MIAMI COMPUTER SUPPLY CORP, S-1, 1997-09-24

MIAMI COMPUTER SUPPLY CORP
S-1, 1997-09-24
PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1997
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MIAMI COMPUTER SUPPLY CORPORATION

(Exact name of registrant as specified in its articles of incorporation)

<TABLE>
<S> <C> <C>
OHIO 5110 31-1001529
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>

4750 HEMPSTEAD STATION DRIVE
DAYTON, OHIO 45429
(937) 291-8282

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

ALBERT L. SCHWARZ
PRESIDENT
MIAMI COMPUTER SUPPLY CORPORATION
4750 HEMPSTEAD STATION DRIVE
DAYTON, OHIO 45429
(937) 291-8282

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------

With a copy to:

TIMOTHY B. MATZ, ESQ.
JEFFREY A. KOEPPEL, ESQ.
FIORELLO J. VICENCIO, ESQ.
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
734 15TH STREET, N.W., 12TH FLOOR
WASHINGTON, D.C. 20005
(202) 347-0300
COUNSEL TO THE REGISTRANT
--------------------------

Approximate date of commencement of proposed sale to public: December 15, 1997
--------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, no par value per share........... 391,109 shares $13.313 $5,206,834 $1,580
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 ("Securities Act")
and computed pursuant to Rule 457(c) under the Securities Act based upon
the average of the high and low prices of the Common Stock on September
19, 1997, as reported on the Nasdaq National Market.

--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

<PAGE>

SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1997
PROSPECTUS

391,109 SHARES

MIAMI COMPUTER SUPPLY CORPORATION
[LOGO]

COMMON STOCK

------------------

This prospectus ("Prospectus") covers 391,109 shares of common stock,
without par value (the "Common Stock"), of Miami Computer Supply Corporation
(the "Company"), which may be offered by the selling stockholders identified
herein (the "Selling Stockholders") from time to time in the public market
for their own benefit (the "Offering"). The Company will not receive any
proceeds from this Offering. Certain expenses of this Offering which are
estimated to be approximately $ will be paid by the Company.

The Common Stock currently trades on the Nasdaq National Market ("NNM")
under the symbol "MCSC." As of August 31, 1997, the Company had 3,929,109
shares of Common Stock issued and outstanding. On September 22, 1997, the
last reported closing sale price of the Common Stock on the NNM was $ 13.125 per
share.

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 10.

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS SEPTEMBER 24, 1997.
<PAGE>
------------------------

The Company has obtained Federal service mark registration of the names
"Miami Computer Supply Corporation-SM-," "Miami Computer Supply
International-SM-," "MCSI-SM-" and the associated Company logo. All other
trademarks or registered trademarks or service marks appearing herein are
trademarks or registered trademarks or service marks of the respective companies
that utilize them.

------------------------

The Company currently furnishes, and intends to continue to furnish, its
stockholders with annual reports containing consolidated financial statements
audited by its independent accountants, together with an opinion thereon
expressed by such accountants, and quarterly reports containing unaudited
interim consolidated financial statements for each of the first three quarters
of each fiscal year.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS AND THE NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. THE
FOLLOWING SUMMARY, IN ADDITION TO THE "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS" SECTIONS,
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND
UNCERTAINTIES, WHICH INCLUDE, BUT ARE NOT LIMITED TO, THOSE FOUND IN THE
"RISK FACTORS" SECTION. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THOSE DISCUSSED HEREIN. UNLESS THE CONTEXT OTHERWISE REQUIRES,
REFERENCES TO MIAMI COMPUTER SUPPLY CORPORATION INCLUDE ITS WHOLLY OWNED
SUBSIDIARIES.

THE COMPANY

Miami Computer Supply Corporation, which was incorporated in September 1980
and commenced its business operations in 1981, is a distributor of computer and
office automation supplies and accessories, including a line of computer
projection presentation products, principally in the midwest, northeast,
southeast and northwest regions of the United States and in certain foreign
countries. The Company distributes over 1,800 different core products primarily
to middle market and smaller companies and to governmental, educational and
institutional customers, including federal, state and local governmental
agencies, universities and hospitals and, to a lesser extent, to computer supply
dealers. The Company's net sales increased from $24.0 million in fiscal year
1992 to $63.0 million in fiscal year 1996, while operating income has increased
from $0.7 million to $2.2 million over the same period.

The Company's growth in sales as of the year ended December 31, 1996 was
due primarily to the acquisition of two computer and office automation supply
companies and the assets of two such other businesses over the past six years
as well as the high level of customer satisfaction which the Company
attributes to the following factors: personal service using a highly
knowledgeable and motivated sales force; fulfillment of customer orders on an
overnight basis; use of the most economic and expeditious shipping routes;
and automated procedures for inventory control, order picking and billing
which are supported by the Company's proprietary computer software
applications. The Company plans to continue to focus on achieving a high
level of customer satisfaction and intends to emphasize the acquisition of
other end-user computer and office automation supply companies to increase
its sales growth and expand its presence in other markets.

The Company believes that it has a lower selling and administrative expense
structure due to its ability to sell without the use of retail locations and its
ability to limit its product line solely to computer and office automation
supplies and projection presentation products. The Company believes that its
lower selling and expense structure afford it a competitive advantage over
traditional contract stationers and large office suppliers. Based upon annual
revenues, management believes that the Company is the largest independent
end-user computer and office automation supply distributor in the country.

The Company sells primarily nationally known, name-brand products
manufactured by approximately 500 original equipment manufacturers, including
Hewlett-Packard Company ("Hewlett-Packard"), Lexmark International, Inc.
("Lexmark") and Imation Corp. ("Imation") (formerly a division of 3M
Corporation) for computer supplies, and by Proxima Corporation ("Proxima"),
Epson America, Inc. ("Epson") and LightWare, Inc. ("LightWare") for projection
presentation products. The Company's products include consumable supplies such
as laser toner, copier toner, facsimile machine supplies, ink jet cartridges,
printer ribbons, diskettes, computer tape cartridges and accessories, including
cleaning kits and media storage files, as well as computer projection
presentation hardware which permits the large-scale, high resolution projection
of computer generated slides for presentation at meetings, seminars, lectures,
training rooms and other similar multiple person gatherings. The Company's
products are used in, or in conjunction with, a broad range of computer and
office automation products such as mainframes, intranets, mini, personal, laptop
and notebook computers, laser and ink jet printers, photocopiers, fax machines
and data storage products.

3
<PAGE>
The Company operates one centralized distribution center in Dayton, Ohio and
nine smaller regional distribution centers in Rochester, New York, Louisville,
Kentucky, Chicago, Illinois, Salt Lake City, Utah, Ann Arbor, Michigan, Spokane,
Washington, Atlanta, Georgia, Portland, Oregon and Leeds, England. Each of the
Company's other 31 sales offices also maintain a limited inventory of frequently
ordered products in order to facilitate same day delivery.

The Company estimates that the U.S. computer and office automation supply
market totaled approximately $26.8 billion (at retail) in 1996. Industry sources
indicate that the U.S. computer supply market will grow at a compound annual
rate of approximately 6.8% over the next two years. The Company believes that
the current size of the industry and its potential for future growth can be
attributed, in part, to the increasing automation of the workplace and the
corresponding increase in the demand for computer and office automation
supplies. In addition, newer laser and ink jet printing technologies,
particularly color printers, require significantly more consumable supplies than
older, impact printing technologies.

Unlike the computer hardware or office equipment industry, the Company
believes that the computer and office automation supplies industry is not
generally subject to the risk of rapid technological advances and subsequent
product obsolescence. The demand for consumable goods is not dependent on the
level or type of computer hardware or office equipment sales in any particular
year, but rather reflects the amount and type of equipment already in use. As a
result, the consumable needs for any particular computer or item of office
equipment will often continue for an extended period of time, even after the
manufacture of such computer or office equipment is discontinued. Moreover,
computer hardware is relatively homogeneous, except for different power sources;
computer printers sold in the U.S. are substantially similar to, and use the
same supplies as, printers sold elsewhere in the world. Thus, the Company's
products typically may be sold transnationally without modification.

The Company's business strategy is to increase sales and earnings growth by:

- Acquiring other computer supply companies in the U.S. and
internationally. With more than 15 years of experience serving the
large and expanding niche computer and office automation supply market,
the Company has garnered specific knowledge regarding the customer
base, its competitors and its suppliers. Accordingly, the Company
believes that the domestic and certain foreign computer supply markets
are highly fragmented and consist primarily of relatively smaller
companies which typically sell within limited geographical areas. The
Company has acquired the stock or the assets of seven smaller regional
computer and office automation supply companies including Datron
Computer Products, Inc., Rochester, New York ("Datron"), Paper Rolls
and Computer Supplies, Inc., Louisville, Kentucky ("Paper Rolls"),
Diversified Data Products, Inc. ("DDP"), Ann Arbor, Michigan, Imperial
Data Supply Corporation ("IDSC"), Spokane, Washington, Data Associates,
Inc. ("DATA"), Roswell, Georgia and Force 4 D.P. Supplies, Inc. ("Force
4"), Portland, Oregon, since 1991. Three of these companies (Paper
Rolls, Datron and DDP) accounted for $22.9 million of the Company's
$63.4 million in revenues for the year ended December 31, 1996 and four
of these companies (Paper Rolls, Datron, DDP and IDSC) accounted and
for $20.2 million of the Company's $42.3 million in revenues for the
six months ended June 30, 1997. None of the acquisitions made during
1997 (IDSC, DATA and Force 4) to the date of this Prospectus,
individually or in the aggregate, had a material impact on the
Company's financial condition or results of operations. The Company
believes that there is a significant consolidation opportunity within
the industry and, thus, intends to continue to aggressively pursue
acquisitions of other end-user computer and office automation supply
companies in the future. The Company has identified potential
acquisition candidates and has had preliminary discussions with several
of such candidates. Except for non-binding letters of intent by and
between the Company and certain other computer supply distributors for
the acquisition of the assets and liabilities or the stock of such
other distributors which are currently in place and which may be
entered into from time to time, there are, as of the date of this
Prospectus, no understandings, agreements or arrangements between the
Company and any other entity with respect to such an acquisition.

4
<PAGE>
Although other larger, better financed companies are currently engaged in a
rapid consolidation of the office supply industry, and to a lesser extent,
computer supply distributors, the Company believes that it can effectively
compete for acquisitions due to its niche market strategy, its knowledge of, and
existing relationships with, many of the potential acquisition targets and its
ability to offer such targets growth potential and a management philosophy which
is clearly different from the large contract stationer consolidators. The
Company believes that it is currently the only company focusing strictly on
acquiring computer and office automation supply distribution companies and that
such focus offers it the ability to increase revenues through such acquisitions
at a faster rate than that of the large consolidators. In addition, the Company
believes that it will be able to integrate acquired companies into its business
by, among other things, retaining existing senior management whenever possible
while expanding the Company's revenue base and centralizing certain
administrative functions, purchasing and information systems to achieve
economies of scale. See "Risk Factors--Integration of Acquisitions," "Risk
Factors--Ability to Manage Growth" and "Business--Business Strategy--Acquisition
Strategy."

- Increasing revenues by initiating relationships with new customers,
increasing international sales, emphasizing sales of additional products
to existing customers and selling higher margin, state-of-the-art liquid
crystal display ("LCD") projection presentation products.

- Improving operating efficiencies with its in-house computer programming
staff through the use of its advanced computerized inventory system,
electronic data interchange ("EDI") and continued management information
system ("MIS") enhancements to its order processing and financial
management systems.

- Adding value to its customer relationships by providing personal customer
contact with its direct sales force and customer service representatives,
special priority and customized service to its very important customers
(those who purchase $40,000 or more of the Company's products in any
year), precise picking and packaging of customer orders, prompt next-day
delivery with reputable couriers at the most economical price, EDI, order
tracking and free technical advice from its highly trained and
knowledgeable sales force and customer service representatives.

- Strengthening its relationships with manufacturers by increasing sales and
related product offerings which, to date, has resulted, and is expected to
result, in larger discounts and rebates and more cooperative advertising
support.

The Company's principal executive offices are located at 4750 Hempstead
Station, Dayton, Ohio, 45429 and its telephone number is (937) 291-8282.

THE OFFERING

<TABLE>
<CAPTION>
<S> <C>
Common Stock offered by Selling Stockholders....... 391,109 shares
Common Stock to be Offered by the Company.......... 0 shares
Common Stock to be outstanding after the
Offering(1)...................................... 3,929,109 shares
Use of Proceeds.................................... All of the shares offered hereby from time to time are being
offered by the Selling Securityholders. The Company will not
receive any proceeds therefrom.
Nasdaq National Market symbol...................... "MCSC"
</TABLE>

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(1) Based on shares outstanding as of August 31, 1997. Excludes 350,000 shares
of Common Stock reserved for future issuance under the Company's stock
option plans. See "Management--Executive Compensation--Employee Benefit
Plans --Stock Plans."

5
<PAGE>
SUMMARY FINANCIAL AND OPERATING DATA

The summary historical consolidated financial and operating data set forth
below for the years ended December 31, 1993, 1994, 1995 and 1996 have been
derived from consolidated financial statements of the Company which have been
audited by Price Waterhouse LLP, independent accountants, whose report is
included elsewhere in this Prospectus. The summary historical consolidated
financial and operating data set forth for the year ended December 31, 1992 and
the six months ended June 30, 1996 and 1997 have been derived from the unaudited
consolidated financial statements of the Company, which, in the opinion of the
Company, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation. The results of operations for
the six months ended June 30, 1997 are not necessarily indicative of the results
to be obtained for the full fiscal year. The summary historical consolidated and
unaudited pro forma financial data set forth below should be read in conjunction
with "Selected Consolidated Financial and Operating Data," "Unaudited Pro Forma
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements of the
Company and accompanying notes thereto included elsewhere in this Prospectus.

6
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<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
PRO FORMA
1992 1993 1994 1995 1996 1996(1)
--------- --------- --------- --------- --------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................... $ 23,982 $ 29,045 $ 35,690 $ 43,321 $ 63,428 $ 68,791
Cost of sales................................ 19,128 23,308 28,250 34,642 52,061 56,995
--------- --------- --------- --------- --------- -----------
Gross profit............................... 4,854 5,737 7,440 8,679 11,367 11,796
Selling, general and administrative
expenses................................... 4,199 5,221 6,219 7,125 8,891 9,226

Non-Cash Compensation
expense(2)................................. -- -- -- -- 280 280
--------- --------- --------- --------- --------- -----------
Operating income............................. 655 516 1,221 1,554 2,196 2,290
Interest expense............................. 101 141 204 274 312 375
Other (expense)/income....................... 6 12 11 22 (11) (11)
--------- --------- --------- --------- --------- -----------
Income before income taxes................... 560 387 1,028 1,302 1,873 1,904
Provision for income taxes................... 243 165 418 509 756 772
--------- --------- --------- --------- --------- -----------
Net Income................................. $ 317 $ 222 $ 610 $ 793 $ 1,117 $ 1,132
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
Earnings per share of common stock........... $ 0.13 $ 0.09 $ 0.26 $ 0.33 $ 0.44 $ 0.45
Weighted average number of common
shares outstanding......................... 2,400,000 2,356,000 2,320,000 2,388,000 2,532,399 2,532,399

OPERATING DATA:
Selling, general and administrative expenses
as a percentage of net sales............... 17.5% 18.0% 17.4% 16.4% 14.0% 13.4%

SIX MONTHS ENDED JUNE 30,
----------------------------------
PRO FORMA
1996 1996(1) 1997
--------- ----------- ---------

<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................... $ 26,247 $ 31,465 $ 42,350
Cost of sales................................ 21,162 25,978 35,008
--------- ----------- ---------
Gross profit............................... 5,085 5,487 7,342
Selling, general and administrative
expenses................................... 4,033 4,368 5,758
Non-cash compensation
expense.................................... -- -- --
--------- ----------- ---------
Operating income............................. 1,052 1,119 1,584
Interest expense............................. 142 205 25
Other (expense)/income....................... 11 11 27
--------- ----------- ---------
Income before income taxes................... 921 925 1,586
Provision for income taxes................... 382 388 642
--------- ----------- ---------
Net Income................................. $ 539 $ 537 $ 944
--------- ----------- ---------
--------- ----------- ---------
Earnings per share of common stock........... $ 0.23 $ 0.23 $ 0.26
Weighted average number of common
shares outstanding......................... 2,388,000 2,388,000 3,573,853
OPERATING DATA:
Selling, general and administrative expenses
as a percentage of net sales............... 15.4% 13.9% 13.6%
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996 JUNE 30, 1997
--------- --------- --------- --------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.................................. $ 660 $ 621 $ 944 $ 1,510 $ 10,211 $ 10,270
Total assets..................................... 4,975 6,033 8,782 9,544 17,775 20,054
Long-term debt................................... 124 72 6 -- 65 72
Total debt....................................... 1,828 2,831 3,005 3,537 100 1,452
Stockholders' equity............................. 1,023 1,174 1,839 2,632 12,073 14,017
</TABLE>

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(1) The pro forma information reflects the acquisition of DDP assuming that
acquisition had occurred on January 1, 1996. See "Unaudited Pro Forma
Financial Data."

(2) Represents non-cash compensation expense related to stock awards granted
by LLC (see definition below) to certain employees which vested in the
fourth quarter of 1996. See Note 12 to the annual Consolidated Financial
Statements of the Company included elsewehere in this Prospectus.

RECENT DEVELOPMENTS

On November 15, 1996, the Company completed its initial public offering
of 1,150,000 shares of its Common Stock (including the underwriter's
overallotment option of 150,000 shares which closed on December 13, 1996) at
a price of $8.50 per share. Net proceeds to the Company after deducting
underwriting fees and expenses amounted to $7.8 million. The net proceeds
were used to repay all outstanding indebtedness under the Company's bank line
of credit and for other general corporate purposes.

Since May 1996, the Company has acquired three operating computer and
office automation supply companies and the assets (and certain liabilities)
of a fourth such business. In May 1996, Pittsburgh Investment Group LLC, a
Maryland limited liability company which acquired control of the Company at
such time ("LLC"), acquired DDP from its stockholders and contributed 100% of
the stock of DDP to the Company. The Company acquired assets of DDP totaling
$2.7 million and assumed liabilities of DDP totaling $2.7 million. Revenues
for DDP for the twelve months ended May 30, 1996 were approximately $12.6
million. See "Certain Transactions--Related Party Transactions,--Other
Transactions."

On April 30, 1997, the Company purchased substantially all of the assets
totaling $1.2 million and assumed certain liabilities totaling $0.9 million
of Imperial Data Supply Corporation in exchange for the issuance of 106,383
shares of Common Stock and a cash payment. The shares of Common Stock issued
to IDSC were subject to an agreement by IDSC not to sell such shares until
December 15, 1997, and an agreement by the Company to register said shares so
that they would be saleable in the public market when the "lock-up" agreement
expired. The stockholders of IDSC represent certain of the Selling
Stockholders set forth herein. See "Selling Stockholders." In addition, the
Company entered into a one year employment agreement with the President of
IDSC for an annual salary of $85,000, plus a bonus payable if certain results
are achieved during the term of the Agreement. Revenues for IDSC for the
twelve months ended April 30, 1997 were $6.4 million. (The financial
information relating to the acquired entity presented in this paragraph is
derived from unaudited financial information).

On July 1, 1997, the Company formed a Georgia Corporation ("MGAC") and
merged Data Associates, Inc. ("DATA") with and into MGAC in consideration of the
issuance of 129,730 shares of Common Stock (subject to adjustment based on the
determined value of the equity of DATA) to the two principal stockholders and
executive officers of DATA. The shares of Common Stock issued to said
stockholders were subject to an agreement by them not to sell such shares until
March 28, 1998 and an agreement by the Company to register said shares so that
they would be saleable in the public market when the "lock-up" agreement
expired. In addition, the Company entered into two year employment agreements
with the two principals of DATA at salaries of $105,000 each, plus certain
bonuses which will be payable if certain results are achieved during the terms
of such agreements. The stockholders of DATA represent certain of the Selling
Stockholders set forth herein. See "Selling Stockholders."

8
<PAGE>

As a result of the merger, MGAC acquired assets of approximately $1.1 and
liabilities of approximately $0.6. Revenues of DATA for the twelve months
ended June 30, 1997 were approximately $6.5. On September 12, 1997, MGAC was
merged with and into the Company. (The financial information relating to the
acquired entity presented in this paragraph is derived from unaudited
financial information).

On July 15, 1997, the Company formed an Oregon corporation ("MOAC") and
merged with Force 4 D.P. Supplies, Inc. ("Force 4") with and into MOAC in
consideration of the issuance of 154,996 shares of Common Stock and a cash
payment to the sole stockholder and chief executive officer of Force 4. The
shares of Common Stock issued to said stockholder were subject to an
agreement by the stockholder not to sell such shares until April 15, 1998 and
an agreement by the Company to register said shares so that they would be
saleable in the public market when the "lock-up" agreement expired. In
addition, the Company entered into a one year employment agreement with the
sole stockholder of Force 4 at a salary of $85,000. The stockholder of Force
4 is one of the Selling Stockholders set forth herein. See "Selling
Stockholders." As a result of the merger, MOAC acquired assets of
approximately $1.4 million and liabilities of approximately $0.8 million.
Revenues of Force 4 for the twelve months ended June 30, 1997 were
approximately $12.2 million. MOAC has since changed its corporate name to
"Force 4 D.P. Supplies, Inc." and is a direct, wholly-owned subsidiary of the
Company. (The financial information relating to the acquired entity presented
in this paragraph is derived from unaudited finanical information).

9
<PAGE>
RISK FACTORS

IN ADDITION TO OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING FACTORS
SHOULD BE CONSIDERED CAREFULLY BY PROSPECTIVE INVESTORS BEFORE PURCHASING ANY OF
THE COMMON STOCK OFFERED BY THIS PROSPECTUS.

FINANCING FOR ACQUISITIONS; ADDITIONAL DILUTION

If future acquisitions are funded by the issuance of additional Common
Stock, such issuance will be without stockholder approval and will dilute
current stockholders and stockholders who purchase shares of Common Stock in
this Offering. Stockholders have no preemptive rights and, therefore, no
stockholder has the right to acquire additional Common Stock in such a
circumstance in order to prevent such dilution. The Company presently intends to
register shares of its Common Stock with the Securities and Exchange Commission
(the "Commission") under Rule 415 of the Securities Act of 1933, as amended (the
"Securities Act"), after the completion of other acquisitions to permit resales
of the Common Stock by the stockholders of the acquired companies and may
register additional shares (up to 6,000,000) with the Commission for use by the
Company as all or a portion of the consideration to be paid in future
acquisitions. These shares will generally be freely tradeable after their
registration, unless the sale thereof is contractually restricted. There can be
no assurance that holders of the Common Stock will not be significantly diluted
by future issuances of Common Stock as a result of the Company's acquisition
strategy. Moreover, the issuance of additional shares of Common Stock may have a
negative impact on earnings per share and may negatively impact the market price
of the Common Stock.

FINANCING FOR ACQUISITIONS; LEVERAGE

If acquisitions are consummated for cash, it is likely that the Company will
borrow the necessary funds and, accordingly, the Company may become highly
leveraged as a result thereof. If it becomes highly leveraged, the Company may
be more vulnerable to extended economic downturns and its flexibility in
responding to changing economic and industry conditions may be limited. The
degree to which the Company is leveraged could have important consequences to
purchasers of the Common Stock, including the impairment of the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions and general corporate purposes. The Company's ability
to make principal and interest payments on its current and future indebtedness
and to repay its current and future indebtedness at maturity will be dependent
on the Company's future operating performance, which is itself dependent on a
number of factors, many of which are beyond the Company's control, and may be
dependent on the availability of borrowings under the Credit Facility (defined
below) or other financings. A substantial portion of the Company's current
borrowing capacity under the Credit Facility could be consumed by increased
working capital needs, including future acquisitions.

POSSIBLE NEED FOR ADDITIONAL FINANCING TO IMPLEMENT ACQUISITION STRATEGY

The Company may require additional funds to implement its acquisition
strategy. While the Company's Credit Facility may be utilized to finance
acquisitions, the amount which may be drawn upon by the Company may be limited.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Credit Facility." Accordingly, the Company may require additional
debt or equity financing for future acquisitions. There can be no assurance that
the Company will be able to obtain additional debt or equity financing on terms
favorable to the Company, or at all, or if obtained, there can be no assurance
that such debt or equity financing will be sufficient for the financing needs of
the Company.

RESTRICTIONS IMPOSED BY DEBT ARRANGEMENTS

The Company's outstanding indebtedness consists primarily of borrowings
under the $15.0 million secured revolving credit facility (the "Credit
Facility") provided by National City Bank of Dayton (the "Bank"). The Credit
Facility contains restrictive covenants which may have an adverse effect on the

10
<PAGE>
Company's operations in the future. These covenants include, among other
restrictions: (i) the maintenance of certain financial ratios; (ii) prior notice
to the Bank with respect to (a) the purchase or sale of assets; (b) any merger,
sale or consolidation activity; (c) the creation or acquisition of any
subsidiary or the investment in any equity securities; (d) the entering into any
partnership or joint venture; or (e) the issuance of any equity securities; and
(iii) certain limitations on the incurrence of other indebtedness. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Credit Facility." These provisions may constrain the Company's
acquisition strategy, may delay, deter, or prevent a takeover attempt that a
shareholder might consider in its best interests and may have an adverse effect
on the market price of the Company's Common Stock. In addition, the Credit
Facility restricts the payment of dividends to no more than 50.0% of the net
income of the Company in the year that the dividend is to be paid. See "Dividend
Policy."

FAILURE TO IMPLEMENT ACQUISITION STRATEGY

Competition for desirable new acquisitions in attractive major metropolitan
markets is expected to increase. No assurance can be given that the Company will
be able to find attractive acquisition candidates or that such acquisitions can
be effected at reasonable prices or in a timely manner, or that once acquired,
the Company will be able to profitably manage such companies. The failure to
complete acquisitions and continue the Company's expansion could have a material
adverse effect on its financial performance.

RISKS RELATING TO INTERNATIONAL ACQUISITIONS

Expansion into international markets may involve additional risks relating
to such things as currency exchange rates, new and different legal and
regulatory requirements, political and economic risks relating to the stability
of foreign governments and their trading relationship with the United States,
difficulties in staffing and managing foreign operations, differences in
financial reporting, differences in the manner in which different cultures do
business, operating difficulties and other factors.

INTEGRATION OF ACQUISITIONS

The Company has acquired four computer and office automation supply
companies and the assets of three other such businesses in the past six years
and intends to continue to actively pursue additional acquisitions. No
assurance can be given that the Company will be able to successfully
integrate its recent or future acquisitions with the Company's existing
systems and operations. The integration of acquired businesses may also lead
to the resignation of key employees of the acquired companies and diversion
of management attention from other ongoing business concerns. The costs of
integration could have an adverse effect on short-term operating results. Any
or all of these factors could have a material adverse effect on the Company's
operations in the future.

ABILITY TO MANAGE GROWTH

The Company expects to experience rapid growth that will likely result in
new and increased responsibilities for management personnel and which will
challenge the Company's management, operating and financial systems and
resources. To compete effectively and manage future growth, if any, the Company
will be required to continue to implement and improve its operational, financial
and management information systems, procedures and internal controls on a timely
basis and to expand, train, motivate and manage its work force. There can be no
assurance that the Company's personnel, systems, procedures and controls will be
adequate to support the Company's future operations. Any failure to implement
and improve the Company's operational, financial and management systems or to
expand, train motivate or manage employees could have a material adverse effect
on the Company's operating results and financial condition. See "Business."

11
<PAGE>
DEPENDENCE ON KEY PERSONNEL

The Company relies on certain key executives, including its President, Chief
Financial Officer and other senior management, with whom it has entered into
employment agreements which expire on December 31, 1999, subject to renewal, and
which contain non-competition provisions which expire 12 months after such
executive's employment is terminated. The agreements with the President and
Chief Financial Officer entitle such individuals to receive a cash bonus based
on the Company's annual income before taxes, limited, however, beginning in
1997, to no more than 100.0% of their respective base salaries, assuming that
pre-tax profit goals are met. The loss of services of one or more of the
Company's key executives could disrupt and have a material adverse effect on the
operations of the Company. As the Company continues to grow, it will continue to
hire, appoint or otherwise retain and/or change senior managers and other key
executives. There can be no assurance that the Company will be able to retain
its executive officers and key personnel or attract additional qualified
management in the future. In addition, the success of certain of the Company's
acquisitions may depend, in part, on the Company's ability to retain management
personnel of the acquired companies. The Company intends to offer certain
individuals who manage the acquired companies written employment agreement which
could contain post employment agreements not to compete. The loss of services of
senior executive officers could have a material adverse effect upon the
Company's business.

The Company has recently hired and intends to continue to hire, certain
sales professionals who have worked for other computer and office supply
companies immediately prior to their hiring by the Company. In this regard,
the Company and two such sales professionals, have been named as defendants
in a lawsuit filed by one such former employer. The Company believes,
however, that the resolution of the lawsuit will not have a material adverse
impact on the financial condition of the Company. See "Business-- Legal
Proceedings" and "Certain Transactions--Limitations on Liability and
Indemnification Matters."

EXCHANGE RATE FLUCTUATIONS

Although the Company's operations are not currently subject to material
operational risks associated with fluctuations in exchange rates, because the
Company intends to expand the size and scope of its international operations,
its exposure to fluctuations in exchange rates will be increased. Accordingly,
no assurance can be given that the Company's results of operations will not be
adversely affected in the future by fluctuations in foreign currency exchange
rates. The Company has, at times, entered into forward foreign currency exchange
contracts in order to hedge the Company's accounts receivable and accounts
payable. At June 30, 1997, the Company had no foreign currency exchange
contracts outstanding. In the future, the Company may, from time to time,
consider entering into other forward foreign currency exchange contracts,
although no assurances can be given that the Company will do so, or will be able
to do so, or that such arrangements will adequately protect the Company from
fluctuations in foreign currency exchange rates.

DEPENDENCE ON CERTAIN KEY SUPPLIERS

Although the Company regularly carries products and accessories manufactured
by approximately 500 original equipment manufacturers, 49.1%, 50.6% and 58.6% of
the Company's net sales in the six months ended June 30, 1997 and in fiscal
years 1996 and 1995, respectively, were derived from products supplied by the
Company's ten largest suppliers, with the sale of products supplied by
Hewlett-Packard, Lexmark and Canon accounting for approximately 14.6%, 6.6% and
10.1% of total net sales, respectively, for the six

12
<PAGE>
months ended June 30, 1997. In addition, the Company's business is dependent
upon terms provided by its key suppliers, including pricing and related
provisions, product availability and dealer authorizations. While the Company
considers its relationships with its key suppliers, including Hewlett-Packard,
Lexmark and Canon to be good, there can be no assurance that these relationships
will not be terminated or that such relationships will continue as presently in
effect. In addition, changes by one or more of such key suppliers of their
policies regarding distributors or volume discount schedules or other marketing
programs applicable to the Company may have a material adverse effect on the
Company's business. Certain distribution agreements require the Company to make
minimum annual purchases. Under its distribution agreements with Hewlett-Packard
and Lexmark, the Company is required to make minimum annual purchases of $5.0
million and $250,000, respectively. See "Business--Suppliers."

HIGHLY COMPETITIVE INDUSTRY

The computer and office automation product supply industry is highly
competitive. The Company competes with major full-service office products
distributors, other national and regional computer supply distributors, office
products superstores, direct mail order companies, and, to a lesser extent, non-
specialized retailers. Certain of the Company's competitors, such as office
products superstores and major full-service office products distributors, are
larger and have substantially greater financial and other resources and
purchasing power than the Company. The Company believes that the computer supply
industry will become more consolidated in the future and consequently more
competitive. Increasing competition will result in greater price discounting
which will continue to have a negative impact on the industry's gross margins.
There can be no assurance that the Company will not encounter increased
competition in the future, which could have a material adverse effect on the
Company's business. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business--Competition."

CONTROL OF EXISTING MANAGEMENT AND CERTAIN STOCKHOLDERS

As of August 31, 1997, management of the Company owned 663,565 shares of
Common Stock representing approximately 16.9% of the outstanding shares of
Common Stock and LLC owned 1,279,336 shares of Common Stock representing
approximately 32.6% of the outstanding shares of Common Stock. Members of LLC
constitute a majority of the directors on the Board of Directors of the
Company. Consequently, management or LLC, acting together or independently,
will be in a position to exert significant influence over all matters
relating to the Company's business, including decisions regarding the
election of the Company's Board of Directors, the acquisition or disposition
of assets (in the ordinary course of the Company's business or otherwise),
future issuances of Common Stock or other securities of the Company, and the
declaration and payment of dividends on the Common Stock. Management or LLC,
acting together or independently, also may be able to delay, make more
difficult or prevent any business combination involving the Company not
approved by them. See "Principal Stockholders" and "Restrictions on
Acquisition of the Company."

DEPENDENCE ON COMPUTER SYSTEMS

The Company's operations are generally dependent on its proprietary software
applications. Modifications to the Company's computer systems and applications
software will be necessary as the Company executes its expansion plans and
responds to customer needs, technological developments, electronic commerce
requirements and other factors. Such modifications may cause disruptions in the
operations of the Company, delay the schedule for implementing the integration
of newly acquired companies, or cost more to design, implement or operate than
currently budgeted. Such disruptions, delays or costs could have a material
adverse effect on the Company's operations and financial performance.

The Company does not currently have redundant computer systems or redundant
dedicated communication lines linking its computers to its warehouses, although
all data is stored on two separate hard drives on a continual basis. The Company
has taken precautions to protect itself from events that could

13
<PAGE>
interrupt its operations, including back-up power supplies that allow the
Company's computer system to function in the event of a power outage, off-site
storage of back-up data, fire protection, physical security systems and an early
warning detection and fire extinguishing system. The occurrence of any of these
events could have a material adverse effect on the Company's operations and
financial performance. See "Business--Management Information System."

POTENTIAL VOLATILITY OF STOCK PRICE

Stock prices of many growth companies fluctuate widely, often for reasons
that are unrelated to their actual operating performance. Announcement of new
acquisitions by the Company or its competitors, variations in quarterly
operating results, litigation involving the Company, general conditions
affecting all participants in the computer supply industry, regulatory
developments, and economic or other external factors, may have a significant
impact on the market price and liquidity of the Common Stock.

NO DIVIDENDS

The Company has never paid a dividend on its capital stock and currently
expects to retain its future earnings, if any, for use in the operation and
expansion of its business and does not anticipate paying any such cash dividends
in the foreseeable future. See "Dividend Policy."

AVAILABILITY OF COMMON STOCK AND PREFERRED STOCK FOR ISSUANCE

The Company's Board of Directors has the authority to issue up to 5,000,000
shares of the Preferred Stock and to determine the price, rights, preferences,
privileges and restrictions thereof, including voting rights of the Preferred
Stock, without any further vote or action by the Company's stockholders. The
voting and other rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any Preferred Stock
that may be issued in the future. The Company's Board may similarly issue
additional shares of Common Stock without any further vote or action by
stockholders. Such an issuance has occurred, and could occur in the context of
other public or private offerings of shares of Common Stock or Preferred Stock
or in a situation where the Common Stock or Preferred Stock is used to acquire
the assets or stock of another company. The issuance of Common Stock or
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company has no current plans to issue any shares of Common Stock or Preferred
Stock other than as described herein. See "Description of Capital Stock."

ANTITAKEOVER PROVISIONS

The Amended and Restated Articles of Incorporation ("Articles") and Amended
and Restated Code of Regulations ("Code of Regulations") of the Company contain
certain provisions which, among other things, permit the establishment of a
"staggered" Board of Directors, limit the personal liability of, and provide
indemnification for, the directors of the Company, require that stockholders
comply with certain requirements before they can nominate someone for director
or submit a proposal before a meeting of stockholders, limit the ability of
stockholders to act by written consent and require a supermajority vote of
stockholders in the event that a "related person" (as defined) attempts to
engage in a business combination with the Company. The Ohio General Corporation
Law, which is applicable to the Company, has certain other provisions which may
be deemed to have antitakeover effects, including statutes which deal with
control share acquisitions, transactions involving interested stockholders,
control bids and the disgorgement of trading profits. See "Restrictions on
Acquisition of the Company."

14
<PAGE>
USE OF PROCEEDS

The Company will not receive any proceeds from the Offering. All proceeds
will be received and retained solely by the Selling Stockholders.

MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

COMMON STOCK DATA:

The Company's Common Stock is listed and trades on the Nasdaq National
Market tier of the Nasdaq Stock Market under the symbol "MCSC." Prior to
November 12, 1996, there was no public trading market for the Common Stock.
The following table sets forth for the periods indicated, the high and low
closing sale price for the Common Stock as reported by the Nasdaq National
Market. Such sale prices reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions. On September 22, 1997, the last reported closing sale price of
the Common Stock on the NNM was $ 13.125 per share.

Fiscal Year Ended December 31, 1996

<TABLE>
<CAPTION>
CLOSING SALE
PRICE
--------------
QUARTER HIGH LOW
- --------------------------------------------- ------ -----
<S> <C> <C>
Fourth....................................... $10 1/4 $8 3/4
</TABLE>

Fiscal Year Ended December 31, 1997

<TABLE>
<CAPTION>
CLOSING SALE
PRICE
--------------
QUARTER HIGH LOW
- --------------------------------------------- ------ -----
<S> <C> <C>
First........................................ $13 3/4 $9 1/4
Second....................................... 12 1/2 9
Third........................................ ------ -----
</TABLE>

As of August 31, 1997, there were approximately 386 shareholders, of which
54 were holders of record of the Company's Common Stock. See "Selling
Stockholders," and "Principal Stockholders."

DIVIDEND POLICY

The Company has never paid a cash dividend on its Common Stock. The Company
does not anticipate paying any cash dividends on its Common Stock in the
foreseeable future because it intends to retain its earnings to finance the
expansion of its business and for general corporate purposes. Any payment of
future dividends will be at the discretion of the Board of Directors and will
depend upon, among other things, the Company's earnings, financial condition,
capital requirements, level of indebtedness, general business conditions,
contractual restrictions with respect to the payment of dividends and other
relevant factors. The Credit Facility provides that the payment of dividends is
an event of default unless the dividend is payable solely in cash, no other
event of default is existing and, after giving effect to the proposed dividend,
the aggregate of all dividends paid during any fiscal year of the Company would
not exceed 50.0% of the net income (as defined in the Credit Facility) of the
Company for that fiscal year to the date of such dividend.

15
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company, at June
30, 1997. This table should be read in conjunction with the Consolidated
Financial Statements of the Company and the notes related thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
<S> <C>
Short-term debt:
Credit Facility.............................................................. $ 1,343,772
Current portion of long-term debt............................................ 35,567
-------------
Total short-term debt.................................................... 1,379,339
-------------

Total long-term debt........................................................... 72,225
-------------
Stockholders' equity:
Preferred Stock, no par value, 5,000,000 shares authorized; none
outstanding................................................................ --
Common stock, no par value, 30,000,000 shares authorized; 3,644,383 shares
issued and outstanding(1)(2)............................................... --
Additional paid-in capital..................................................... 9,349,249
Retained earnings.............................................................. 4,682,731
Less: Treasury stock........................................................... (15,000)
-------------
Total stockholders' equity............................................... 14,016,980
-------------
Total capitalization..................................................... $ 15,468,544
-------------
-------------
</TABLE>

- ------------------------

(1) Excludes 350,000 shares of Common Stock reserved for future issuance under
the Company's stock option plans. See "Management--Executive
Compensation--Employee Benefit Plans--Stock Option Plans."

(2) Subsequent to June 30, 1997, the Company has issued, through August 31,
1997, 284,726 shares of Common Stock in connection with the acquisitions of
DATA and Force 4.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The selected historical consolidated financial and operating data set forth
below for the years ended December 31, 1993, 1994, 1995 and 1996 have been
derived from consolidated financial statements of the Company which have been
audited by Price Waterhouse LLP, independent accountants, whose report is
included elsewhere in this Prospectus. The selected historical consolidated
financial and operating data set forth for the year ended December 31, 1992 and
the six months ended June 30, 1996 and 1997 have been derived from the unaudited
consolidated financial statements of the Company, which, in the opinion of the
Company, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation. The results of operations for
the six months ended June 30, 1997 are not necessarily indicative of the results
to be obtained for the full fiscal year. The selected consolidated and unaudited
pro forma financial data set forth below should be read in conjunction with
"Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Consolidated Financial
Statements of the Company, and accompanying notes thereto included elsewhere in
this Prospectus.

16
<PAGE>
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
PRO FORMA
1992 1993 1994 1995 1996 1996(1)
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................. $ 23,982 $ 29,045 $ 35,690 $ 43,321 $ 63,428 $ 68,791
Cost of sales......................... 19,128 23,308 28,250 34,642 52,061 56,995
---------- ---------- ---------- ---------- ---------- ----------
Gross profit........................ 4,854 5,737 7,440 8,679 11,367 11,796
Selling, general and administrative
expenses............................. 4,199 5,221 6,219 7,125 8,891 9,226
Non-cash compensation expense(2)...... -- -- -- -- 280 280
---------- ---------- ---------- ---------- ---------- ----------
Operating income.................... 655 516 1,221 1,554 2,196 2,290
Interest expense...................... 101 141 204 274 312 375
Other (expense)/income................ 6 12 11 22 (11) (11)
---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes............ 560 387 1,028 1,302 1,873 1,904
Provision for income taxes............ 243 165 418 509 756 772
---------- ---------- ---------- ---------- ---------- ----------
Net Income.......................... $ 317 $ 222 $ 610 $ 793 $ 1,117 $ 1,132
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Earnings per share of common stock.... $ 0.13 $ 0.09 $ 0.26 $ 0.33 $ 0.44 $ 0.45
Weighted average number of common
shares outstanding................... 2,400,000 2,356,000 2,320,000 2,388,000 2,532,399 2,532,399

OPERATING DATA:
Selling, general and administrative
expenses as a percentage of net
sales................................ 17.5% 18.0% 17.4% 16.4% 14.0% 13.4%

SIX MONTHS ENDED JUNE 30,
----------------------------------
PRO FORMA
1996 1996(1) 1997
---------- ---------- ----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................. $ 26,247 $ 31,465 $ 42,350
Cost of sales......................... 21,162 25,978 35,008
---------- ---------- ----------
Gross profit........................ 5,085 5,487 7,342
Selling, general and administrative
expenses............................. 4,033 4,368 5,758
Non-cash compensation expense......... -- -- --
---------- ---------- ----------
Operating income.................... 1,052 1,119 1,584
Interest expense...................... 142 205 25
Other (expense)/income................ 11 11 27
---------- ---------- ----------
Income before income taxes............ 921 925 1,586
Provision for income taxes............ 382 388 642
---------- ---------- ----------
Net Income.......................... $ 539 $ 537 $ 944
---------- ---------- ----------
---------- ---------- ----------
Earnings per share of common stock.... $ 0.23 $ 0.23 $ 0.26
Weighted average number of common
shares outstanding................... 2,388,000 2,388,000 3,573,853
OPERATING DATA:
Selling, general and administrative
expenses as a percentage of net
sales................................ 15.4% 13.9% 13.6%
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996 JUNE 30, 1997
--------- --------- --------- --------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital................................ $ 660 $ 621 $ 944 $ 1,510 $ 10,211 $ 10,270
Total assets................................... 4,975 6,033 8,782 9,544 17,775 20,054
Long-term debt................................. 124 72 6 -- 65 72
Total debt..................................... 1,828 2,831 3,005 3,537 100 1,452
Stockholders' equity........................... 1,023 1,174 1,839 2,632 12,073 14,017
</TABLE>

- ------------------------

(1) The pro forma information reflects the acquisition of DDP assuming that
acquisition had occurred on January 1, 1996. See "Unaudited Pro Forma
Financial Data."

(2) Represents non-cash compensation expense related to stock awards granted
by LLC to certain employees which vested in the fourth quarter of 1996.
See Note 12 to the annual Consolidated Financial Statements of the
Company included elsewhere in this Prospectus.

18
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA

The Unaudited Pro Forma Consolidated Statements of Operations for the six
months ended June 30, 1996 and the year ended December 31, 1996 gives effect
to the acquisition of DDP by the Company as if such transaction had occurred
on January 1, 1996. The unaudited pro forma financial data are based on the
historical financial statements of the Company and DDP and the assumptions
and adjustments described in the accompanying notes. The Unaudited Pro Forma
Consolidated Statements of Operations do not purport to represent what the
Company's results of operations actually would have been if the foregoing
transaction occurred as of the date indicated or what such results will be
for any future periods. Subsequent to the acquisition of DDP no other
acquisition by the Company has, individually or in the aggregate, been
significant.

An Unaudited Pro Forma Consolidated Balance Sheet is not presented because
DDP has been consolidated with the Company subsequent to May 30, 1996.

The Unaudited Pro Forma Consolidated Statements of Operations are based
upon assumptions that the Company believes are reasonable and should be read
in conjunction with the Consolidated Financial Statements of the Company and
the accompanying notes thereto included elsewhere in this Prospectus.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
HISTORICAL DDP
FOR THE PERIOD
JANUARY 1, 1996
TO THE COMPANY
THE COMPANY(1) MAY 30, 1996 PRO FORMA
--------------- --------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net sales........................................................ $ 63,428 $ 5,363 $ 68,791
Cost of sales.................................................... 52,061 4,934 56,995
--------------- ------ -------------
Gross profit................................................... 11,367 429 11,796
Selling, general and administrative expenses..................... 8,891 335 9,226
Non-cash compensation expense(3)................................. 280 -- 280
--------------- ------ -------------
Operating income................................................. 2,196 94 2,290
Interest expense................................................. 312 63 375
Other (expense).................................................. (11) -- (11)
--------------- ------ -------------
Income before income taxes....................................... 1,873 31 1,904
Provision for income taxes....................................... 756 16 772
--------------- ------ -------------
Net income..................................................... $ 1,117 $ 15 $ 1,132
--------------- ------ -------------
--------------- ------ -------------
Earnings per share of common stock............................... $ 0.44 $ 0.45
--------------- -------------
--------------- -------------
Weighted average number of shares of common stock outstanding.... 2,532,399 2,532,399
--------------- -------------
--------------- -------------
</TABLE>

19
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996

<TABLE>
<CAPTION>
HISTORICAL DDP
FOR THE PERIOD
JANUARY 1, 1996 OTHER THE COMPANY
THE COMPANY(1) TO MAY 30, 1996 ADJUSTMENTS(2) PRO FORMA
--------------- --------------- --------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales........................................ $ 26,247 $ 5,363 $ (145) $ 31,465
Cost of sales.................................... 21,162 4,934 (118) 25,978
--------------- ------ ----- -------------
Gross profit................................... 5,085 429 (27) 5,487
Selling, general and administrative expenses..... 4,033 335 -- 4,368
--------------- ------ ----- -------------
Operating income................................. 1,052 94 (27) 1,119
Interest expense................................. 142 63 -- 205
Other (expense)/income........................... 11 -- -- 11
--------------- ------ ----- -------------
Income before income taxes....................... 921 31 (27) 925
Provision for income taxes....................... 382 16 (10) 388
--------------- ------ ----- -------------
Net income..................................... $ 539 $ 15 $ (17) $ 537
--------------- ------ ----- -------------
--------------- ------ ----- -------------
Earnings per share of common stock............... $ 0.23 $ 0.23
--------------- -------------
--------------- -------------
Weighted average number of shares of common stock
outstanding.................................... 2,388,000 2,388,000
--------------- -------------
--------------- -------------
</TABLE>

- ------------------------

(1) Includes the results of operations of DDP from the date of acquisition, May
30, 1996.

(2) Represents the elimination of net sales and cost of sales activity between
the Company and DDP for the period of January 1, 1996 to May 30, 1996 and
the related intercompany profit in inventory, net of income tax effects.
These inventories were sold to third parties subsequent to June 30, 1996.

(3) Represents non-cash compensation expense related to stock awards granted
by LLC to certain employees which vested in the fourth quarter of 1996.
See Note 12 to the annual Consolidated Financial Statements of the
Company included elsewhere in this Prospectus.

20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements of the Company and the notes thereto, included
elsewhere in this Prospectus. The matters discussed in this Prospectus, other
than historical information, and, in particular, information regarding future
revenue, earnings and business plans, intentions and goals, consist of forward
looking information under the Private Securities Litigation Reform Act of 1995,
and are subject to and involve risks and uncertainties which could cause actual
results to differ materially from the forward-looking information. These risks
and uncertainties, include, but are not limited to, those identified in the
"Risk Factors" section of the Prospectus, as well as general economic
conditions, general levels of market rates of interest and industry trends.

OVERVIEW

The Company's past sales growth has been due, in part, to the acquisition
of four computer and office automation supply companies and the assets of
three such businesses over the past six years. The Company intends to
significantly increase the scope of its operations through additional
acquisitions. The Company continues to evaluate potential acquisitions and to
identify and have preliminary discussions with potential acquisition
candidates. Except for non-binding letters of intent by and between the
Company and certain other computer supply distributors for the acquisition of
the assets and liabilities or the stock of such other distributors which are
currently in place, and which may be entered into from time to time, there
are, as of the date of this Prospectus, no agreements, arrangements or
understandings between the Company and any other party relating thereto.
There can be no assurance that any acquisition can or will be consummated on
terms favorable to the Company, or at all.

Further competition in the non-impact printing supplies and projection
presentation products markets is expected to continue to have a negative effect
on the Company's gross profit percentage. While overall gross profit is expected
to increase as a result of the Company's acquisitions, the Company's gross
profit percentage is expected to be lower as a result of increased competition
and the fact that DDP's profit margins are anticipated to be lower than the
gross profit margins of the Company as a whole.

21
<PAGE>
RESULTS OF OPERATIONS

As an aid to understanding the Company's operations on a comparative basis,
the following table has been prepared to set forth certain statement of
operations and other data for 1994, 1995 and 1996 and for the six months ended
June 30, 1996 and June 30, 1997.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1994 1995 1996
---------------------- ---------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ----------- --------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales............................................ $ 35,690 100.0% $ 43,321 100.0% $ 63,428 100.0%
Cost of sales........................................ 28,250 79.2 34,642 80.0 52,061 82.1
--------- ----- --------- ----- --------- -----
Gross profit....................................... 7,440 20.8 8,679 20.0 11,367 17.9
Selling, general and administrative expenses......... 6,219 17.4 7,125 16.4 8,891 14.0
Non-cash compensation expense........................ -- -- -- -- 280 0.4
--------- ----- --------- ----- --------- -----
Operating income................................... 1,221 3.4 1,554 3.6 2,196 3.5
Interest expense..................................... 204 0.5 274 0.6 312 0.5
Other (expense)/income............................... 11 -- 22 -- (11) --
--------- ----- --------- ----- --------- -----
Income before income taxes......................... 1,028 2.9 1,302 3.0 1,873 3.0
Provision for income taxes........................... 418 1.2 509 1.2 756 1.2
--------- ----- --------- ----- --------- -----
Net income........................................... $ 610 1.7% $ 793 1.8% $ 1,117 1.8%
--------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- -----
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------------------------
1996 1997
---------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT
--------- ----------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales................................................................ $ 26,247 100.0% $ 42,350 100.0%
Cost of sales............................................................ 21,162 80.6 35,008 82.7
--------- ----- --------- -----
Gross profit........................................................... 5,085 19.4 7,342 17.3
Selling, general and administrative expenses............................. 4,033 15.4 5,758 13.6
--------- ----- --------- -----
Operating income....................................................... 1,052 4.0 1,584 3.7
Interest expense......................................................... 142 0.5 25 0.1
Other income............................................................. 11 -- 27 0.1
--------- ----- --------- -----
Income before income taxes............................................. 921 3.5 1,586 3.7
Provision for income taxes............................................... 382 1.4 642 1.5
--------- ----- --------- -----
Net income............................................................... $ 539 2.1% $ 944 2.2%
--------- ----- --------- -----
--------- ----- --------- -----
</TABLE>

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

NET SALES. Net sales for the six months ended June 30, 1997 increased by
$16.1 million, or 61.4%, to $42.3 million from $26.2 million for the six
months ended June 30, 1996. Approximately 82.7% of the increase resulted from
the acquisition of DDP on May 30, 1996 and 6.0% of such increase was due to
the acquisition of IDSC on April 30, 1997. The remaining increase was
primarily a result of increased sales to the Company's current customer base.

GROSS PROFIT. Gross profit for the six months ended June 30, 1997 increased
by $2.3 million, or 44.4% to $7.3 million from $5.1 million for the six months
ended June 30, 1996. Gross profit as a percentage of net sales for the six
months ended June 30, 1997 was 17.3% compared to 19.4% for the six months ended
June 30, 1996. The decrease in the gross profit percentage was due primarily to
the acquisition of DDP

22
<PAGE>
which has lower operating gross margins primarily due to volume discounts
associated with sales to other computer supply dealers.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the six months ended June 30, 1997 increased by $1.7
million, or 42.7% to $5.7 million from $4.0 million for the six months ended
June 30, 1996. Approximately 39.7% of the increase resulted from increased
salary expenses, while 12.3% was due to increased commission expense resulting
from the Company's increased sales volume. The remainder of the increase in
selling, general and administrative expenses resulted primarily from the
acquisition of DDP and IDSC. As a percentage of net sales, selling, general and
administrative expenses were 13.6% for the six months ended June 30, 1997
compared to 15.4% for the six months ended June 30, 1996. This decrease as a
percentage of sales reflects the Company's ability to support increased sales
volumes without a significant increase in its overhead structure.

OPERATING INCOME. Operating income for the six months ended June 30, 1997
increased by $0.5 million to $1.6 million from $1.1 million for the six months
ended June 30, 1996 for the reasons stated above.

INTEREST EXPENSE. Interest expense for the six months ended June 30, 1997
decreased by $118,003 or 82.8% to $24,584 from $142,587 for the six months ended
June 30, 1996 due primarily to the decreased level of indebtedness during 1997.

PROVISION FOR INCOME TAXES. The provision for income taxes for the six
months ended June 30, 1997 increased $260,433 to $642,512 from $382,079 for the
six months ended June 30, 1996. The Company's effective tax rate was 40.5% for
the six months ended June 30, 1997 as compared to 41.5% for the corresponding
period of the prior year.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

NET SALES. Net sales for the year ended December 31, 1996 increased by
$20.1 million or 46.4% to $63.4 million from $43.3 million for the year ended
December 31, 1995. Of this net sales increase, 64.6% was attributable to the
Company's acquisition of DDP in May 1996, while 5.2% of the increase was a
result of increased sales of presentation products. The remaining increase
was primarily a result of increased sales penetration and product offerings
to existing customers. DDP's sales for the three months ended December 31,
1996 were higher than normal due to several one time sales transactions
totaling $1.7 million that may not recur in 1997.

GROSS PROFIT. Gross profit for the year ended December 31, 1996 increased
by $2.7 million or 31.0%, to $11.4 million from $8.7 million for the year ended
December 31, 1995. Gross profit as a percentage of net sales for the year ended
December 31, 1996 was 17.9% compared to 20.0% for the year ended December 31,
1995. The decrease in the gross profit percentage was due primarily to the
acquisition of DDP which had lower operating gross margins, primarily due to
volume discounts associated with sales to other computer supply dealers and
export business.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the year ended December 31, 1996 increased by
$1.8 million, or 24.8% to $8.9 million from $7.1 million for the year ended
December 31, 1995. Approximately 38.5% of this increase was due to increased
salary, bonus and profit sharing expenses, approximately 20.9% was due to
increased commissions expense resulting from the Company's increased sales
volume. As a percentage of net sales, selling, general and administrative
expenses were 14.0% for the year ended December 31, 1996 compared to 16.4%
for the year ended December 31, 1995. The decrease as a percentage of sales
reflects the Company's ability to support increased sales volumes without a
significant increase in its overhead structure.

23
<PAGE>
NON-CASH COMPENSATION EXPENSE. Non-cash compensation expense for the year
ended December 31, 1996 was $0.3 million. This compensation expense related to
stock awards granted to the three selling stockholders of DDP (see Note 12 of
the Notes to the Consolidated Financial Statements for the year ended December
31, 1996).

OPERATING INCOME. Operating income for the year ended December 31, 1996 was
$2.2 million as compared to $1.6 million for the year ended December 31, 1995,
an increase of $0.6 million or 41.3%. This increase was primarily due to
increased sales volume, the acquisition of DDP and improved operating
efficiencies.

OTHER (EXPENSE)/INCOME. Other (expense)/income for the year ended December
31, 1996 decreased to $(10,587) from $21,722 for the year ended December 31,
1995.

INTEREST EXPENSE. Interest expense for the year ended December 31, 1996
increased $38,250 to $312,327 from $274,077 for the year ended December 31,
1995. This increase was due primarily to the higher level of indebtedness during
1996, due to the Company's additional inventory purchases. See "Credit
Facility."

PROVISION FOR INCOME TAXES. Provision for income taxes for the year ended
December 31, 1996 increased by $0.2 million to $0.8 million from $0.5 million
for the year ended December 31, 1995. The Company's effective tax rate was 40.3%
compared to 39.1% for the year ended December 31, 1995.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

NET SALES. Net sales for the year ended December 31, 1995 increased by $7.6
million, or 21.4%, to $43.3 million from $35.7 million for the year ended
December 31, 1994. Of this net sales increase, 31.6% of the increase was
attributable to the Company's acquisition of Paper Rolls in June 1994, while
19.0% was attributable to increased sales of presentation products. The
remaining increase was primarily a result of increased sales penetration and
product offerings to existing customers.

GROSS PROFIT. Gross profit for the year ended December 31, 1995 increased
by $1.2 million, or 16.7%, to $8.7 million from $7.4 million for the year ended
December 31, 1994. Gross profit as a percentage of net sales for the year ended
December 31, 1995 was 20.0% compared to 20.8% for the year ended December 31,
1994. The decrease in the gross profit percentage was due primarily to increased
sales of non-impact printer supplies (laser and ink jet supplies) which have
lower gross margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the year ended December 31, 1995 increased by $0.9
million, or 14.6%, to $7.1 million from $6.2 million for the year ended December
31, 1994. Approximately 37.0% of this increase was due to increased commissions
resulting from the Company's increased sales volume while approximately 14.3%
was due to increased salary and profit sharing expenses. As a percentage of net
sales, selling, general and administrative expenses was 16.4% for the year ended
December 31, 1995 compared to 17.4% for the year ended December 31, 1994. This
decrease as a percentage of sales reflects the Company's ability to support
increased sales volumes without a significant increase in its overhead
structure.

OPERATING INCOME. Operating income for the year ended December 31, 1995
increased by $0.3 million to $1.6 million from $1.2 million for the year ended
December 31, 1994 for the reasons stated above.

OTHER INCOME. Other income for the year ended December 31, 1995 increased
to $21,722 from $10,767 in 1994. This increase was due primarily to interest
income.

24
<PAGE>
INTEREST EXPENSE. Interest expense for the year ended December 31, 1995
increased by $0.1 million, or 34.3%, to $0.3 million from $0.2 million for the
year ended December 31, 1994. This increase was due primarily to an increase in
the interest rate associated with the Company's short-term line of credit and to
a lesser extent an increase in amounts outstanding under the line of credit.

PROVISION FOR INCOME TAXES. The provision for income taxes for the year
ended December 31, 1995 increased $0.1 million to $0.5 million from $0.4 million
for the year ended December 31, 1994. The Company's effective tax rate was 39.1%
for the year ended December 31, 1995 compared to 40.7% for the year ended
December 31, 1994.

25
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

On November 15, 1996, the Company completed its initial public offering of
1,150,000 shares of its Common Stock (including the underwriters' overallotment
option of 150,000 shares which closed on December 13, 1996) at a price of $8.50
per share. Net proceeds to the Company after deducting underwriting fees and
expenses amounted to $7.8 million. The net proceeds were used to repay all
outstanding indebtedness under the Bank line of credit and for other general
corporate purposes.

Net cash flows used in operating activities totaled $0.6 million for the
first six months of 1997 compared to $0.2 million used by operating activities
during the first six months of 1996. The change in net cash flows from operating
activities in the first six months of 1997, compared to the first six months of
1996, was due primarily to a decrease in accounts payable. Net cash used in
operating activities for the years ended December 31, 1996 and 1995, were $1.3
million and $0.1 million, respectively, and net cash provided by operating
activities was $0.7 million for the year ended December 31, 1994. The increase
in net cash flows used in operations in 1996 primarily related to increases in
working capital requirements to support the Company's expanded business
activities. The net cash used in operating activities for the year ended
December 31, 1995 resulted primarily from an increase in inventories of $0.6
million and accounts receivable of $0.1 million as a result of increased working
capital requirements resulting from increased sales activity. Additionally, a
decrease of $0.4 million in accounts payable was due primarily to greater
utilization of favorable discounts provided by the Company's vendors. The net
cash provided by operating activities for the year ended December 31, 1994
resulted primarily from an increase of $1.0 million in accounts payable, offset
by an increase of $1.0 million in accounts receivable and of $0.7 million in
inventories due to increased sales activity.

Working capital amounted to $10.2 million at June 30, 1997 as compared to
$1.9 million at June 30, 1996, which resulted primarily from the proceeds
received in the Company's initial public offering in November 1996. At December
31, 1996, working capital amounted to $10.2 million compared to $1.5 million at
December 31, 1995, which resulted primarily from the proceeds of the Company's
initial public offering, an increase in accounts receivable and inventories, and
a decrease in borrowings, partially offset by an increase in accounts payable.

Net cash used in investing activities was $1.2 million for the six months
ended June 30, 1997 versus $0.04 million for the six months ended June 30,
1996. The net cash used in investing activities for the six months ended June
30, 1997 primarily reflected the acquisition of IDSC in April 1997. Cash used
in investing activities for the years ended December 31, 1994, 1995, and 1996
was $0.7 million, $0.4 million, and $0.6 million, respectively. The use of
cash for the year December 31, 1994 was due primarily to the acquisition of
Paper Rolls. The use of cash for the year ended December 31, 1995 was due to
capital expenditures and investments in officer life insurance policies. The
use of cash for the year ended December 31, 1996 was due primarily to an
increase in working capital requirements.

Cash provided by financing activities for the six months ended June 30,
1997 was $1.1 million and was $0.1 million, $0.4 million, and $2.6 million
for the years ended December 31, 1994, 1995, and 1996, respectively. Cash
provided by financing activities for such periods resulted primarily from
borrowings under the Company's Credit Facility.

Capital expenditures for the six months ended June 30, 1997 of $166,015 were
used primarily to upgrade the computer system at DDP and the purchase of
additional distribution vehicles. For fiscal year 1997, the Company expects
capital expenditures of approximately $0.3 million (comprised of approximately
$0.2 million to be used for upgrading and enhancing the Company's management
information systems and approximately $0.1 million for capital maintenance
items). Actual expenditures for fiscal 1997 may be greater than budgeted amounts
depending on the level of acquisition activity and other factors.

The Company believes that its cash on hand, borrowing capacity under the
Credit Facility, capital resources, cash flows and the proceeds from the
Offering will be sufficient to fund its ongoing operations

26
<PAGE>
and budgeted capital expenditures through the end of fiscal year 1998, although
actual capital needs may change, particularly in connection with acquisitions
which the Company may make in the future. The Company's long-term requirements
including capital expenditures and acquisitions, are expected to be financed by
a combination of internally generated funds, additional borrowings and other
sources of external financing as needed.

CREDIT FACILITY

In September 1996, the Company increased its line of credit with the Bank
from $6.5 million to $15.0 million in order to facilitate the planned expansion
of the Company's business activities, including acquisitions. The Credit
Facility matures on September 11, 1998.

The amount of the Credit Facility that will be available to the Company
may not exceed the lesser of $15.0 million or an amount equal to the sum of:
(i) 85.0% of the net book value of all eligible receivables (i.e., those
receivables less than 90 days old, except that all receivables from any
particular customer will be ineligible if more than 15.0% of the total due
from such customer are aged 90 days or more) plus (ii) an amount equal to the
lesser of either 50.0% of the then value of all inventory, not to exceed
45.0% of the aggregate unpaid principal balance less the amount secured by
inventory acquired by the Company from Hewlett-Packard and not yet paid for,
or if advances are made against foreign account receivables, not to exceed
$2.0 million (the "Borrowing Base"). Under the Credit Facility, the Company's
borrowing availability at June 30, 1997 approximated $9.3 million. At June
30, 1997, $1.3 million was outstanding under the Credit Facility.

The Borrowing Base may be changed by the Bank, in its sole discretion, from
time to time. Borrowings under the Credit Facility bear interest, at the
Company's option, (i) on amounts in excess of $500,000, at the applicable London
Interbank Offered Rate ("LIBOR") per annum determined by the Bank plus 2.0%,
adjustable at the end of each contract period (one, two, three, four or six
months), as defined in the Credit Facility, or (ii) at the Bank's applicable
prime rate (as defined in the Credit Facility). Interest on the Credit Facility
is payable in arrears on the last day of each month and at maturity, except that
interest on loans bearing interest utilizing the LIBOR option is payable on the
last day of the contract period and at maturity, unless the contract period is
longer than 90 days in which case interest is payable every three months.

The Company's ability to utilize the LIBOR option is subject to certain
conditions set forth in the Credit Facility, including the condition that the
LIBOR option must adequately compensate the Bank for making such loan. If the
interest option selected by the Company is deemed ineffective by the Bank, the
Company will be required to pay the Bank interest at the prime rate until an
effective LIBOR election is made. Amounts under the Credit Facility are
available for borrowings and stand-by letters of credit to finance the Company's
working capital requirements and acquisitions. The Company believes that the
amounts available for borrowing under the Credit Facility are sufficient to fund
its current operations. Under the terms of the Credit Facility, the Company must
pay the Bank a quarterly commitment fee of 0.25% of the daily difference between
$15.0 million and the aggregate unpaid principal outstanding balance under the
Credit Facility.

The principal amount of the Credit Facility may be prepaid without premium
or penalty unless the amount prepaid is subject to the LIBOR option, in which
event the Company would be obligated to pay to the Bank accrued interest, if
any, and a premium based on the principal amount paid and computed for the
period from the date of the last day of the contract period for the amount
subject to the LIBOR option at a rate equal to the excess, if any, of the LIBOR
rate over the bond equivalent yield for U.S. Treasury debt securities for a term
similar to the contract period. Moreover, if, in the Bank's opinion, any event
has occurred which increases the cost of funding or maintaining the LIBOR option
or reduces the amount of any payment to be made to the Bank in respect thereof,
the Company will be obligated to pay to the Bank an amount equal to such cost
increase or reduced payment, as the case may be, and the Company must also pay
to the Bank any amount which reduces the Bank's rate of return and requires the
Bank to increase its capital.

27
<PAGE>

The indebtedness under the Credit Facility is secured by substantially
all of the assets of the Company, including accounts receivable, equipment
and inventory. In addition, the Credit Facility requires that the Company
maintain a tangible net worth of $3.2 million in 1997 and increasing by an
amount equal to 50.0% of the Company's net income annually thereafter,
maintain a debt to tangible net worth ratio of 450.0% and annual pre-tax
interest coverage (net income plus interest expense plus income tax) of
150.0% or more of the Company's annual interest expense. The Company was, at
June 30, 1997, and is as of the date hereof, in compliance with these
financial covenants.

Events of default under the Credit Facility include, among other things, the
failure to pay interest and/ or principal when due, the failure of the
representations or warranties of the Company to be true and correct, the failure
or repudiation of the performance of the Credit Facility by the Company, any
default of the Company on any other indebtedness where such creditor has the
right to accelerate the maturity of such indebtedness, the entry of any judgment
against the Company, the failure of the Company to provide information to the
Bank, the use of the proceeds of the Credit Facility for any purpose not in the
ordinary course of the Company's business or the occurrence of any event which,
in the Bank's judgment, is likely to have a material adverse effect on the
financial condition, properties or business operations of the Company, or if the
Bank believes that the prospect of payment or the performance of any obligation
evidenced by the Credit Facility is impaired. The occurrence of an event of
default will give the Bank the right to immediately terminate the Credit
Facility and declare any indebtedness outstanding thereunder immediately due and
payable.

The Credit Facility further states that it will be an event of default if
the Company, without first providing to the Bank prior written notice: (i) uses
advances under the Credit Facility to acquire less than a majority interest in
any company or venture; (ii) becomes a party to any merger or consolidation,
purchases all of the assets or business of any corporation or business
enterprise, creates or acquires any subsidiary or makes any investment in any
stock or other equity securities of any kind; or (iii) becomes a party to any
joint venture or partnership, sells or transfers any equity interest in any
subsidiary, or issues any equity interest. Moreover, the Company may not, except
in connection with certain acquisition transactions, without the Bank's prior
consent, make loans or advances to others or borrow any money unless it is
subordinated to borrowings under the Credit Facility, or become a guarantor of
any kind.

INFLATION

Certain of the Company's product offerings, particularly paper products,
have been and are expected to continue to be subject to significant price
fluctuations due to inflationary and other market conditions. The Company is
generally able to pass such increased costs on to its customers through price
increases, although the Company may not be able to adjust its prices
immediately. In general, the Company does not believe that inflation has had a
material effect on its results of operations in recent years, and the Company
believes that technological advances have caused its prices on certain products
to decrease.

INVENTORY MANAGEMENT

The Company manages its inventory by maintaining sufficient quantities of
the most frequently ordered products to achieve high order fill rates while
at the same time attempting to maximize inventory turnover rates. The Company
does not maintain any inventory of certain items, which items, when ordered
from the Company are drop-shipped (i.e., shipped from the manufacturer's
loading dock) directly to the Company's customers. While the Company sells
more than 12,940 stock keeping units ("SKUs") or items of merchandise,
approximately 1,800 SKUs account for approximately 70.0% of the Company's
revenues. Consequently, the Company is continually attempting to identify
slow moving inventory by use of its computer software applications and delete
those SKUs whenever possible in order to maximize inventory turns. Inventory
balances will fluctuate as the Company adds new product lines, when it makes
large purchases from suppliers to take advantage of attractive terms and when
certain inventory items are deleted. Inventory turns on an annual basis have
declined from 13 times for the year ended December 31,

28
<PAGE>
1995 to 12 times for the year ended December 31, 1996. For the semi-annual
period ended June 30, 1997, inventory turns were six, on an annualized basis.
These decreases reflect the Company's purchases during such periods in larger
quantities in order to take advantage of volume purchasing pricing structures
from its vendors. The Company's purchasing decisions are made from time to time
based upon incentive pricing programs offered by its vendors.

The Company permits its customers to return defective products (most of
which are then returned by the Company to the manufacturer) and incorrect
shipments for credit against other purchases. During the last three years and
for the six months ended June 30, 1997, the Company's net expense for returns of
the Company's consumable supply products has not been material. To reduce the
risk of loss to the Company due to manufacturer price reductions and slow moving
or obsolete inventory, the Company's agreements with certain manufacturers,
including most of its major suppliers, contain provisions which permit "stock
balancing" (the return of certain products) and price protection, subject to
certain restrictions, pursuant to which the Company obtains credit against
future purchases if the inventory is not sold or if the manufacturer lowers
prices on previously purchased inventory. See "Business--Suppliers."

29
<PAGE>
BUSINESS

GENERAL

The matters discussed in this Prospectus, other than historical information,
and, in particular, information regarding future revenue, earnings and business
plans, intentions and goals, consist of forward looking information under the
Private Securities Litigation Reform Act of 1995, and are subject to and involve
risks and uncertainties which could cause actual results to differ materially
from the forward-looking information. These risks and uncertainties, include,
but are not limited to, those identified in the "Risk Factors" section of the
Prospectus, as well as general economic conditions, general levels of market
rates of interest and industry trends.

OVERVIEW

The Company is a distributor of computer and office automation supplies and
accessories, including a line of computer projection presentation products,
principally in the midwest, northeast, southeast and northwest regions of the
United States and in certain foreign countries. The Company distributes over
1,800 different core products to middle market and smaller companies and to
governmental, educational and institutional end-user customers, including
federal, state and local governmental agencies, universities and hospitals and,
to a lesser extent, to computer supply dealers. An end-user is the final
customer in the chain of distribution who will utilize the product sold by the
Company.

The Company's growth in sales is due primarily to the acquisition of four
computer and office automation supply companies and the assets of three other
such businesses over the past six years. Sales growth can also be attributed
to the high level of customer satisfaction which the Company believes is
based on the following factors: personal service using a highly knowledgeable
and motivated sales force; fulfillment of customer orders on an overnight
basis; use of the most economic and expeditious shipping routes; and
automated procedures for inventory control, order picking and billing which
are supported by the Company's proprietary computer software applications.
The Company plans to continue to focus on achieving a high level of customer
satisfaction and intends to emphasize the acquisition of other computer and
office automation supply companies to increase its sales growth and expand
its presence in other markets.

The Company believes that it has a lower selling and administrative expense
structure due to its ability to sell without the use of retail locations and its
ability to limit its products line solely to computer supplies. The Company
believes that its lower selling and expense structure afford it a competitive
advantage over traditional contract stationers and large office suppliers. Based
upon annual revenues, management believes that the Company is the largest
independent end-user computer and office automation supply distributor in the
country.

The Company sells primarily nationally known, name-branded products
manufactured by approximately 500 original equipment manufacturers, including
Hewlett-Packard, Lexmark and Imation for computer supplies and by Proxima, Epson
and LightWare for projection presentation products. The Company's products
include consumable supplies such as laser toner, copier toner, facsimile machine
supplies, ink jet cartridges, printer ribbons, diskettes, computer tape
cartridges and accessories, including cleaning kits and media storage files, and
computer projection presentation hardware which permits the large-scale, high
resolution projection of computer generated slides for presentation at meetings,
seminars, lectures and other similar multiple person gatherings. The Company's
products are used in, or in conjunction with, a broad range of computer and
office automation products such as mainframe, mini, personal, laptop and
notebook computers, laser and ink jet printers, photocopiers, fax machines and
data storage products.

The Company's customers place orders directly with one of the Company's
sales representatives, by telephone, facsimile or by EDI, utilizing the
Company's customized facsimile order forms or its comprehensive catalog. Very
Important Customers ("VICs") are given priority treatment by the Company.

30
<PAGE>
The Company operates one centralized distribution center in Dayton, Ohio and
nine smaller regional distribution centers in Rochester, New York, Louisville,
Kentucky, Chicago, Illinois, Salt Lake City, Utah, Ann Arbor, Michigan, Spokane,
Washington, Atlanta, Georgia, Portland, Oregon and Leeds, England. Each of the
Company's other 31 sales offices also maintain a limited inventory of frequently
ordered products in order to facilitate same day delivery. Most of the Company's
U.S. shipments are shipped via either United Parcel Service ("UPS") or Roadway
Package System ("RPS"), both of which provide a discounted rate to the Company
which enables the Company to offer to its customers next business day or second
business day delivery. The Company charges its customers delivery rates based on
the customer's purchase and on competition on a local and national level.

The Company was incorporated in September 1980 and commenced business
operations in March 1981. The Company was founded by Thomas C. Winstel and
Richard A. Newkold, both of whom were previously employed as computer supply
salesmen with another company. Net sales in 1981 were $187,000. By 1987, annual
sales had reached approximately $3.5 million and the Company hired Albert L.
Schwarz to provide the Company with professional executive guidance. The
Company's first acquisition was an asset purchase in 1991. In April 1993, the
Company acquired for cash 100.0% of the outstanding shares of Datron. At that
time, Datron's annual net sales were approximately $2.5 million. In June 1994,
the Company acquired for cash the assets and assumed certain liabilities of
Paper Rolls. At that time, Paper Rolls' annual net sales were approximately $3.2
million. For continuity and local name recognition purposes, each of Datron and
Paper Rolls is represented to the public to be a "division" of the Company,
although there are no internal consequences of such nomenclature. In both
acquisitions, the Company was able to retain existing senior management by
entering into non-competition and employment agreements, although in the Datron
acquisition, the chief executive officer and sole stockholder of Datron did not
remain. In May 1996, the Company acquired DDP, a computer and office automation
supply company, which purchases and sells products in the domestic and
international wholesale marketplace. In April 1997, the Company purchased
substantially all of the assets of IDSC for cash and shares of the Company's
Common Stock. At that time, IDSC annual net sales were approximately $7.0
million. IDSC is being operated as a division of the Company. In July 1997, the
Company acquired both DATA and Force 4 for shares of Common Stock, and for cash
and Common Stock, respectively. While DATA is being operated as a division of
the Company, Force 4 is being operated as a wholly-owned subsidiary of the
Company. Each of IDSC, DATA and Force 4 sell computer and office automation
supplies primarily into the end-user market. DATA has a particular expertise in
the sale of back-up power supplies, a niche market not previously filled by the
Company. See "--Business Strategy--Acquisition Strategy."

Prior to May 30, 1996, the Company was closely held by ten stockholders,
including Messrs. Albert L. Schwarz, Thomas C. Winstel, Richard A. Newkold,
Roger E. Turvy, and John C. Huffman, III, all of whom (except for Mr. Newkold
who has since retired) are officers of the Company, and by five other
individuals, four of whom were employees of the Company and one of whom was the
Company's corporate counsel. On April 25, 1996, the Company, the above-named
officers and the corporate counsel entered into a Stock Purchase Agreement (the
"Agreement") with LLC to sell 70.0% of the Company's issued and outstanding
common stock to LLC for $8.0 million, consisting of cash in the amount of $4.0
million which was paid at the closing of the Agreement and two year, 8.0% senior
promissory notes of LLC (the "LLC Notes") aggregating $4.0 million which were
paid in full in November 1996. The Agreement was closed on May 30, 1996, and, at
that time, three nominees of LLC became members the Board of Directors of the
Company.

LLC is a Maryland limited liability company whose members include Anthony W.
Liberati, the Manager--President and Chief Executive Officer of LLC and the
Chairman of the Board of the Company, Robert G. Hecht, Vice Chairman of the
Board and a director of the Company, Harry F. Radcliffe, the Manager--Secretary
of LLC and a director of the Company, Michael E. Peppel, the Manager--Treasurer
of LLC, the Vice President-Chief Financial Officer of the Company and a former
stockholder and officer of DDP, the FBR Private Equity Fund, L.P. (an affiliate
of which was the investment banking company which sold the Company's Common
Stock in the initial public offering) and the EMTH Partner Investment

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Fund I, a general partnership composed of certain members of the Company's
special counsel. See "Business--Overview," "Certain Transactions," "Principal
Stockholders" and "Legal Matters."

On May 20, 1996, LLC executed a Stock Purchase Agreement (the "DDP
Agreement") with DDP and its three stockholders, Messrs. Joseph R. Hollenshead,
III, David J. White and Peppel (who also were the directors and executive
officers of DDP) to acquire 100.0% of the issued and outstanding shares of DDP
common stock. The DDP Agreement provided that LLC would acquire the business of
DDP and that at the time of such acquisition the assets of DDP would be equal to
its liabilities. In consideration therefor, LLC agreed to loan to each of
Messrs. Hollenshead and White $125,000 for a term of one year with interest at
5.0%, the principal and interest to be due at maturity. Pursuant to the DDP
Agreement, if DDP generated pre-tax income of $250,000 during the year ended
December 31, 1996, LLC would cancel such loans. The loans were cancelled at
December 31, 1996.

It was the intent of LLC to combine the businesses of DDP and the Company.
Accordingly, LLC provided the DDP stockholders an opportunity to invest in LLC
on the same terms as other LLC investors and negotiated with the management of
the Company to hire the officers of DDP as officers of the Company. In addition,
LLC agreed to provide the three officers of DDP with a stock incentive in the
Company so long as such officers remain employees of the Company (or of DDP, as
a subsidiary of the Company, as applicable), for the years ended December 31,
1996, 1997 and 1998. Under the DDP Agreement, LLC agreed to transfer to each of
the officers of DDP 4,180 shares of Common Stock of the Company at December 31,
1996, 6,855 shares of Common Stock at December 31, 1997, and 5,685 shares of
Common Stock to each of Messrs. Hollenshead and White, and 14,045 shares of
Common Stock to Mr. Peppel, at December 31, 1998. However, upon the consummation
of the initial public offering, all of such shares became immediately vested in
such individuals. The DDP Agreement was also consummated on May 30, 1996. On
that date, LLC contributed 100.0% of the common stock of DDP to the Company,
resulting in DDP becoming a wholly owned subsidiary of the Company.

THE COMPUTER SUPPLY INDUSTRY

The Company estimates that the U.S. computer and office automation supply
market totaled approximately $26.8 billion (at retail) in 1996. Industry sources
indicate that the U.S. market for computer and office automation supplies will
grow at a compound annual rate of approximately 6.8% over the next two years.
The Company believes that the current size of the industry and its potential for
future growth can be attributed to: (i) the increasing automation of the
workplace as evidenced by the widespread use of personal computers ("PCs"),
printers and computer network systems, (ii) the decline in unit prices of
computer hardware and peripherals, making them more affordable to small and
medium sized businesses and individuals, and (iii) the growth in business
presentation and graphics software, which results in the use of projection
presentation hardware, and in more frequent and repeated use of printers, which
typically require a greater amount of consumable products.

The Company believes that advances in printing technologies will further
increase the demand for consumable computer supplies. Printer manufacturers have
lowered the prices of their printers in order to establish a large installed
base. Such companies have come to view the sale of the printer as the
commencement of a relationship with the customer who typically must spend, over
the life of the printer, twice as much on consumable goods as the cost of the
printer itself.

Industry sources estimate that the market for projection presentation
products was approximately $1.0 billion in 1996 and is expected to grow at a
rate of approximately 30% per year. While advances in technology continue to
exert downward pricing pressure on the manufacturers who compete in this market,
the projection presentation products are priced at retail in the range of $2,000
to $8,000 and currently provide for gross margins higher than other products
sold by the Company.

The Company believes that the role of distributors in the computer and
office automation supply industry has increased in importance in recent years as
an increasing number of end-users find that their

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need for computer supplies have increased dramatically and the number of
products to choose from and the issues of compatibility of products have
proliferated. The Company is able to serve such users by maintaining a
knowledgeable and skilled direct and telephone marketing sales force and by
maintaining the capability of filling most orders on the same or next business
day with delivery on the next business day.

THE COMPANY'S MARKET

The Company believes that its primary market consists of small and medium
size businesses and, to a lesser extent, large businesses, governments and
institutions. The small business segment consists of small businesses having 20
or fewer white-collar employees which has traditionally been served by small
independent retailers located in close proximity to these customers and who
generally sell at the manufacturer's suggested list prices. More recently, this
segment has been targeted by the retail office products superstores and direct
mail order companies, seeking to increase market share by offering lower prices
and a wider product selection. The medium size business segment of this market
consists of a broad range of business and other office automation product users
having 20 to 100 white collar employees. This segment has been historically
serviced by traditional contract stationers and full-service office products
distributors, and to a lesser extent by small local retailers and direct mail
order companies. The Company believes that such companies do not provide all of
the services that these small and medium size businesses need or desire, such as
customized account histories which can tell customers about their order
histories, customized billing and customized packing and shipping to achieve the
most economical and efficient mode of transport and processing prioritization
for the Company's VICs, all of which are offered by the Company. See
"--Products" and "--Management Information Systems."

The large business segment of the market consists of businesses, governments
and institutions having more than 100 white-collar employees which have
historically been served primarily by traditional contract stationers and full
service office products distributors. These customers, many of which operate at
multiple locations, seek competitively priced products, a high level of
value-added service including next day delivery and account relationship
management, credit terms and other information services. Although many of these
organizations have a centralized purchasing function for office and computer
supplies, the Company has found through experience, that such function does not
always serve all departments of these organizations and that certain purchasing
authority has become decentralized. As a result, the Company's sales force
attempts to visit the central purchasing manager as well as the computer network
manager at the subject organization, the PC coordinator, the facilities manager
and the office manager at the subject organization, each of whom may have
different computer supply needs and may have a budget to fulfill such needs.

The Company operates in all business segments of the computer and office
automation supply distribution industry. Historically, the corporate computer
supply and office automation distribution segment has been populated by numerous
contract stationers and computer supply companies, most of which operate in only
one metropolitan area and have annual sales of less than $15.0 million. However,
as the computer and office automation supply distribution industry continues to
rapidly consolidate, in large measure as a result of the consolidation of the
office products industry, the Company believes that many smaller companies will
be unable to effectively compete and will stagnate, be acquired by larger
companies or will be closed. Based upon annual revenues, the Company believes
that it is the largest independent end user computer and office automation
supply company in the United States. See "--Competition."

Unlike the computer hardware or office equipment industry, the Company
believes that the computer and office automation supply industry is not
generally subject to the risk of rapid technological advances and subsequent
product obsolescence. In general, the demand for computer supplies is not
dependent on the level or type of computer hardware or office equipment sales in
any particular year, but rather reflects the amount and type of equipment
already in use (the "installed base"). As a result, the consumable needs for any
particular computer or office equipment will often continue for an extended
period of time, even after the manufacture of such computer or office equipment
is discontinued. For example, the Company

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expects that sales of all-in-one toner cartridges for the Hewlett-Packard Series
II laser printer engine are projected to continue through 1997 even though this
particular laser printer engine was discontinued by the manufacturer in late
1992. Nevertheless, the Company attempts to insulate itself from the risk of
technological obsolescence faced by manufacturers by: (i) distributing a wide
range of brand-name products so that the Company is not dependent upon the
success of any particular computer or office equipment manufacturer, (ii)
carrying primarily consumable supplies for computer or office equipment which
the Company believes has a substantial installed base, and (iii) entering into
agreements with major suppliers under which the Company can return slow-moving
inventory.

BUSINESS STRATEGY

The Company believes that its growth has been primarily attributable to the
Company's acquisition strategy as well as the efforts of its highly trained and
highly motivated direct sales force which engages, on a daily basis, in
face-to-face sales calls with the Company's customers, and to a lesser extent,
in telephone direct marketing. Using the Company's sophisticated, on-line data
base, the Company's salespeople are able to access their customer's sales
history (which includes quantity, price and margin information) and provide the
customer with individualized price and quantity quotations at the time of the
call. This system allows the salesperson maximum flexibility when responding to
customer inquiries and concerns, especially those relating to pricing and
delivery. The Company believes that this ability to be immediately responsive to
the customer's needs provides the Company with a competitive advantage. The
Company also attributes its growth to its wide selection of popular products at
competitive prices, its precise, double-checked picking and packing ability,
same day order processing and shipment, same or next business day delivery and
the quality and breadth of its value-added customer services, such as its VIC
priority treatment, customized billing, customer-dedicated account
representatives, and automated order tracking.

The Company's business strategy seeks to build on its strengths as a sales
and service oriented business to increase its market share and achieve continued
sales and earnings growth. In particular, the Company intends to implement its
strategy by: (i) expanding the scope of its operations, primarily through
strategic acquisitions of computer and office automation supply distribution
companies in metropolitan markets in the United States and overseas; (ii)
increasing its revenues from its existing and new customer base; and (iii)
decreasing its expenses by utilizing technology to enhance the efficiency of its
operations.

ACQUISITION STRATEGY. Since 1991, the Company has acquired four operating
computer and office automation supply companies and the assets of three other
such businesses. In August 1991, the Company purchased the inventory of
Datawares Computer and Word Processing Supplies, Inc., Pittsburgh, Pennsylvania
("Datawares") from Datawares' lender. In that transaction, the Company acquired
Datawares' right to distribute products for Hewlett-Packard and obtained
Westinghouse Electric Corporation as a customer. On May 1, 1993, the Company
purchased the stock of Datron Computer Products, Inc. for cash and assumed
liabilities plus certain payments over a five year period ending on May 1, 1999
for an agreement with the former owner not to compete. If the Datron gross
margin exceeds $931,636 on an annual basis through June 15, 1999, the Company is
obligated to make additional annual payments equal to 11.0% of such excess, not
to exceed $17,520 in any one year. No additional payments were made in 1994 or
1995 but $954 was paid in 1997. In addition, the Company entered into a one year
employment agreement with Datron's sole stockholder. Datron's revenues for the
12 months ended April 30, 1993 were approximately $2.7 million. The Company
purchased the assets of Paper Rolls and Computer Supplies, Inc. on July 1, 1994
for cash and agreed to pay certain amounts over a four year period beginning
July 1, 1994 for agreements with the former owners not to compete and for
goodwill. In addition, the Company entered into four year employment agreements
with the owners of Paper Rolls, including, John Schwarz, Jr. and Robert Schwarz.
Revenues for Paper Rolls for the twelve months ended June 30, 1994 totaled
approximately $3.3 million. In May 1996, LLC acquired DDP from its stockholders
and contributed 100.0% of the stock of DDP to the Company. The Company received
assets of DDP totaling $2.7 million and assumed liabilities of DDP totaling $2.7
million. Revenues for DDP for the 12 months ended May 30, 1996 were

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$12.6 million. See "Certain Transactions--Related Party Transactions--Other
Transactions." The Company also purchased substantially all of the assets of
IDSC on April 30, 1997 for cash and a number of shares of Common Stock. In
connection with the acquisition, the Company entered into a one year
employment agreement with one of the stockholders of IDSC. As a result, the
Company received assets of IDSC totaling $1.2 million and assumed liabilities
of IDSC totaling $0.9. Revenues for IDSC for the twelve months ended April
30, 1997 approximated $6.4 million. On July 1, 1997, the Company acquired
DATA for cash and a number of shares of Common Stock. In connection with the
acquisition, the Company entered into two year employment agreements with the
two principal stockholders of DA. As a result, the Company acquired assets of
DATA totaling $1.1 million and assumed liabilities of DATA totaling $0.6
million. Revenues for DATA for the twelve months ended June 30, 1997
approximated $6.5 million. On July 15, 1997, the Company acquired Force 4 for
cash and a number of shares of Common Stock. In connection with the
acquisition, the Company entered into a one year employment agreement with
the sole stockholder of Force 4. As a result, the Company received assets of
Force 4 totaling $1.4 million and liabilities totaling $0.8 million. Revenues
for Force 4 for the twelve months ended June 30, 1997 approximated $12.2
million. None of the acquisitions made during 1997 to the date of this
Prospectus, individually or in the aggregate, had a material impact on the
Company's financial condition or results of operations. (The financial
information related to the acquired entities presented in this paragraph,
except as it relates to DDP, is derived from unaudited financial information).

The Company intends to continue its aggressive acquisition strategy of
entering new markets domestically and internationally on an opportunistic basis
and to acquire end-user computer supply and office automation supply companies
and to hire certain experienced sale representatives in and outside the
Company's current market areas, some of whom may be constrained from working in
their present locations for a period of time. The typical target company profile
for the Company's acquisition strategy is a computer and office automation
supply distributor with a large middle-market corporate end-user business in a
major metropolitan area with sales of between $5.0 to $50.0 million. Such
companies are attractive acquisition candidates because: (i) the Company
believes that such companies have limited growth potential at their current
revenue size in such markets; (ii) of the Company's knowledge of, and existing
personal or business relationships with, many of the potential acquisition
targets; (iii) the Company's strategy differs significantly from the strategy of
the large office products consolidators in that the Company does not plan major
employee terminations upon acquisition but expects to maintain the target
company's sales force while integrating the acquired company's operating and
financial systems; (iv) of the Company's ability to provide such target
company's sales force with expanded product lines to increase their commission
income due to the Company's in-house technical support, broad supplier
relationships and the breadth of its product line; (v) of the Company's
intention to utilize the target company's niche markets and expertise in areas
not focused on by the Company to cross-sell to existing customers; and (vi) of
the Company's management style which provides its sales representatives with
significant autonomy. The Company believes that it is currently the only company
focusing strictly on acquiring end-user computer supply and office automation
distribution companies.

The Company intends to utilize its Common Stock to fund acquisitions because
it believes that such shares will be valued by the market to reflect the
Company's sales and earnings growth potential, the use of Common Stock is
tax-advantaged to the seller because no income tax is due until such shares are
sold and the public market should provide sellers with sufficient liquidity for
their personal and estate planning purposes. The Company may also use cash for
some or all of the purchase consideration. Such cash will be borrowed by the
Company under the Credit Facility, or, to a lesser extent, generated from
operations. See "Risk Factors Financing for Acquisitions; Additional Dilution,"
"--Financing for Acquisitions; Leverage" and "--Possible Need for Additional
Financing to Implement Acquisition Strategy" for additional information relating
to the considerations concerning the financing of such acquisitions.

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<PAGE>
REVENUE STRATEGY. Another element of the Company's strategy to increase
sales revenues is the initiation of relationships with new customers. This
strategy involves the expansion of the Company's direct sales force through the
acquisition of businesses in different markets and by providing greater
training, support and sales leads to its existing sales force to permit them to
work more efficiently and obtain new customers. Sales growth will also depend
upon the Company having its sales force emphasize vertical marketing,
cross-selling and add-on sales in order to increase its current average order
size. This will be accomplished by learning more about the customer's needs and
purchase habits and making such information available to the sales force at the
time of the sales call through the Company's information management system. The
Company will also emphasize the sales of the higher margin, state-of-the-art LCD
projection presentation products, which have transformed the art of presentation
graphics from transparencies and 35mm slides to highly complex, multi-colored
computer generated presentations. The Company typically does not sell such
products at the lowest price, but offers substantial post-sale technical support
to its customers, free of charge. Such support includes, for the LCD projection
presentation products, set-up and personal operating instruction demonstrations,
telephone technical support and the maintenance of an inventory of hard to find
but commonly needed parts, such as cables and bulbs. The Company believes that
its post-sale service distinguishes it from its competitors who market such
products as commodities and fail to assist the customer if complications arise
after the sale.

The Company further intends to continue to emphasize cost savings by
strengthening its relationship with manufacturers by increasing sales of such
manufacturer's products, which is expected to result in better discounts and
rebates and more cooperative advertising support and purchasing computer
supplies from foreign and domestic sources when the price offered makes it
attractive to do so. Prices on products carried by the Company may vary from
market to market based on the supply and demand for such products on a global
basis. Management of the Company has been able to take advantage of temporary
over-supply situations in one market by purchasing inventory at what might be
considered "below market" prices in another country. The Company utilizes these
market inefficiencies in order to increase its operating income.

TECHNOLOGY STRATEGY. The Company also intends to improve its operating
efficiencies, cost control and profit margin monitoring through continuous
enhancements to its customized computer system which provides a link between
management, the sales force and the warehouses. The Company's current Management
Information System and telephone system have significant upgrade and growth
potential. It has been the Company's practice to increase MIS and
telecommunication capacity as the Company's sales increase. In 1996 and for the
six months ended June 30, 1997, the Company invested $167,000 and $79,000,
respectively, in hardware in order to upgrade the MIS and telecommunications
systems in contemplation of the Company's expansion plans. The upgrade was
designed to enhance the Company's ability to improve efficiency, monitor its
operations, manage its inventory and offer faster and increased levels of
service to its customers. This emphasis on technology has contributed to a
decline in selling, general and administrative expense as a percentage of net
sales from 19.0% in 1991 to 14.0% in 1996, and to 13.6% for the six months ended
June 30, 1997.

The Company utilizes its MIS and distribution efficiency to identify its
VICs. The Company awards a VIC designation to customers who purchase $40,000 or
more product in any year. If a VIC calls the Company to ask a question or to
order products, that customer is directed to a customer service representative
who can immediately obtain on the representative's computer screen the
customer's past purchase history with the Company. If the customer desires to
order a product, the customer service representative has computer access to
information on, among other things, all prior purchases made by that customer
and the items and quantities ordered and prices paid, the customer's payment
history, and special billing or delivery instructions. If the item desired is
not in stock, the representative's computer screen will display a list of other
products which may be substituted for the specific out-of-stock item. Once the
order is taken, the computer will display complementary items which the customer
may need or which the customer has forgotten about or may want to acquire in
addition to the ordered product. All VICs are

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given priority service by the Company whereby the order is processed in
accordance with the specific instructions of the customer as to billing,
packaging and shipping and before non-VIC orders are processed.

PRODUCTS

The Company distributes an aggregate of over 12,940 different computer and
office automation supplies and related products and regularly updates its
product line to reflect advances in technology and to avoid product
obsolescence. The Company's major product categories can generally be classified
as follows:

NON-IMPACT PRINTER SUPPLIES. Non-impact printer supplies include toner
cartridges, ink jet cartridges, optical photo conductor kits, copier
supplies and fax supplies. Non-impact printers, such as laser printers,
copiers and fax machines, are rapidly growing in popularity and have a wide
range of applications. Sales of non-impact printer supplies accounted for
approximately 45.5% and 35.1% of the Company's total net sales in 1996 and
1995 and 57.5% of the Company's total net sales for the six months ended
June 30, 1997. The Company also sells specialized all-in-one toner
cartridges for laser printers produced by manufacturers such as
Hewlett-Packard and Lexmark.

IMPACT PRINTER SUPPLIES. Impact printer supplies include printwheels,
ribbons, elements, fonts and other consumable supplies used in impact
printers ranging from electronic typewriters to high speed dot matrix
printers. While new technology is moving toward non-impact printing, the
Company believes that a substantial installed base of impact printers, such
as dot matrix printers, is still in use and requires a continuing amount of
consumable computer supplies. Sales of impact printer supplies accounted for
approximately 10.0% and 11.9% of the Company's total net sales in 1996 and
1995 and 7.4% of the Company's total net sales for the six months ended June
30, 1997.

MAGNETIC MEDIA PRODUCTS. Magnetic media products include computer tapes,
data cartridges, diskettes, optical disks, recordable compact disks and
other products which store or record computer information and are used in a
variety of computers ranging from notebook and personal computers to large
mainframe computer systems. Sales of magnetic media products accounted for
approximately 16.4% and 13.2% of the Company's total net sales in 1996 and
1995 and 11.3% for the six months ended June 30, 1997.

PROJECTION PRESENTATION PRODUCTS. Projection presentation products sold
by the Company include overhead projectors, LCD projection panels, LCD
portable projectors, laser pointers, projection screens and other projection
presentation accessories. Sales of projection presentation products
accounted for approximately 7.8% and 9.2% of the Company's total net sales
in 1996 and 1995 and 7.9% of the Company's total net sales for the six
months ended June 30, 1997.

ACCESSORIES AND OTHER PRODUCTS. Accessories sold by the Company include
paper, cleaning supplies, disk storage boxes, data cartridge storage, point
of sale and bar code supplies, racks, surge protection devices, workstation
accessories and anti-glare screens. The Company also sells a limited number
of other products such as transparencies, banking supplies and selected
business machines. Sales of accessories and other products accounted for
approximately 20.3% and 30.6% of the Company's total net sales in 1996 and
1995 and 15.8% of the Company's total net sales for the six months ended
June 30, 1997.

SUPPLIERS

The Company's computer supply and office automation products are
manufactured by approximately 500 original equipment manufacturers, including
Hewlett-Packard, Lexmark, Imation, Proxima and Epson. During 1996 and 1995, and
for the six months ended June 30, 1997, approximately 50.6%, 58.6% and 49.1%,
respectively, of the Company's total net sales were derived from products
supplied by the

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Company's ten largest suppliers. The sale of products supplied by
Hewlett-Packard, Lexmark and Canon accounted for approximately 17.5%, 7.4%,
and 5.9%, respectively, of total net sales for 1996 and 14.6%, 6.6% and
10.1%, respectively, of total net sales for the six months ended June 30,
1997. The Company's projection presentation products are manufactured by five
original equipment manufacturers, including Proxima, Epson and LightWare. The
Company is obligated to purchase products from Hewlett-Packard and Lexmark
based on its distribution agreements with such suppliers in the annual
amounts of $5.0 million and $250,000, respectively.

The Company has entered into written distribution agreements with
Hewlett-Packard, Lexmark, Imation and Proxima and a majority of the other major
suppliers of the products it distributes. As is customary in the industry, these
agreements generally provide non-exclusive distribution rights, have one year
renewable terms, are terminable by either party at any time, with or without
cause, and require notice of certain events such as a change in control of the
Company. The Company notified its major suppliers of such change with no
resulting adverse consequences. The Company considers its relationships with its
major suppliers, including Hewlett-Packard, Lexmark and Imation, to be good and
has recently renewed its direct purchasing agreements with Hewlett-Packard and
several other suppliers. The Company is also discussing with several major
suppliers expanded direct purchasing arrangements in order to provide the
Company with a broader product line. There can be no assurance, however, that a
material change in the Company's relationship with one or more of its major
suppliers will not occur and if it does occur, that it will not have a material
adverse effect on the Company's business. See "Risk Factors--Dependence on
Certain Key Suppliers."

Although the Company purchases most of its products directly from authorized
U.S. manufacturers, the Company also purchases products from foreign and
domestic sources. Depending upon product pricing and availability, the Company
also purchases products from secondary sources, such as wholesalers and selected
dealers, other than from the direct manufacturer. During 1995 and 1996, and for
the six months ended June 30, 1997, approximately 8.2%, 40.2% and 15.4%,
respectively, of the Company's total net sales were derived from the sale of
products purchased from sources other than the direct manufacturer. The Company
utilizes its ability to purchase imported and secondary source products in order
to increase its operating income and provide its customers with competitive
prices. In order to ensure that such imported and secondary source products are
not produced by unauthorized manufacturers, the Company has established various
steps and procedures which it believes enable it to identify unauthorized
products and the Company does not purchase from such sources. There can be no
assurance, however, that the Company will be completely successful in such
efforts or that such imported and secondary source products will continue to be
available.

Certain of the Company's major suppliers offer rebate programs under which,
subject to the Company purchasing certain predetermined amounts of product, the
Company receives rebates of the dollar volume of total rebate program purchases.
The Company also takes advantage of several other programs offered by
substantially all of its suppliers. These programs include price protection
plans under which the Company receives credits against future purchases if the
supplier lowers prices on previously purchased inventory and stock rotation or
stock balancing privileges under which the Company can return slow moving
inventory in exchange for other products.

SALES AND MARKETING

The Company sells its products to approximately 21,000 middle-market and
smaller companies and to governmental, educational, wholesale and retail
customers, including federal, state and local governmental agencies,
universities and hospitals and, to a lesser extent, to computer supply dealers.
The Company's typical customer is a small to medium sized corporate end-user who
relies on distributors like the Company, that provide high levels of value-added
service. No single customer accounts for more than 3.0% of the Company's sales
in 1996 and in the six months ended June 30, 1997. The Company's international

38
<PAGE>
sales accounted for approximately 4.3% of the Company's total net sales for the
six months ended June 30, 1997.

The Company's sales force, as of June 30, 1997, consisted of 69 full-time
sales representatives that work out of the Company's headquarters in Dayton,
Ohio and from its seven sales offices in Ohio, located in Akron/Canton,
Cincinnati, Cleveland, Columbus, Toledo, Zanesville and Youngstown, its four
sales offices in Pennsylvania, located in Erie/Meadville, Davidsville,
Pittsburgh and Philadelphia, its two offices in New York, located in Buffalo and
Rochester and its offices in Portland, Oregon, Spokane and Seattle, Washington,
Idaho Falls, Idaho, Corvallis, Montana, Indianapolis, Indiana, Chicago,
Illinois, Louisville, Kentucky, Atlanta, Georgia, Gastonia, Raleigh and
Pineville, North Carolina, Fountain Inn, Columbia and Greenville, South
Carolina, Orlando and Jacksonville, Florida, Salt Lake City, Utah and Ann Arbor
and Detroit, Michigan in the United States, and its sales office in Leeds,
England. The Company relies on its direct sales force to initiate sales
contacts, follow up on leads provided by manufacturers and to engage in
face-to-face contact with its customers to solicit orders and provide service.

The Company's direct sales force markets the Company's products and services
utilizing the Company's full-color catalog and the sales representative's
ability to quote a price to the customer within a range which maintains the
Company's margins but gives the sales representative the flexibility to price
products competitively. The sales force works with the Company's customers to
simplify and reduce the cost of the computer supply product procurement process
by providing customized facsimile order forms, EDI processing and customized
billing and shipping, and product technical expertise. Outbound telemarketing
sales are primarily directed to federal government and other corporate customers
which have the authority to make their own purchases or are purchasing specific
products under master contracts with specific manufacturers and which, in part,
represent sales in markets in which the Company does not have an office. The
Company ships products to every state in the United States.

The Company believes that its ability to maintain and grow its customer and
revenue base will depend, in part, on its ability to maintain a high level of
customer satisfaction, as well as competitive prices. The Company believes that
its customers typically purchase computer supply and office automation products
based on an established long-term business relationship with one primary
supplier. The Company establishes and maintains its relationships with customers
by assigning a sales and an in-house customer service representative to most
customers. Sales representatives are compensated almost exclusively on a
commission basis based on the gross margin of sales consummated (which may be
augmented by sales bonus programs offered by certain of the Company's suppliers
in connection with a specific product sales campaign) and receive Company
benefits such as incentive recognition trips if quotas are met. Sales
representatives have frequent contact with their customers and share
responsibility for increasing account penetration and providing customer
service. Sales representatives also are responsible for marketing efforts
directed to prospective customers and for responding to all bid and/or contract
requests for their existing and prospective customers. The Company believes that
its personalized marketing strategy offers it a competitive advantage in
responding to the needs of each customer.

The Company also has an in-house marketing department which assists its
sales representatives by generating leads and sales from existing accounts
resulting from direct mail advertisements and questionnaires and from direct
telephone solicitations.

The Company intends to focus its marketing efforts on the small- and
middle-market segments of the computer supply and office automation products
industry. The Company believes that a significant opportunity exists in these
segments and that the larger office products companies have focused more on the
large corporate segment. The Company sells primarily through direct contact with
customers and does not conduct significant mass market advertising. The Company
utilizes manufacturer cooperative advertising support for direct mail
solicitations, product exhibitions and product gifts.

39
<PAGE>
MANAGEMENT INFORMATION SYSTEMS

Since 1992, the Company has invested approximately $0.8 million in hardware,
software and programming upgrades to its MIS, which is run from an IBM AS/400
computer located at its Dayton, Ohio headquarters, and has automated a large
number of key business functions using on-line, real time systems. These on-line
systems provide management with information concerning sales, inventory levels,
customer payments and other operations which are essential for the Company to
operate as a low cost, high efficiency distributor. Ten of the Company's
offices, which represented 84.3% of the Company's sales volume for 1996 and
83.2% of the Company's sales volume for the six months ended June 30, 1997, have
a direct, full-time dedicated link to the Company's in-house computer system.
Non-linked offices dial in daily. The Company maintains two full-time computer
programmers who work on a continual basis to upgrade the Company's software
capability. The "down time" for the Company's computer system has been
negligible to date.

The implementation of these systems has allowed the Company to offer an
advanced EDI program to its customers so that the Company can communicate
directly with their computer systems and automatically process, send and receive
purchase orders, invoices and acknowledgements. The Company is also able to
offer "customer links" to provide customers with direct access to a specialized
Company database to examine pricing, credit information, product description and
availability and promotions information. This link also allows customers to
place orders directly into the Company's order processing system.

The Company has also invested in advanced telecommunications, voice response
equipment, electronic mail and messaging, automated fax technology, scanning,
bar coding, and automated inventory management.

DISTRIBUTION

The Company distributes its products from its ten warehouse facilities,
although most products are shipped from the primary warehouse located in
Dayton, Ohio. The warehouses located in Dayton, Ohio. The warehouses located
in Dayton, Ohio, Louisville, Kentucky, Rochester, New York and Atlanta,
Georgia are electronically linked via a central computer system (the
"Company's Computer System"), which allows for the efficiencies described in
this section with respect to such locations. The other regional warehouses,
located in Chicago, Illinois, Salt Lake City, Utah, Ann Arbor, Michigan,
Spokane, Washington, Portland, Oregon and Leeds, England, are warehouse
locations that the company has acquired in connection with the acquisitions
of DDP and Force 4 and the asset purchase of IDSC (the "Acquired
Warehouses"). As of the date hereof, although the Company has not integrated
the warehouse computer systems of the Acquired Warehouses with the Company's
Computer System and intends to do so as soon as practicable, the non-linked
warehouses dial in daily to the Company's Computer System.

Once an order is input into the Company's Computer System, a
picking ticket is printed in the appropriate warehouse where the inventory is
located. This significantly decreases "stock-outs" and backorders since
products may be shipped from more than one warehouse location to arrive at
the customer's office on the next business day. The picking ticket tells the
warehouse personnel where the merchandise is located. The stock is then
picked and sent to the packing department where the items are double-checked
against the picking ticket, packaged and assigned the most economical and
efficient mode of transport, based upon the customer's desires.

The Company believes that the automation brought about by advances in its
MIS have resulted in: (i) more efficient management of its inventory which, in
turn, has reduced the Company's working capital borrowings; (ii) a consistent
picking accuracy rate of approximately 99.5%, thereby reducing shipping errors
and the associated costs of returned merchandise; (iii) significant savings to
its customers as a result of customizing packaging which takes advantage of
weight discounts and provides for less frequent deliveries; and (iv) improved
customer service through later order acceptance times (currently 8:00 p.m. for
shipments out of Dayton, Ohio) and next business day delivery.

When the Company ships packages with UPS or RPS, it will label the package
with the UPS or RPS bar code for tracking purposes. The Company is then able to
track a customer's package from the time it is put on the courier's vehicle
until delivery. The Company's arrangements with UPS and RPS enable the Company
to offer to its customers a discounted shipping rate and next business day
delivery to most U.S. geographic areas. The Company charges its customers
delivery rates based upon the customer's purchase and competition on a local and
national level offered to the Company by UPS on RPS or, if that rate is
unavailable, the local ground delivery rates for this service. However, in
certain markets where the cost of delivery is highly competitive or free to the
customer, the Company will match its delivery charges with those of its direct
competitors. The Company ships virtually all orders for products in stock on the
same day.

40
<PAGE>
The Company's principal executive offices are currently located in Dayton,
Ohio. With respect to the office and warehouse space used in the ordinary course
of business, all of such space is leased by the Company. The leases expire at
various times through 2006 and some of the Company's leases contain options to
renew. The Company expects that it will be able to renew leases expiring in 1997
at rents which are substantially similar to current rent payments on a square
footage basis.

The Company's sales and warehouse locations are described in the table
below:

<TABLE>
<CAPTION>
LEASE
LOCATION SQUARE FEET EXPIRATION DATE
- -------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Akron, Ohio**....................................................... 500 1997
Ann Arbor, Michigan*................................................ 5,500 1998
Buffalo, New York................................................... 500 1999
Chicago, Illinois*.................................................. 3,114 2000
Cincinnati, Ohio.................................................... 2,400 1999
Cleveland, Ohio..................................................... 120 1998
Cleveland, Ohio..................................................... 95 1998
Columbus, Ohio...................................................... 1,478 1999
Dayton, Ohio*....................................................... 30,000 2006
Detroit, Michigan................................................... 1,075 1997
Idaho Falls, Idaho**................................................ 500 1997
Indianapolis, Indiana............................................... 912 2000
Louisville, Kentucky*............................................... 7,500 2004
Nashville, Tennessee................................................ 166 1998
Pittsburgh, Pennsylvania............................................ 1,725 1999
Portland, Oregon*................................................... 6,000 2000
Rochester, New York*................................................ 12,032 2000
Roswell, Georgia.................................................... 7,789 2000
Salt Lake City, Utah*............................................... 1,200 1999
Seattle, Washington................................................. 1,100 2000
Spokane, Washington*................................................ 15,000 2000
Toledo, Ohio........................................................ 256 1998
Leeds, England*..................................................... 500 1997
</TABLE>

- ------------------------

* All locations listed above are sales offices except those designated with an
asterisk, which locations include Company warehouses.

** The leases are currently on a month to month basis.

The Company has entered into a lease with a partnership composed of certain
executive officers of the Company (the "Draft Partnership") and moved its
Dayton, Ohio offices and warehouse to a newly constructed site also located in
Dayton, Ohio. The lease commenced on November 1, 1996 and will expire on October
31, 2006, unless renewed, at the Company's option, for up to two successive five
year periods. See "Certain Transactions--Related Party Transactions." The new
facility provides the Company with a total of 30,000 square feet of space,
expandable by build-out to 62,000 square feet, of which 15,000 square feet is
being used as warehouse space and the remainder of which is being used for
offices and other business purposes. The Company's operations were not unduly
interrupted by the move to the new Dayton location. The Company invested
approximately $220,000 in furniture and fixtures for the new facility. The
operating cost of the relocation, which occurred in November 1996 was
approximately $40,000.

41
<PAGE>
The Company's trade name is "Miami Computer Supply International." The
Company has obtained Federal service mark registration of "Miami Computer Supply
Corporation," "Miami Computer Supply International," "MCSI" and the associated
Company logo. No assurance can be given that any such registration will be
effective to prevent others from: (i) using the service mark concurrently; or
(ii) preventing the Company from using the service mark in certain locations.

SUBSIDIARIES

The Company has two direct, wholly owned subsidiaries, DDP and Force 4.
DDP has two subsidiaries, Diversified Data Products (U.K.) Limited ("DDP-UK")
and CEM (Overseas) Limited ("CEM"). DDP-UK is a United Kingdom private
limited company and CEM is a British Virgin Islands International Business
Company. Both DDP-UK, whose sales office is located in Leeds, England, and
CEM, whose sales office is located in Dubai, United Arab Emirates, engage in
the computer supply and office automation supply distribution business and
purchase and sell computer and office automation supplies internationally.
DDP-UK operates in England and DDP and DDP-UK sell in Germany, France,
Australia, New Zealand, Hong Kong, Indonesia and Singapore, while CEM
operates in the United Arab Emirates and sells product in Kuwait and Saudi
Arabia. See "Risk Factors--Risks Relating to International Acquisitions" and
"--Exchange Rate Fluctuations.

EMPLOYEES

As of June 30, 1997, the Company had 152 full-time employees and three
part-time employees, of which 61 were in executive and administrative positions,
including accounting, purchasing, credit and management information systems, 69
were in sales and marketing and 22 were in warehousing and related functions.
None of the Company's employees are represented by a labor union, and the
Company has never suffered an interruption of business as a result of a labor
dispute. The Company considers its relations with its employees to be excellent.

COMPETITION

The Company believes that most, if not all, of its customers maintain
several sources of supply for their product requirements. Accordingly, the
Company competes with major full-service office products distributors, other
national and regional computer supply distributors, office products superstores,
direct mail order companies, and, to a lesser extent, non-specialized retailers.
Certain of the Company's competitors, such as office products superstores and
major full-service office products distributors, are larger and have
substantially greater financial and other resources and purchasing power than
the Company. Competition in the Company's industry is generally based on price,
breadth of product lines, product and credit availability, a knowledgeable sales
force, delivery time and the level and quality of customer services. The Company
believes that the computer supply industry will become more consolidated in the
future and thereby more competitive. Increasing competition will result in
greater price discounting which will continue to have a negative impact on the
industry's gross margins. The Company has experienced relatively consistent
gross profit margins while experiencing continuing price competition. The effect
of such competition has been offset primarily by increased gross profit margins
from new product offerings.

The Company believes its competitive advantage over other distributors
includes its ability to efficiently maintain a wide selection of name brand
products in stock ready to be shipped on a same day basis and delivered
overnight, to efficiently distribute its products, to provide innovative and
high quality value-added customer service programs and to respond to changing
customer demand and product development. However, there can be no assurance that
the Company will not encounter increased competition in the future, which could
have a material adverse effect on the Company's business.

42
<PAGE>
ENVIRONMENTAL MATTERS

The Company is subject to federal, state and local laws, regulations and
ordinances that: (i) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water as well as handling
and disposal practices for solid and hazardous wastes, or (ii) impose liability
for the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances.

The Company currently is not aware of any environmental conditions relating
to present or past waste generation at or from its facilities or operations,
that would be likely to have a material adverse effect on the financial
condition or results of operations of the Company. However, there can be no
assurance that environmental liabilities in the future will not have a material
adverse effect on the financial condition or results of operations of the
Company.

LEGAL PROCEEDINGS

On August 26, 1997, Corporate Express of the South, Inc. ("CES") filed
suit in the Superior Court for Guilford County, North Carolina, against the
Company and two of its salespersons alleging, among other things, that the
salespersons breached their agreements not to compete with CES and that the
Company intentionally induced the salespersons not to honor their covenants
not to compete. The Company believes that resolution of the suit, which seeks
injunctive relief against the salespersons and unspecified damages from the
Company, will not have a material adverse impact on the financial condition
of the Company. The Company intends to vigorously defend itself against the
suit.

Other than the proceeding described above, the Company was not involved in
any legal proceedings incidental to the conduct of its business as of the date
hereof. The Company maintains general liability and business interruption
insurance coverage in amounts which it believes to be adequate. See "Certain
Transactions--Limitations on Liability and Indemnification Matters" and "Risk
Factors--Dependence on Key Personnel."

43
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name, age and position of the directors
and executive officers of the Company as of August 31, 1997.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -----------------------------------------------------------------------
<S> <C> <C>
Anthony W. Liberati................ 64 Chairman of the Board and Director

Albert L. Schwarz.................. 57 President and Director

Robert G. Hecht.................... 56 Vice Chairman of the Board and Director

Harry F. Radcliffe................. 46 Treasurer and Director

Thomas C. Winstel.................. 51 Director, Secretary and Vice President--Presentation Products

Roger E. Turvy..................... 58 Vice President--Product Sales and Development

Michael E. Peppel.................. 30 Vice President--Chief Financial Officer

John C. Huffman, III............... 39 Vice President--National Sales Manager

Mary A. Stewart.................... 40 Vice President--Operations

Joseph R. Hollenshead, III......... 27 President of DDP
</TABLE>

ANTHONY W. LIBERATI. Mr. Liberati has been Chairman of the Board since May
1996, when LLC, of which he is the Manager--President and Chief Executive
Officer and a member, acquired a majority interest in the Company. Commencing in
1982 and until his retirement in August 1995, Mr. Liberati was employed by the
Edward J. DeBartolo Corporation, Youngstown, Ohio (the "DeBartolo Corporation"),
the nation's largest shopping center developer and the owner of the San
Francisco 49ers professional football team. At the time of his retirement, Mr.
Liberati was the Chief Operating Officer of the DeBartolo Corporation. Prior to
his appointment as the Chief Operating Officer, he was the DeBartolo
Corporation's Chief Financial Officer for ten years. Mr. Liberati is a director
of Hawthorne Financial Corporation, Los Angeles, California, a savings
institution holding company which is traded on the Nasdaq National Market, and
is a former member of the Board of Directors of DeBartolo Realty Corporation,
Youngstown, Ohio, a New York Stock Exchange-traded real estate investment trust.
He is a current member of the Board of Directors of Imperial Land Company,
Pittsburgh, Pennsylvania, a privately held land-bank company and Pennsylvania
Capital Bank, Pittsburgh, Pennsylvania, a privately held Pennsylvania commercial
bank. He attended Duquesne University, Pittsburgh, Pennsylvania.

ALBERT L. SCHWARZ. Mr. Schwarz joined the Company in 1987 as President
and a Director. He is the Chairman of the Company's Executive Management
Committee, a committee composed of management which deals with Company
operating issues. Mr. Schwarz was a division controller of Amcast Industries
Corp., a New York Stock Exchange-traded company which manufactures metal
castings located in Dayton, Ohio from 1984 to 1987. Mr. Schwarz received his
MBA from the University of Dayton, Dayton, Ohio, and his undergraduate degree
in accounting from Wright State University, Fairborn, Ohio. Mr. Schwarz is
the brother-in-law of Mr. Turvy.

ROBERT G. HECHT. Mr. Hecht became a Director of the Company in May 1996 and
is also a member of LLC. Mr. Hecht is the Chief Executive Officer of Trumbull
Corporation, a privately held highway construction company, the President of
Allegheny Asphalt Manufacturing, Inc., a privately held material supply company
and is the Executive Vice President for P.J. Dick Incorporated, a privately held
construction company, all of which are located in Pittsburgh, Pennsylvania. Mr.
Hecht is also a director of Essex Bancorp, Virginia Beach, Virginia, a savings
institution holding company which is traded on the Nasdaq National Market and
formerly a director of First Home Bancorp, Inc. Mr. Hecht received his Juris
Doctor degree from the University of Pittsburgh, Pittsburgh, Pennsylvania and
his undergraduate degree in

44
<PAGE>
engineering from the U.S. Naval Academy. Mr. Hecht is the Co-Chairman of the
Washington County Southwestern Pennsylvania Growth Alliance and a member of the
Board of Directors of the Children's Home of Pittsburgh.

HARRY F. RADCLIFFE. Mr. Radcliffe, an officer and member of LLC, was
elected as a Director in May 1996. Mr. Radcliffe was, from December 1993 to
April 1997, the President and Chief Executive Officer of First Home Bancorp,
Inc., a privately held financial institution holding company. He is a
director of Essex Bancorp, Virginia Beach, Virginia, a savings institution
holding company which is traded on the Nasdaq National Market and of
Hawthorne Financial Corporation, Los Angeles, California, a savings
institution holding company which is also traded on the Nasdaq National
Market. From 1989 to 1993, Mr. Radcliffe was the President and Chief
Executive Officer of First South Savings Association, a
Pennsylvania-chartered stock savings association located in Pittsburgh,
Pennsylvania. Mr. Radcliffe received his degree in economics from Ohio
Wesleyan University.

THOMAS C. WINSTEL. Mr. Winstel co-founded the Company in 1981 and has been
a Director and Vice President of the Company since that time. Mr. Winstel has
been the Corporate Secretary of the Company since May 1996. Mr. Winstel is a
member of the Company's Executive Management Committee. Mr. Winstel received his
marketing degree from the University of Dayton, Ohio.

ROGER E. TURVY. Mr. Turvy joined the Company in 1981 and has been the Vice
President--Product Sales and Development since that time. Mr. Turvy is a member
of the Company's Executive Management Committee. Mr. Turvy received his degree
in mathematics and business from Miami University, Oxford, Ohio and his MBA from
Ohio State University. Mr. Turvy is the brother-in-law of Mr. Schwarz.

MICHAEL E. PEPPEL. Mr. Peppel joined the Company in May 1996 and is an
officer and member of LLC. Mr. Peppel is also a member of the Company's
Executive Management Committee. Prior thereto, from November 1990 to May 1996,
he was a director and Chief Financial Officer of Diversified Data Products, Inc.
which was acquired by LLC and contributed to the Company in May 1996. From April
1987 to October 1990, he was the money desk manager for the DeBartolo
Corporation, Youngstown, Ohio. Mr. Peppel received his degree in economics and
finance from the University of Notre Dame.

JOHN C. HUFFMAN, III. Mr. Huffman joined the Company in 1981 and is the
Company's National Sales Manager. He is a member of the Company's Executive
Management Committee. Mr. Huffman was the General Manager of the Company from
1985 to 1987, the Dayton Sales Manager from 1987 to 1989 and has been the
National Sales Manager since 1989. Mr. Huffman received his degree in business
management from Wright State University, Fairborn, Ohio.

MARY A. STEWART. Ms. Stewart joined the Company in 1989 as a staff
accountant and is currently the Company's Vice President--Operations. From 1991
to May 1996, Ms. Stewart served the Company as Controller. She is a member of
the Company's Executive Management Committee.

JOSEPH R. HOLLENSHEAD, III. Mr. Hollenshead joined the Company in May 1996
and is a member of LLC. He founded DDP in 1988 and has been a director and the
President of DDP since that time. Mr. Hollenshead attended Eastern Michigan
University in Ypsilanti, Michigan.

The Board of Directors currently meets monthly and is required to meet
not less than quarterly. Directors are elected annually, however, the
Articles and Code of Regulations of the Company provide that the Board may,
by resolution of a majority of the Continuing Directors then in office,
divide the Board into two or three classes as nearly equal in number as
possible, each class having not less than three directors, with one class to
be elected annually for a term of two or three years, respectively. Such
"staggering" of the terms of the members of the Board of Directors could make
it easier for incumbent Board members to retain their status and make it more
difficult for stockholders to replace the entire Board of Directors at one
meeting of stockholders. For certain other terms and conditions in the
Articles and the Code of Regulations which also may have an antitakeover
effect, see "Restrictions on Acquisition of the Company." Officers are
elected annually by the Board of Directors and serve at the

45
<PAGE>

discretion of the Board. The Company anticipates that it will continue to hire,
appoint or otherwise change senior managers and other key executives as it
continues to grow.

The Board of Directors has an Executive Committee, Compensation Committee
and Audit Committee. The Executive Committee is composed of all members of the
Board of Directors and has the authority to act as the Board of Directors when
the Board is not in session. Actions of the Executive Committee may be taken
upon the affirmative vote of any three of the five directors provided that of
the three directors who are so acting, one must be a non-employee director.
Executive Committee decisions must be ratified by the Board of Directors at its
next regularly scheduled meeting. The Compensation Committee, currently
comprised of Messrs. Liberati, Hecht and Radcliffe, has the authority to approve
salaries and bonuses and other compensation matters for executive officers of
the Company and reviews and approves employee health and benefit plans. The
Audit Committee, currently comprised of Messrs. Liberati, Hecht and Radcliffe
has the authority to recommend the appointment of the Company's independent
auditors and review the results and scope of audits, internal accounting
controls and tax and other accounting-related matters.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth individual
compensation paid or accrued by the Company to the President and to each of the
four most highly compensated executive officers (other than the President) of
the Company (the "Named Executive Officers") for all services rendered in all
capacities to the Company and its subsidiaries for each of the three years ended
December 31, 1996.

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION SECURITIES ALL OTHER
--------------------------------- UNDERLYING COMPENSATION
YEAR SALARY(1) BONUS(2) OPTIONS (3)
--------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Albert L. Schwarz..................................... 1996 $ 110,235 $ 229,247 51,000 $ 23,401
President 1995 102,000 164,579 -- 17,400
1994 102,000 155,329 -- 17,400

Thomas C. Winstel..................................... 1996 194,011 -- 15,000 18,043
Vice President--Presentation Products 1995 172,215 23,520 -- 14,400
1994 172,399 44,100 -- 14,400

Michael E. Peppel..................................... 1996 46,669 137,333 45,000 4,218
Vice President--Chief Financial Officer

John C. Huffman, III.................................. 1996 118,800 10,000 -- 18,597
Vice President--National Sales Manager 1995 92,000 13,975 -- 14,400
1994 90,000 17,951 -- 14,400

Joseph R. Hollenshead, III............................ 1996 46,669 104,000 -- --
President of DDP
</TABLE>

- ------------------------

(1) Mr. Michael E. Peppel became the Company's Vice President--Chief Financial
Officer on May 30, 1996. See "--Employment Contracts." Mr. Hollenshead also
joined the Company on the same date.

46
<PAGE>
(2) Bonuses shown for the years 1994, 1995 and 1996 were paid during 1995, 1996
and 1997, respectively. Mr. Schwarz's bonuses were based upon his prior
employment agreement with the Company pursuant to which he received 10.0% of
the total sum of (i) the Company's pre-tax net income, before taxes, (ii)
other officers' bonus expenses, and (iii) the accrued profit sharing
expense. Mr. Peppel's 1996 bonus was based on his new employment agreement.
Mr. Winstel's 1995 and 1994 bonuses were determined by the President of the
Company. Mr. Hollenshead's 1996 bonus was based on his 1996 employment
agreement, which provided that he receive a bonus equal to 25.0% of the
pre-tax income of DDP. Mr. Huffman's 1996 bonus was based on his new
employment agreement and his 1995 and 1994 bonuses were based upon attaining
business plan margin goals. Messrs. Schwarz's, Winstel's and Huffman's
previous employment agreements were terminated on May 30, 1996. See
"Employment Contracts."

(3) All Other Compensation includes director's fees and expense reimbursement,
car allowance, premiums for split dollar life insurance coverage, sporting
event tickets, annual medical examination expenses, taxable relocation,
temporary housing and/or other executive or employee benefits. There was no
stock option plan in effect during 1995 or the years prior thereto.

COMPENSATION OF DIRECTORS

The Company began paying non-employee directors a quarterly retainer of
$2,500 and fees of $1,000 per Board meeting attended and $250 per Committee
meeting attended beginning with the third quarter of fiscal 1996. From
January through May of 1996, the Company paid $50.00 per month to all
directors and from May through July 1996, directors received no compensation.
In addition, Board members are reimbursed for their travel and other
out-of-pocket expenses arising from attending Board or committee meetings,
and participate in the Non-employee Directors Stock Option Plan. See
"--Executive Compensation;--Employee Benefit Plans--Stock
Plans,--Non-employee Directors Stock Option Plan." Directors who are also
employees receive no compensation for attending such meetings other than
their base salary.

EMPLOYMENT CONTRACTS

On May 30, 1996, in conjunction with the acquisition of the controlling
interest in the Company by LLC, the Company entered into employment contracts
with Messrs. Schwarz, Winstel, Richard A. Newkold (formerly the Vice
President--Training and Development who retired as of December 31, 1996),
Turvy, Peppel, Huffman, Hollenshead and White (the "Executives"), which
agreements are substantially similar except for compensation provisions. Each
such agreement terminates on December 31, 1999 (except for the agreements of
Messrs. Newkold, Hollenshead and White which terminated on December 31, 1996)
unless sooner terminated for death, physical or mental incapacity or cause
(which is defined as the uncured refusal to perform, or substantial neglect
of, or an intentional failure to perform, a material portion of the
Executive's duties, willful misconduct, breach of a fiduciary duty involving
personal gain, a material breach of the employment agreement, or a felony
conviction), or terminated by the Executive for the failure of the Company to
provide the resources necessary to the fulfillment of the Executive's
responsibilities, the express direction by the Board of Directors to have the
Executive perform any illegal action, the threatened or actual insolvency of
the Company or the failure of the Company to perform its obligations to the
Executive under the employment agreement. The contracts for Messrs. Newkold
and White were not renewed upon their termination; Mr. Hollenshead's contract
was renewed in January 1997, for one year, as set forth below.

47
<PAGE>
Each Executive's monthly base salary is as set forth in the table below:

<TABLE>
<CAPTION>
MONTHLY BASE SALARY
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Albert L. Schwarz*..................................................... $ 15,000 $ 15,900 $ 16,854
Thomas C. Winstel...................................................... 9,800 10,300 10,800
Roger R. Turvy......................................................... 7,800 8,600 9,500
Michael E. Peppel*..................................................... 10,871 11,523 12,214
John C. Huffman, III................................................... 10,700 11,300 12,000
Joseph R. Hollenshead, III............................................. 10,833 -- --
</TABLE>

- ------------------------

* The increases in the base salary shown in the table will occur if targeted
pre-tax profit goals are not achieved in every prior year. If such goals are
achieved, the base salaries will be $15,000 in 1997, $19,950 in 1998 and
$24,938 in 1999 for Mr. Schwarz, and $10,871 in 1997, $14,428 in 1998 and
$18,072 in 1999 for Mr. Peppel, assuming that targeted pre-tax profit goals
are attained in each prior year.

In addition to, or in lieu of, a base salary, each such Executive is
entitled to a bonus, or commission, as follows: (i) Mr. Schwarz will receive a
bonus of 10.0% of pre-tax profits before employee profit sharing or any other
bonuses, which, beginning in 1997, will not exceed the amount of his base salary
in any year; (ii) Mr. Winstel will receive a monthly commission in the amount of
40.0% of the Gross Margin (as defined below) of all sales to certain accounts
set forth in Mr. Winstel's agreement plus the sum of $3,000 plus 5% of the Gross
Margin on sales of all presentation products, which commission will be paid only
when the amount of commission exceeds his monthly base salary and will be paid
in lieu of a monthly base salary; (iii) Mr. Turvy will receive a commission in
the amount of 40.0% of the Gross Margin of the sales to accounts assigned to
him, as maintained in the Company's records, which commission will be paid only
when the amount of commission exceeds his base salary and will be paid in lieu
of a base salary; (iv) Mr. Peppel will receive a bonus equal to 9.0% of the
pre-tax profits of the Company before employee profit sharing or any other
bonuses, 60.0% of which shall be paid quarterly, which cash bonus, beginning in
1997, will not exceed the amount of his base salary in any year; (v) Mr. Huffman
will be paid a bonus of 0.5% of Gross Margin over $9.0 million in any calendar
year; (vi) Mr. Hollenshead will receive a bonus equal to 30.0% of the pre-tax
income of DDP; and (vii) Mr. White received a bonus equal to 15.0% of the
pre-tax income of DDP in excess of $250,000 prior to his retirement in December
1996. "Gross Margin" is defined by the employment agreements to mean the
difference of the unit sales price of the product and the actual cost of the
product to the Company. In 1996, Messrs. Peppel, Hollenshead and White also
received certain stock compensation from LLC. See "Certain Transactions--Related
Party Transactions-- Other Transactions."

In addition, for 1997, each of the Executives (except Mr. Peppel) utilizes a
Company automobile for Company business having a retail value of up to $35,000,
for which the Company pays rent, insurance, repairs, gas, oil and fees, of up to
$1,200 per month.

The Executives are granted up to six weeks vacation annually and are
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock options, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Company, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors. Moreover, the Executive
will be eligible to participate in and be covered by all plans effective
generally for executives of the Company with respect to life, accident or health
insurance, hospitalization, disability and other benefits. Notwithstanding Mr.
Newkold's retirement as of December 31, 1996, the Company has agreed to continue
to pay for health insurance for him and his spouse until he reaches age 65 and
thereafter to pay premiums for Medicare Supplemental Insurance for him and his
spouse on a policy selected by Mr. Newkold until he becomes 70 years old. The
Company will pay or reimburse the Executive

48
<PAGE>
for all reasonable out-of-pocket expenses incurred or paid by him in connection
with the performance of his duties under the agreement. The contracts also
provide for the indemnification of the Executives to the extent permitted by the
Company's Articles, Code of Regulations and applicable law, and the valuation
and purchase of the Executive's shares of Common Stock of the Company if he is
terminated for cause prior to December 31, 1999 (or December 31, 1996 in the
case of Messrs. Newkold, White and Hollenshead) and the Common Stock is not, at
the time of termination, publicly traded.

In consideration of the above, the Executive also has agreed, during the
term of the agreement and for 12 months after the termination of the agreement,
not to compete with the Company in any area which is within a 100-mile radius of
any existing office of the Company. All disputes are to be resolved using
alternative dispute resolution procedures (such as arbitration) rather than
litigation.

The Company has, in the past, entered into employment and non-competition
agreements with the senior management of the companies it has acquired and may
do so in the future.

EMPLOYEE BENEFIT PLANS

STOCK PLANS

1996 STOCK OPTION PLAN. Effective September 19, 1996, the Board of
Directors of the Company adopted the 1996 Stock Option Plan (the "Stock Option
Plan") which was approved by the stockholders of the Company by the unanimous
written consent of the stockholders as of October 25, 1996.

The Stock Option Plan is designed to attract and retain qualified personnel
in key positions, provide officers and key employees with a proprietary interest
in the Company as an incentive to contribute to the success of the Company and
to reward key employees for outstanding performance and the attainment of
targeted goals. The Stock Option Plan provides for the grant of incentive stock
options intended to comply with the requirements of Section 422 of the Internal
Revenue Code, as amended (the "Code"). The Company has reserved 250,000 shares
of Common Stock for issuance pursuant to the exercise of Options granted under
the Stock Option Plan, subject to adjustment. In the event of a stock split,
reverse stock split or stock dividend, the number of shares of Common Stock
under the Stock Option Plan, the number of shares to which any Option relates
and the exercise price per share under any option will be adjusted to reflect
such increase or decrease in the total number of shares of the Common Stock
outstanding.

The Stock Option Plan is administered and interpreted by a committee of the
Board of Directors ("Option Committee") composed of non-employee directors.
Unless sooner terminated, the Stock Option Plan will be in effect until
September 19, 2006, ten years from the date of the adoption of the Stock Option
Plan by the Board of Directors.

Under the Stock Option Plan, the Option Committee will determine, among
other things, which officers and key employees will be granted Options, the
performance goals which must be met to receive Options, the number of shares
subject to each Option, the exercise price of the Option, whether such Options
may be exercised by delivering other shares of Common Stock or other
consideration and when such Options become exercisable. The per share exercise
price of all Options is required by the Code to be at least equal to the fair
market value of a share of Common Stock on the date the Option is granted. The
Code also requires that the aggregate fair market value of the Common Stock with
respect to which the Options are exercisable for the first time by the Optionee
during any calendar year cannot exceed $100,000. Moreover, any person who owns
10.0% or more of the voting power of the Common Stock may not receive Options
whose exercise price is less than 110.0% of the fair market value of a share of
Common Stock of the Company on the date of grant.

Options will become vested and exercisable in the manner specified by the
Option Committee and all Options will become fully vested and exercisable in the
event of a change in control of the Company, as defined in the Stock Option
Plan. Each Option or portion thereof will be exercisable at any time on or after
it vests and is exercisable until ten years after its date of grant or three
months after the date on which

49
<PAGE>
the optionee's employment terminates, unless extended by the Option Committee to
a period not to exceed five years from such termination. However, failure to
exercise Options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee.
Options are non-transferable except by will or the laws of descent and
distribution.

Under current provisions of the Code, the federal income tax treatment of
incentive stock options is as follows. An optionee who meets certain holding
period requirements will not recognize income at the time the option is granted
or at the time the option is exercised, and a federal income tax deduction
generally will not be available to the Company at any time as a result of such
grant or exercise.

OPTIONS GRANTED UNDER THE 1996 STOCK OPTION PLAN

As of August 31, 1997, the following number of options had been granted to
employees of the Company:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
NUMBER OF APPRECIATION FOR OPTION
SECURITIES PERCENT OF TERM(3)
UNDERLYING TOTAL EXERCISE ------------------------
NAME OPTIONS OPTIONS(1) PRICE/SHARE(2) EXPIRATION DATE 5% 10%
- ---------------------------------- ----------- ----------- ------------- ---------------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Albert L. Schwarz................. 51,000 45.9% $ 8.50 November 15, 2006 $ 706,126 $ 1,124,387
Thomas C. Winstel................. 15,000 13.5 8.50 November 15, 2006 207,684 330,702
Michael E. Peppel................. 45,000 40.6 8.50 November 15, 2006 623,052 992,106
</TABLE>

- ------------------------

(1) Percentage of options to purchase 111,000 shares of Common Stock granted to
the named individuals in 1996. No other options were granted to employees of
the Company in 1996.

(2) The exercise price was based on the initial public offering price of the
Company's Common Stock on the date of grant, November 15, 1996.

(3) Assumes compounded rates of return for the remaining life of the options and
a future stock price of $8.50 at compounded rates of return of 5% and 10%,
respectively.

The above options are subject to a three year vesting schedule which
provides that one-third of such options will vest annually beginning on
November 15, 1997. None of the options granted to the above employees had
been exercised as of August 31, 1997.

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN. The Company's Non-employee
Directors Stock Option Plan (the "Directors Plan") provides for automatic
grants of non-qualified stock options on the date of each annual meeting of
stockholders to each non-employee director of the Company, so long as shares
of Common Stock remain available under the Directors Plan. Pursuant to the
Directors Plan, options covering 15,000 shares of Common Stock, which vest
in 5,000 share increments, were granted to each person who was then a
non-employee director at the first annual meeting of shareholders following
the closing of the Company's initial public offering. The first increment
will vest immediately, the second will vest on the date of the second annual
meeting of shareholders following the closing of the Company's initial public
offering and the last increment will vest on the date of the third annual
meeting of shareholders following the Company's initial public offering,
except that all such options shall become immediately vested if the Company
engages in a Business Combination, as defined by the Articles. See
"Restrictions or Acquisition of the Company--Amended and Restated Articles of
Incorporation, Code of Regulations and Other Provisions." Commencing on the
date of the second annual meeting of shareholders held following the closing
of the Company's initial public offering, and on the date of each such
meeting thereafter, each person who is a non-employee director,

50
<PAGE>

other than the non-employee directors who received the 15,000 share grants at
the first such meeting, will be automatically granted a non-qualified stock
option to purchase 5,000 shares of the Common Stock, not to exceed 15,000
shares for any director. All of the options granted thereunder, except for
the options granted on the date of the first annual meeting, shall become
immediately exercisable in full on the date of grant. The exercise price of
each option is the fair market value of the Common Stock on the date of
grant. These options are also subject to a three year vesting schedule which
provides that one-third of such options will vest annually. Each option
expires upon the earlier of ten years after grant or one year after the death
of the recipient director. A total of 100,000 shares of Common Stock has been
reserved for future grants of options under the Directors Plan.

OPTIONS GRANTED UNDER THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

As of August 31, 1997, the following options had been granted to
non-employee directors:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF PRICE APPRECIATION FOR
SECURITIES PERCENT OF OPTION TERM(3)
UNDERLYING TOTAL EXERCISE EXPIRATION ----------------------
NAME OPTIONS OPTIONS(1) PRICE/SHARE(2) DATE 5% 10%
- ------------------------------------------ ----------- ----------- ------------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Anthony W. Liberati....................... 15,000 33.3% $ 10.25 May 29, 2007 $ 250,443 $ 398,788
Robert G. Hecht........................... 15,000 33.3 10.25 May 29, 2007 250,443 398,788
Harry F. Radcliffe........................ 15,000 33.3 10.25 May 29, 2007 250,443 398,788
</TABLE>

- ------------------------

(1) Percentage of options to purchase 45,000 shares of Common Stock granted to
the named individuals on May 29, 1997, the date of the Company's first
annual meeting of stockholders following the Company's initial public
offering in November 1996. No other options were granted to non-employee
directors of the Company on May 29, 1997.

(2) The exercise price was based on the fair market value of the Common Stock on
the date of grant.

(3) Assumes compounded rates of return for the remaining life of the options and
a future stock price of $10.25 at compounded rates of return of 5% and 10%,
respectively.

None of the options granted to the above-named non-employee directors had
been exercised as of August 31, 1997.

401(K) PLAN. The Company has a 401(k) plan for all employees (the "401(k)
Plan"), age 21 or older, with one year of service. The 401(k) Plan is a
contributory defined contribution plan which is intended to qualify under
Section 401(k) of the Code. Participants may contribute to the 401(k) Plan by
salary reduction up to 20.0% of annual compensation for the year. Such
contribution defers the employee's earnings up to a maximum of $9,500 in each
plan year, indexed annually. The Company may, in its discretion, determine each
year to make a matching contribution out of current or accumulated pre-tax
profit equal to up to 50.0% of the amount deferred by the employee, with a
maximum contribution of 1.5% of the employee's compensation. An employee's
contributions to the 401(k) Plan as well as all employer matching contributions
are vested immediately. All funds contributed to the 401(k) Plan are held in a
trust fund, which are invested at the direction of the employee in any one or
more of five separate mutual funds: a stock growth fund, an aggressive stock
growth fund, a growth and income equity fund, an income fund and a money market
fund. Contributions by the Company to the 401(k) Plan are made annually and were
$63,776 for the year ended December 31, 1996.

SECTION 125 C CAFETERIA PLAN. All Company employees are eligible to
participate in the Company's Section 125 C Cafeteria Plan which permits
employees to deduct all or a portion of their gross wages prior to the
calculation of federal income tax, FICA and Medicare deductions and state income
tax, to be used

51
<PAGE>
to pay for the following permissible benefits: group health insurance, long
and/or short-term disability insurance, child care or dental insurance.

PROFIT SHARING PLAN. All Company employees (excluding sales personnel and
officers and employees of DDP) who have been employed for the calendar year and
through the date of distribution (March 15 of the following year) are eligible
to participate in the Company's profit sharing plan (the "Profit Sharing Plan")
which was inaugurated in 1995. Assuming that the Company achieves projected
pre-tax income for the year, 3.0% of the Company's pre-tax income is set aside
for distribution (the "Profit Sharing Pool") under the Profit Sharing Plan.
Employees are entitled to a portion of the Profit Sharing Pool based on the
employee's number of years of service as of the end of the Profit Sharing Plan
year (a "Unit"). Managers of the Company, who are designated annually, have
their Units multiplied times three, and part-time employees who work an average
of 30 hours per week earn fractions of Units based on the number of hours worked
in a 2,080 hour year. Under the Profit Sharing Plan, one-third of the Profit
Sharing Pool is awarded based on Units and two-thirds is awarded based on the
employee's individual performance as determined by the employee's immediate
supervisor. The Company recorded an expense of $46,079 for the Profit Sharing
Plan in 1996.

SPLIT DOLLAR LIFE INSURANCE AGREEMENTS. In December 1995, the Company
entered into "split dollar" life insurance agreements, which were amended on May
30, 1996 in conjunction with the acquisition of control of the Company by LLC
(the "Split Dollar Agreements"), with Messrs. Schwarz, Winstel, Newkold and
Turvy (the "Insureds") pursuant to which the Company purchased, and currently
pays the premiums on, and the income tax gross-up at a 40.0% tax rate for, term
life insurance policies in the face amounts of $1,550,000, $2,300,000,
$1,600,000 and $1,050,000, respectively. While the Company is the owner of the
policies, the Split Dollar Agreements state that the beneficiaries of the
Insureds will be entitled to receive the face value of the policies upon the
death of the Insureds, less the policies' cash value, which, at June 30, 1997,
approximated $164,957, $105,516, $145,189 and $109,144, respectively. The
Insureds have the right to purchase the policies from the Company when they
reach age 65 for their then cash surrender values. The cost to the Company for
the premiums for 1996 was $40,000 for Mr. Schwarz, $30,000 for Mr. Winstel,
$30,000 for Mr. Newkold and $30,000 for Mr. Turvy. The Split Dollar Agreements
will terminate during the Insureds' lifetimes upon: (i) the total cessation of
the Company's business, or (ii) the bankruptcy, receivership or dissolution of
the Company, and (iii) the Insureds may terminate the Split Dollar Agreements at
any time upon written notice.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is currently comprised of Messrs. Liberati, Hecht
and Radcliffe. None of the executive officers of the Company currently serves on
the compensation committee of another entity or on any other committee of the
board of directors of another entity performing similar functions. The only
transaction which affected the members of the Compensation Committee, or their
affiliates, during 1996 (there were none in 1995) was the Stock Split of the
Company's Common Stock effected on September 25, 1996, and, for the six months
ended June 30, 1997, was the granting of options under the Directors Plan.

52
<PAGE>
CERTAIN TRANSACTIONS

RELATED PARTY TRANSACTIONS

LEASE AGREEMENTS. The Company has entered into a lease with Draft
Partnership ("Lessor") for a 30,000 square foot office and warehouse building in
Dayton, Ohio. The general partners of Draft Partnership are James F. Rowland
(owning a 50.0% partnership interest), and Messrs. Schwarz, Winstel, Newkold and
Turvy, each of whom own a 12.5% partnership interest. The lease is for a term of
ten years commencing on November 1,1996 for a base monthly rental of $20,000
plus $3,691, subject to a proportionate increase each year after July 1999 based
on the increase in the Consumer Price Index ("CPI"). The Company is responsible
for paying all taxes, public liability insurance but not fire and property
damage insurance, and all utilities on the leased premises. Provided that the
Company is not in default under the lease, it has the option to renew the term
of the lease for two successive terms of five years each, commencing on the
expiration of the initial term. The Lessor has agreed to maintain the exterior
of the building, all structural components and the parking lot, while the
Company has agreed to maintain the interior, including glass, mechanical,
electrical, plumbing, heating and air conditioning, as well as grounds
maintenance. In addition, the Company has indemnified the Lessor against any
claims which may arise out of the Company's occupancy of the leased premises or
any act of the Company or its employees, agents, invitees or licensees.

Management of the Company believes that the terms and conditions of such
lease are no less favorable than those that could be obtained from a
non-affiliated third party in the local real estate market for similar
office/warehouse structures and, although the Company has not obtained a third
party opinion regarding the fairness of the above-described transaction, the
Company believes that the rental and other payments under the lease are at or
below current comparable rates in the local market.

John Schwarz and Robert Schwarz, two employees and stockholders of the
Company who are brothers (but not related to Albert L. Schwarz) and who were
stockholders of Paper Rolls at the time of the acquisition by the Company of the
assets of Paper Rolls in June 1994, and their parents are among the lessors of
the Company's 7,500 square foot office/warehouse facility in Louisville,
Kentucky. This lease is for a ten year term, expiring in June 2004, at a rental
of $2,000 per month, plus an annual increase based on the CPI with the base
month being July 1994. Rent adjusts annually on the first day of July. The
Company, as lessee, is obligated to pay the taxes, insurance and utilities for
the property and has indemnified the lessors against all liability arising from
injury or damage during the term of the lease to any person or property
occasioned wholly or in part by any act or omission of the Company or any guest,
servant, assign or sub-tenant of the Company.

OTHER TRANSACTIONS. In connection with the acquisition of control of the
Company in May 1996, LLC purchased 70.0% of the issued and outstanding shares of
voting and non-voting common stock of the Company for $8.0 million in cash and
notes (which notes were paid in full in November 1996) or $4.78 per share.
Messrs. Liberati, Hecht, Radcliffe, Peppel, Hollenshead and White (and an
investment fund of Friedman, Billings, Ramsey & Co., Inc., the underwriters in
the Company's initial public offering, and an investment fund composed of
certain members of Elias, Matz, Tiernan & Herrick L.L.P., special counsel to the
Company) are members of LLC. The stockholders of the Company who sold shares to
LLC included Messrs. Schwarz, Winstel, Newkold, Turvy, Huffman and a family
limited partnership affiliated with Mr. Schwarz.

53
<PAGE>
In addition, at the same time, LLC purchased 100.0% of the issued and
outstanding common stock of DDP for $125,000 loans to each of Messrs.
Hollenshead and White, stockholders of DDP, which loans were completely
cancelable if DDP generated pre-tax income of $250,000 for the year ended
December 31, 1996 and partially cancelable based upon the amount of pre-tax
income generated by DDP which was less than $250,000. The loans were cancelled
at December 31, 1996. Mr. Peppel was a director and the Chief Financial Officer
and a selling stockholder of DDP, but received no cash consideration in the
transaction. LLC contributed all of the shares of common stock of DDP to the
Company on May 30, 1996. See "Risk Factors--Control of Existing Management and
Certain Stockholders."

In conjunction with the purchase of DDP by LLC, LLC agreed to provide the
three selling stockholders of DDP a stock incentive so long as such stockholders
remain employees of the Company or DDP, as a subsidiary of the Company, for the
years ended December 31, 1996, 1997 and 1998. Under the Stock Purchase Agreement
by and among LLC, DDP and the selling stockholders of DDP (Messrs. Hollenshead,
Peppel and White), LLC transferred 58,520 shares of Common Stock to them as of
November 15, 1996. See "Business--Overview," and "Principal Stockholders."

The Company purchases inventory from Cranel, Inc., ("Cranel") Columbus,
Ohio, a computer supply wholesaler. In fiscal year 1996 and fiscal year 1997,
through August 31, 1997, the Company's purchases of such inventory equaled
$277,000 and $218,000, respectively. The brother of John C. Huffman, III, Vice
President--National Sales Manager of the Company, is a sales representative for
Cranel.

Management of the Company believes that the terms and conditions of its
purchases from Cranel are no less favorable than those that could be obtained
from a non-affiliated third party.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS. The Company has
adopted provisions in its Articles that eliminate to the fullest extent
permissible under Ohio law the liability of its directors to the Company or its
stockholders for monetary damages except to the extent that it is proved by
clear and convincing evidence that the director took or failed to take action,
and that such action or failure to act involved an act or omission undertaken
with the deliberate intent to cause injury to the Company or was undertaken with
reckless disregard for the best interests of the Company. The Articles do not,
however, affect the liability of directors for the granting of unlawful loans,
dividends or distributions of assets. Under Ohio law, directors will not be
found to have violated their duties to the corporation unless it is proved by
clear and convincing evidence that the director has not acted in good faith, in
a manner he reasonably believes to be in, or not opposed to, the best interests
of the corporation, or with the care that an ordinarily prudent person in a like
position would use under similar circumstances, in any action brought against
the director. However, a director will not be considered to be acting in good
faith if he has knowledge concerning the matter in question that would cause
reliance on information, opinions or reports prepared by counsel or the
Company's auditors to be unwarranted. A director, in determining what he
reasonably believes to be in the best interests of the Company, is allowed by
the General Corporation Law of the State of Ohio ("OGCL") to consider the
interests of the Company's stockholders, and may, in his discretion, consider:
(i) the interests of the Company's employees, suppliers, creditors and
customers; (ii) the local and national economy; (iii) community and societal
considerations; and (iv) the long-term as well as the short-term interests of
the Company and its stockholders, including the possibility that these interests
may be best served by the continued independence of the Company. This limitation
of liability provision is designed to ensure that the ability of the Company's
directors to exercise their best business judgment in managing the Company's
affairs, subject to their continuing fiduciary duties to the Company and its
stockholders, is not unreasonably impeded by exposure to potentially high
personal costs or other uncertainties of litigation.

The Articles also provide that the Company shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, because such person is or was a director, officer, employee or
agent of the Company. Under the terms of the Company's Articles, such
indemnification also will be

54
<PAGE>
provided to any person who is or was serving at the request of the Company as a
director, officer, employee, agent or in certain other capacities of another
corporation, partnership, joint venture, trust or certain other enterprises.
Such indemnification is furnished to the full extent provided by law against
expenses (including attorneys' fees), judgments, fines, excise taxes and amounts
paid in settlement actually and reasonably incurred in connection with such
action, suit or proceeding; if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to a criminal action, if he had no reasonable cause to
believe his conduct was unlawful. However, in an action by or in the right of
the Company, no indemnification will be made if such person is adjudged liable
for negligence or misconduct in the performance of his duty to the Company
unless the court determines that despite such liability, but in view of all of
the circumstances, such person is fairly and reasonably entitled to indemnity
for expenses as determined by the court, or unless such action is for an
unlawful loan, dividend or distribution of assets. The indemnification
provisions also permit the Company to pay reasonable expenses in advance of the
final disposition of any action, suit or proceeding as authorized by the
Company's Board of Directors, provided that the indemnified person provides an
undertaking to repay the Company if it is ultimately proved by clear and
convincing evidence in court that his action or failure to act involved an act
or omission undertaken with the deliberate intent to cause injury to the Company
or undertaken with reckless disregard for the best interests of the Company and
to reasonably cooperate with the Company concerning the action, suit or
proceeding.

The rights of indemnification provided in the Company's Articles are not
exclusive of any other rights which may be available under the Articles or Code
of Regulations of the Company, any insurance or other agreement, by vote of
stockholders or disinterested directors or otherwise. In addition, the Articles
authorize the Company to maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Company or with another entity
at the request of the Company, whether or not the Company would have the power
to provide indemnification to such person. The Company has also obtained
director and officer liability insurance coverage.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, it is the published opinion of the
Commission that such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.

Except for an action against the Company and two salespersons, at August
31, 1997 there was no pending litigation or proceedings involving a director,
officer, employee or other agent of the Company in which indemnification
would be required or permitted. The Company is providing for the legal fees
and expenses of the employees, both of whom intend to vigorously defend
against the action brought. There can be no assurance, however, that the
employees will be successful in their defense or that the Company will not
have to pay certain sums in a judgment or to settle the case. Management of
the Company believes that the amounts that may be payable hereunder will be
immaterial to the financial condition of the Company. The Company is not
presently aware of any other threatened litigation or proceeding which may
result in a claim for such indemnification. See "Business--Legal Proceedings."

55
<PAGE>
SELLING STOCKHOLDERS

The shares of Common Stock to be sold by the Selling Stockholders pursuant
to this Prospectus represent shares issued to the Selling Shareholders by the
Company in connection with the acquisitions of IDSC, DATA and Force 4 (the
"Acquisition Shares"). No Selling Stockholder beneficially owns any shares of
Common Stock other than the Acquisition Shares. The following tables set forth
the aggregate number of Acquisition Shares issued to each Selling Stockholder
and offered by each Selling Stockholder hereunder. See "Plan of Distribution."

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
SHARES BENEFICIALLY
OWNED PRIOR TO
OFFERING AFTER OFFERING
---------------------- ----------------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER OF SHARES NUMBER PERCENT
- ------------------------------------------------------- --------- ----------- BEING OFFERED ------------- -------------
-----------------
<S> <C> <C> <C> <C> <C>
John Keegan............................................ 2,000 * 2,000 + *
John Keegan and Valerie Keegan......................... 57,510 1.5 57,510 + *
Melva Potter........................................... 25,217 * 25,217 + *
William H. Potter Testamentary Trust(1)................ 21,656 * 21,656 + *
Gerald G. Gould........................................ 64,865 1.7 64,865 + *
J. Phillip Crone....................................... 64,865 1.7 64,865 + *
Daniel W. Wisdom....................................... 154,996 3.9 154,996 + *
Total................................................ 391,109 10.0 391,109 + *
</TABLE>

- ------------------------

(*) Less than 1% of the total shares of Common Stock issued and outstanding as
of August 31, 1997.

(+) The Selling Stockholder may sell some or all of the Acquisition Shares
during the period of time this Prospectus is effective.

(1) Melva Potter is the trustee of the William H. Potter Testamentary Trust.

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<PAGE>
PRINCIPAL STOCKHOLDERS

At August 31, 1997, the Company had 3,929,109 shares of its Common Stock
outstanding which were held by approximately 386 stockholders, of which 54 were
stockholders of record.

The following table sets forth as of August 31, 1997 certain information
with respect to the beneficial ownership of the Common Stock, and as adjusted to
reflect the sale of the shares offered hereby, for (i) each person or entity
(including any "group" as defined by Section 13(d)(3) of the Securities Exchange
Act of 1934) known to the Company to be the beneficial owner of more than 5.0%
of the issued and outstanding shares of Common Stock of the Company, (ii) each
director and each Named Executive Officer (See "Management--Executive
Compensation"), and (iii) all current directors and executive officers as a
group. The address for all directors and executive officers of the Company is
4750 Hempstead Station, Dayton, Ohio 45429.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
AS OF AUGUST 31, PERCENT OF COMMON
NAME OF BENEFICIAL OWNER OR NUMBER OF PERSONS IN GROUP 1997(1) STOCK
- -------------------------------------------------------------------------- ---------------------- -----------------
<S> <C> <C>
Pittsburgh Investment Group LLC(2)........................................ 1,279,336 32.6%
Value Partners, Ltd.(3)................................................... 692,127 17.6
Anthony W. Liberati(4)(5)(12)............................................. 5,000 *
Albert L. Schwarz(4)(6)................................................... 52,955 1.3
Robert G. Hecht(4)(7)(12)................................................. 8,000 *
Harry F. Radcliffe(4)(8)(12).............................................. 5,000 *
Thomas C. Winstel(4)(9)................................................... 200,360 5.1
Michael E. Peppel(4)(10).................................................. 43,080 1.1
John C. Huffman, III(4)................................................... 20,300 *
Joseph R. Hollenshead, III(11)............................................ 22,720 *
The Schwarz Family Limited Partnership(13)................................ 158,400 4.0
All directors and executive officers as a group (10 persons)(14).......... 663,565 16.9
</TABLE>

- ------------------------

* Less than 1.0%.

(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the Voting Record Date upon the
exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and that are
exercisable within 60 days from the date of the Voting Record Date have
been exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.

(2) The business address of LLC is Birmingham Towers, Suite 701, 2100 Wharton
Street, Pittsburgh, Pennsylvania 15203.

(3) The business address for Value Partners, Ltd. is 2200 Ross Avenue, Suite
4660 West, Dallas, Texas 75201. Includes 29,202 shares owned by the general
partner of the general partner of Value Partners, Ltd.

(4) This person's business address is 4750 Hempstead Station, Dayton, Ohio
45429.

(5) Does not include the shares of Common Stock owned by LLC. Mr. Liberati is
the Manager-- President and Chief Executive Officer of LLC and, as such,
may be deemed to have the power to vote or direct the voting of, and to
dispose and direct the disposition of, the shares of Company Common Stock
owned by LLC.

(6) Does not include the shares owned by the Schwarz Family Limited
Partnership. The general partner of the Schwarz Family Partnership is the
Albert L. Schwarz Family Trust, of which Mr. Schwarz is the

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<PAGE>
sole trustee and members of his immediate family are the beneficiaries. See
footnote (12), below. Mr. Schwarz is a limited partner of Schwarz Family
Limited Partnership. Includes options to purchase 17,000 shares of Common
Stock granted to Mr. Schwarz pursuant to the Stock Option Plan as of
November 15, 1996, which become exercisable on November 15, 1997. Does not
include options to purchase 34,000 shares of Common Stock granted to Mr.
Schwarz pursuant to the Stock Option Plan as of November 15, 1996, of which
17,000 shares become exercisable on November 15, 1998 and 1999,
respectively.

(7) Does not include the shares of Common Stock owned by LLC, but includes
2,000 shares held in a custodial account for two minor children who share
the same household with Mr. Hecht, who disclaims beneficial ownership of
such shares. Mr. Hecht is a member, but not an officer of, LLC.

(8) Does not include the shares of Common Stock owned by LLC. Mr. Radcliffe is
the Manager-- Secretary of LLC and, as such, may be deemed to have the
power to vote or direct the voting of, and to dispose and direct the
disposition of, the shares of the Common Stock owned by LLC.

(9) Includes options to purchase 5,000 shares of Common Stock granted to Mr.
Winstel as of November 15, 1996, which become exercisable on November 15,
1997. Does not include options to purchase 10,000 shares of Common Stock
granted to Mr. Winstel as of November 15, 1996, of which 5,000 shares
become exercisable on November 15, 1998 and 1999, respectively. Includes
1,300 shares of Common Stock owned by Mr. Winstel's wife as custodian for
their child who shares the same household with Mr. Winstel.

(10) Includes 3,000 shares held as custodian for Mr. Peppel's two minor
children, and for which Mr. Peppel disclaims beneficial ownership. Includes
options to purchase 15,000 shares of Common Stock granted to Mr. Peppel
pursuant to the Stock Option Plan as of November 15, 1996, which become
exercisable on November 15, 1997. Does not include options to purchase
30,000 shares of Common Stock granted to Mr. Peppel pursuant to the Stock
Option Plan as of November 15, 1996, of which 15,000 shares become
exercisable on November 15, 1998 and 1999, respectively. Does not include
shares of Common Stock owned by LLC. Mr. Peppel is the Manager-Treasurer of
LLC and, as such, may be deemed to have the power to vote or direct the
voting of, and to dispose or direct the disposition of the shares of
Company Common Stock owned by LLC.

(11) Does not include shares of Common Stock owned by LLC, of which Mr.
Hollenshead is a member. The business address for Mr. Hollenshead is 4177-B
Varsity Drive, Ann Arbor, Michigan 48104.

(12) Includes 5,000 shares of Common Stock issuable upon the exercise of
options granted to each of Messrs. Liberati, Hecht and Radcliffe on May
29, 1997, which vested immediately upon such issuance, but does not
include 10,000 shares of Common Stock issuable upon exercise of options
granted to each of Messrs. Liberati, Hecht and Radcliffe on May 29,
1997, of which 5,000 shares become exercisable on the date of the annual
meetings of shareholders in 1998 and 1999, respectively. See
"Management--Non-Employee Directors Stock Option Plan."

(13) Does not include shares of Common Stock owned individually by Albert L.
Schwarz, who is the trustee of the Schwarz Family Trust, an inter vivos
revocable Ohio trust, which is the general partner of the Schwarz Family
Limited Partnership, an Ohio limited partnership. The address for the
Schwarz Family Limited Partnership is 453 Rolling Timber Trail, Kettering,
Ohio 45429.

(14) Does not include shares of Common Stock owned by LLC. Includes shares held
by the Schwarz Family Limited Partnership.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company is authorized to issue 30,000,000 shares of Common Stock, and
5,000,000 shares of Preferred Stock. The amount of authorized shares of Common
Stock and Preferred Stock reflects the Recapitalization of the Company's equity
from two classes of common stock (voting common stock, without par value, and
non-voting common stock, without par value) to a single class of Common Stock,

58
<PAGE>
without par value, and the Preferred Stock, without par value, as well as the
Stock Split which increased the number of authorized shares from 12,000 shares
of common stock to the number of authorized shares of Common Stock and Preferred
Stock set forth above. The Recapitalization resulted from the filing by the
Company of the Amended and Restated Articles of Incorporation on September 25,
1996. Both the Recapitalization and the Stock Split were effective as of
September 25, 1996. All outstanding shares of Common Stock are fully paid and
nonassessable. As of August 31, 1997, there were 3,929,109 shares of Common
Stock outstanding and no shares of Preferred Stock outstanding. The Board of
Directors may issue additional shares of Common Stock or Preferred Stock from
time to time without the approval of the stockholders.

The following summary description of the Company's capital stock does not
purport to be complete and is subject to, and qualified in its entirety by, the
description of the Company's capital stock contained in the Company's Articles,
a copy of which has been filed with the Commission. Reference is made to the
Articles for a detailed description of the provisions summarized below.

COMMON STOCK

DIVIDENDS. Subject to the prior rights of the holders of any shares of
preferred stock that may be outstanding, the Company may pay dividends as
declared from time to time by the Board of Directors out of funds legally
available therefor. The holders of Common Stock will be entitled to receive and
share equally in such dividends as may be declared by the Board of Directors.

VOTING RIGHTS. Except as provided in any resolution or resolutions adopted
by the Board of Directors establishing any series of preferred stock, the
holders of Common Stock possess exclusive voting rights in the Company. Each
holder of shares of Common Stock is entitled to one vote for each share held on
all matters voted upon by stockholders. No holder of the capital stock of the
Company shall be permitted to cumulate his votes in the election of directors.

LIQUIDATION. Subject to the prior rights of the holders of any shares of
Company Preferred Stock that may be outstanding, in the event of any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Common Stock would generally be entitled to
receive pro rata, after payment of all debts and liabilities of the Company, all
remaining assets of the Company available for distribution.

PREEMPTIVE RIGHTS; REDEMPTION. Holders of the Common Stock do not have any
preemptive rights with respect to any shares of capital stock of the Company. In
addition, the Common Stock is not subject to any redemption provisions.

PREFERRED STOCK

None of the Company's authorized Preferred Stock is issued or outstanding.

The Company is authorized to issue 5,000,000 shares of Preferred Stock. The
Board of Directors has the authority to issue the Preferred Stock in one or more
series and to fix the price, rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting a series or the designation of such series,
without any further vote or action by the Company's stockholders. The Preferred
Stock may be issued in distinctly designated series, may be convertible into
Common Stock and may rank prior to the Common Stock as to dividend rights,
liquidation preferences, or both, and may have full or limited voting rights.
Accordingly, the issuance of Preferred Stock could adversely affect the voting
and other rights of holders of Common Stock.

The authorized but unissued shares of Preferred Stock and the authorized but
unissued and unreserved shares of Common Stock are available for issuance in
future mergers or acquisitions, in a future

59
<PAGE>
underwritten public offering or private placement or for other general corporate
purposes. Except as otherwise required to approve a transaction in which the
additional authorized shares of Preferred Stock would be issued or as may be
required by the National Association of Securities Dealers, Inc. (the "NASD") to
maintain the quotation of the Common Stock on the Nasdaq National Market, no
stockholder approval would be required for the issuance of these shares. The
issuance of Common or Preferred Stock, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders and may adversely affect the
market price of, and the voting and other rights of, the holders of Common
Stock. Except as described herein, the Company has no current plans to issue any
shares of Common or Preferred Stock.

TRANSFER AGENT

The transfer agent for the Common Stock is the Registrar and Transfer
Company, Cranford, New Jersey.

RESTRICTIONS ON ACQUISITION OF THE COMPANY

AMENDED AND RESTATED ARTICLES OF INCORPORATION, CODE OF REGULATIONS AND OTHER
PROVISIONS

GENERAL. The following discussion is a general summary of certain
provisions of the Articles and Code of Regulations relating to nominations and
stockholder proposals, special meetings of stockholders, business combinations
and amendments to the Articles and Code of Regulations, which may be deemed to
have an anti-takeover effect. The following description of certain of the
provisions of the Articles and Code of Regulations of the Company is necessarily
general and reference should be made in each case to such Articles and Code of
Regulations, each of which is set forth as an exhibit to the Company's
Registration Statement filed with the Commission. See "Additional Information."
Capitalized terms not otherwise defined shall have the meanings set forth in the
Articles and Code of Regulations.

NOMINATIONS AND STOCKHOLDER PROPOSALS. Article VII.D. of the Articles
governs nominations for election to the Board of Directors, and requires all
nominations for election to the Board of Directors other than those made by the
Board to be made by a stockholder who has complied with the notice provisions in
that section. Article IX.C. of the Articles provides that only such business as
shall have been properly brought before an annual meeting of stockholders shall
be conducted at the annual meeting. Business may be brought before the meeting
by or at the direction of the Board of Directors or otherwise must be properly
brought before the meeting by a stockholder. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the Company. In both
instances, written notice of a stockholder nomination or stockholder proposal
must be communicated to the attention of the Company's Secretary and either
delivered to, or mailed and received at, the principal executive offices of the
Company not less than 60 days prior to the anniversary date of the mailing of
proxy materials by the Company in connection with the immediately preceding
annual meeting of stockholders of the Company. Each such notice shall include
specified matters set forth in the Articles, including information relating to
the proposal or the nominee or nominees and to the stockholder who has made the
nomination or proposal and any stockholder known to be supporting such
nomination or proposal.

The procedures regarding stockholder nominations and stockholder proposals
will provide the Board of Directors with the information which will be necessary
to evaluate a stockholder nominee to the Board and stockholder proposals and
other relevant information, such as existing stockholder support for the nominee
or business proposal, as well as the time necessary to consider and evaluate
such information in advance of the applicable meeting. The proposed procedures,
however, will provide incumbent directors advance notice of a dissident slate of
nominees for director or of a business proposal not favored by the Board, and
will make it easier for the Board to solicit proxies resisting such nominees or
business proposal.

60
<PAGE>
This may make it easier for the incumbent directors to retain their status as
directors or to defeat a stockholder proposal, even when certain stockholders
view the dissident nominations or business proposal as in the best interests of
the Company or its stockholders. In this sense, this provision can be seen as
advantageous to incumbent management and may discourage takeover attempts.

SPECIAL MEETINGS OF STOCKHOLDERS. Article IX.A. of the Company's Articles
provides that special meetings of the Company's stockholders, for any purpose or
purposes, may only be called by the Chairman of the Board, the President or a
majority of the Whole Board of Directors and a majority of the Continuing
Directors, as defined below, or by holders of not less than 50.0% of all votes
entitled to be cast on any issue proposed to be considered at such special
meeting. The provisions in the Articles accordingly effectively require a
majority vote of the stockholders or enable the Chairman of the Board, the
President or a majority of the Whole Board of Directors and a majority of the
Continuing Directors to determine if it is appropriate for the Company to incur
the expense of a special meeting in order to present a proposal to stockholders.

BUSINESS COMBINATIONS. Article X of the Articles governs any proposed
"Business Combination" (defined generally to include certain sales, purchases,
exchanges, leases, transfers, dispositions or acquisitions of assets, mergers or
consolidations, or certain reclassifications of securities of the Company)
between the Company, on the one hand, and a Related Person, on the other hand. A
"Related Person" is defined generally to include any person, partnership,
corporation, group or other entity (other than the Company or LLC) which is the
Beneficial Owner (as defined) of 10.0% or more of the shares of the Company
entitled to vote ("Voting Shares") generally in an election of directors (i.e.,
control).

Under Article X.B., if certain specified conditions (discussed in the
following four paragraphs) are not met, the Company may not become a party to
any Business Combination without the prior affirmative vote at a meeting of the
Company's stockholders by the holders of at least 80.0% of the Voting Shares,
voting separately as a class, and by an Independent Majority of Stockholders,
which is defined to mean the holders of a majority of the outstanding Voting
Shares that are not Beneficially Owned (as defined), directly or indirectly, by
a Related Person. If such approval were obtained, the specified conditions would
not have to be met. Such conditions also would not have to be met if the Board
of Directors approved the Business Combination at times and by votes specified
in the Articles.

The conditions necessary to avoid the vote of 80.0% of the Company's
outstanding Voting Shares and of an Independent Majority of Stockholders include
conditions providing that, upon consummation of the Business Combination, all of
the Company's stockholders would receive at least a certain minimum price per
share for their shares. The ratio of the price to be received by the
stockholders (other than the Related Person) in the Business Combination to the
market price of the Company's shares immediately before the announcement of the
Business Combination would have to be at least as great as the ratio of (i) the
highest per share price paid by the Related Person in acquiring any of the
Company Common Stock prior to the Business Combination to (ii) the market price
per share of the Company Common Stock immediately before the initial acquisition
of any shares by the Related Person. A similar condition would apply in the case
of the price to be paid for any outstanding shares of the Company's Preferred
Stock. These requirements generally are designed to ensure that the stockholders
receive the benefit of any premium paid by the Related Person in acquiring any
of its holdings. The price to be received by stockholders in the Business
Combination also would have to be not less than the highest per share price paid
by the Related Person in acquiring any of its holdings.

Another condition necessary to avoid the increased vote requirements is that
the consideration to be received in the Business Combination by holders of stock
must be in the same form and of the same kind as the consideration paid by the
Related Person in acquiring stock already owned by it (except to the extent that
each individual stockholder might agree to accept consideration of a different
form or kind in exchange for all or part of the shares which he or she owns).
Thus, for example, if the Related Person had acquired his or her initial share
interest for cash, the remaining stockholders would have to be offered cash in
the Business Combination and would not have to accept stock or debt of another
corporation or institution.

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<PAGE>
In order to avoid the supermajority voting requirements of Article X.B., the
Related Person also would have to comply with certain other conditions after he
or she acquired his or her 10.0% interest in the Company. These conditions
include the following: (i) the Related Person must ensure that the Company's
Board of Directors included representation by "Continuing Directors" (generally,
those directors at the time of effectiveness of the Articles, whether or not a
Related Person or Associate or Affiliate (as defined) of a Related Person, and
those directors who are not affiliated with the Related Person and who are
elected as directors prior to the time the Related Person became such or with
the recommendation of a majority of other Continuing Directors) in proportion to
the holdings of the other stockholders; (ii) the Related Person must have
refrained from acquiring additional capital stock of the Company with certain
limited exceptions, and must have refrained from acquiring additional Voting
Shares, or securities convertible into or exchangeable for Voting Shares, after
he or she became a Related Person; (iii) the Related Person must not have
received certain specified benefits from the Company, such as loans or
guarantees, and, except with the approval of a majority of the directors and a
majority of the Continuing Directors, must not have made any major change in the
Company's business or equity capital structure or entered into any contract with
the Company; and (iv) except as approved by a majority of the directors and a
majority of the Continuing Directors, there must have been no failure to pay
dividends on any outstanding Company Preferred Stock, no reduction in annual
dividends paid on the Company Common Stock, and increases in annual dividends as
necessary to reflect any reclassification, recapitalization, reorganization or
similar transaction which has the effect of reducing the number of outstanding
shares of stock. Finally, a proxy statement must have been sent to stockholders
in connection with the Business Combination. Such proxy statement must contain
the recommendations, if any, of the Continuing Directors, and of any investment
banking firm selected by a majority of the Continuing Directors, as to the
fairness of the Business Combination from the point of view of the stockholders.

If all of the foregoing conditions are met, the increased voting
requirements described above would be dispensed with and the Business
Combination would require only such approval, if any, as would otherwise be
required by Ohio law.

Article X is intended to provide minimum safeguards for stockholders who do
not accept a takeover attempt and continue to hold their shares after the
attempt succeeds and the control of the Company is acquired by a Related Person.
The requirement of an 80.0% stockholder vote probably means that a Business
Combination which fails to meet the minimum price and other conditions might not
be accomplished against the opposition of the incumbent Board of Directors,
members of which, along with the executive officers of the Company and LLC, at
August 31, 1997 beneficially owned 1,942,901 shares or 49.4% of the Common
Stock, which amount does not include shares of Common Stock which may be
immediately acquired upon the vesting of outstanding stock rights. See
"Principal Stockholders."

The provisions would not restrict another company which merely desired to
exercise control over the Company and did not intend to effect a subsequent
Business Combination. Moreover, these provisions may not apply to an attempted
combination with a person not a Related Person. On the other hand, if another
company obtaining control over the Company were not willing to meet the price
and other conditions of Articles X.B., the holders of just over one-fifth of the
outstanding Voting Shares could block a Business Combination supported by the
remaining stockholders. The result is that Business Combinations favored by a
majority of stockholders might not be approved. Article X.B. might also
discourage a tender offer for the Company's stock because of the resulting need
either to observe the minimum price requirements or to obtain an 80.0%
stockholder vote as a precondition to any subsequent Business Combination. This
might have the effect of preventing temporary fluctuations in the market price
of the stock of the Company which could result from actual or rumored takeover
attempts.

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AMENDMENT OF ARTICLES AND CODE OF REGULATIONS. Article XI of the Company's
Articles provides that any amendment of the Articles must be first approved by a
majority of the Board of Directors and thereafter by the holders of two-thirds
of the shares of the Company entitled to vote in an election of directors, but
the approval of 75.0% of the shares of the Company entitled to vote in an
election of directors is required for any amendment to Articles VI (pre-emptive
rights), VII (directors), VIII (indemnification), IX (relating to meetings of
stockholders), and XI (amendments). In addition, Article X.E. of the Company's
Articles provides that Article X may not be changed, amended or repealed without
the affirmative vote of the holders of at least 80.0% of the Voting Shares and
by an Independent Majority of Stockholders (as such terms are defined, see
"--Business Combinations"). However, any such change, amendment or repeal to
Article X of the Company's Articles approved by two-thirds of the Whole Board of
Directors and a majority of the Continuing Directors, as defined, is not subject
to the approval requirements of Article X.E.

Article XI of the Articles provides that the Code of Regulations of the
Company may be adopted, altered, amended or repealed by the affirmative vote of
a majority of the stockholders of the Company at any regular or special meeting
of the stockholders called for that purpose.

OHIO GENERAL CORPORATION LAW. The General Corporation Law of the State of
Ohio, the state in which the Company is incorporated and maintains its principal
executive office, contains certain provisions that may have the effect of
delaying, deterring or preventing a change in control of the Company. All
information set forth below regarding the OGCL is necessarily general in nature
and reference should be made to the OGCL for more specific, detailed
information.

CONTROL SHARE ACQUISITION. Because the Articles are silent on this matter,
Section 1701.831 of the OGCL regarding shareholder review of control share
acquisitions will apply to the Company. A "control share acquisition" is defined
as the acquisition, directly or indirectly, by any person of shares of an Ohio
corporation having fifty or more stockholders (an "Ohio Public Company") that,
when added to all other shares of the corporation in respect of which such
person may exercise or direct the exercise of voting power, would entitle such
person, immediately after such acquisition, directly or indirectly, alone or
with others, to exercise or direct the exercise of the voting power of the
corporation in the election of directors within any of the following ranges of
voting power: (i) one fifth or more, but less than one third; (ii) one third or
more, but less than a majority; or (iii) a majority or more. No person may make
a control share acquisition unless: (i) the shareholders of the corporation by a
majority vote (excluding the shares held by the person proposing the control
share acquisition), at a special meeting held for such purpose, authorize such
acquisition, and (ii) such acquisition is consummated no later than 360 days
following such shareholder authorization. The special meeting of shareholders
must be preceded by the filing by the person proposing the control share
acquisition of a statement which details the proposed acquisition and notice of
the special meeting.

TRANSACTIONS INVOLVING INTERESTED SHAREHOLDERS. Chapter 1704 of the OGCL
regulates certain transactions by Ohio Public Companies and a person who,
directly or indirectly, alone or with others, can exercise or direct the
exercise of 10.0% of the voting power of the Ohio Public Company in an election
of directors (the "Interested Shareholder"). The Articles of the Company have
been amended to make Chapter 1704 inapplicable to the Company, although Section
1704.05(F)(2) required that the Company be precluded from engaging in a Chapter
1704 transaction until September 25, 1997. A "Chapter 1704 transaction" is a
merger, consolidation, combination or majority share acquisition between the
Ohio Public Company and the Interested Shareholder, a purchase, lease, sale,
distribution, dividend, mortgage, pledge or other disposition of at least 5.0%
of the assets, or 5.0% of the outstanding shares or 10.0% of the earnings power
or income of the Ohio Public Company by, to or with an Interested Shareholder,
the issuance or transfer to an Interested Shareholder of any shares, or rights
to acquire shares, of the Ohio Public Company if the shares or rights have an
aggregate fair market value equal to 5.0% of all outstanding shares of the Ohio
Public Company, the adoption of a plan for the dissolution or liquidation of the
Ohio Public Company by

63
<PAGE>
or on behalf of an Interested Shareholder, or a reclassification,
recapitalization, merger or consolidation of the Company, the effect of which is
to increase the proportionate shares of the Ohio Public Company's outstanding
shares owned by the Interested Shareholder. Any such transactions, after
September 25, 1997, will be governed by Article X of the Company's Articles. See
"--Business Combinations."

CONTROL BIDS. No person may make a control bid for the Common Stock of the
Company pursuant to a tender offer or a request or invitation for tenders until
such person has filed with the Ohio Division of Securities (the "Division") and
the Company a control bid information statement. A "control bid" is defined by
Section 1707.01 of the OGCL as the purchase or offer to purchase any equity
security of a company located in Ohio, which has more than 10.0% of its record
equity security holders who are residents of such state, from a resident of Ohio
where, after such purchase, the offeror would own more than 10.0% of any class
of the issued and outstanding equity securities of such issuer. Within three
calendar days of the filing of the control bid information statement, the
Division may summarily suspend the continuation of the control bid if the
Division determines that the information given in the information statement does
not provide full disclosure to offerees of all material information relating to
the control bid. A hearing will be scheduled on such suspension. In addition, no
offeror may make a control bid that is not made to all holders residing in Ohio,
or that is not made to such holders on the same terms as the control bid made to
holders residing outside of the state of Ohio. Further, no offeror may acquire
from any resident of Ohio any equity security within two years following the
last acquisition of any security of the same class pursuant to a control bid by
such offeror unless the resident is afforded, at the time of the later
acquisition, a reasonable opportunity to dispose of the security to the offeror
upon substantially the same terms as those provided in the earlier control bid.

DISGORGEMENT. For the purpose of preventing manipulative practices by a
person who makes a proposal, or publicly discloses the intention or possibility
of making a proposal, to acquire control of the Company, Section 1707.043 of the
OGCL states that any profit in excess of $250,000 realized, directly or
indirectly, from the disposition of any equity securities of the Company by a
person who, within 18 months before the disposition, directly or indirectly,
alone or in concert with others, made a proposal, or publicly disclosed the
intention or possibility of making a proposal, to acquire control of the
Company, inures to the Company and is recoverable by the Company by an action
brought within two years after the date of the disposition of such securities.

ANTI-TAKEOVER EFFECTS. The Board of Directors believes that the foregoing
provisions in the Articles of the Company are prudent and, together with
applicable state law, will reduce vulnerability to takeover attempts and certain
other transactions that are not negotiated with and approved by the Board of
Directors of the Company. The Board of Directors believes that these provisions
are in the best interests of the Company and its current and future
stockholders. In the Board of Directors' judgment, the Board of Directors is in
the best position to determine the true value of the Company and to negotiate
more effectively for what may be in the best interests of its stockholders.
Accordingly, the Board of Directors believes that it is in the best interests of
the Company and its current and future stockholders to encourage potential
acquirors to negotiate directly with the Board of Directors and that these
provisions will encourage such negotiations and discourage hostile takeover
attempts. It is also the Board of Directors' view that these provisions should
not discourage persons from proposing a merger or other transaction at prices
reflective of the true value of the Company and where the transaction is in the
best interests of all stockholders.

Despite the Board of Directors' belief as to the benefits to the Company's
stockholders of the foregoing provisions, these provisions also may have the
effect of discouraging a future takeover attempt in which stockholders might
receive a substantial premium for their shares over then current market prices.
As a result, stockholders who might desire to participate in such a transaction
may not have an opportunity to do so. The Board of Directors, however, has
concluded that the potential benefits of these provisions

64
<PAGE>
outweigh their possible disadvantages. The Board of Directors of the Company is
not aware of any present effort that might be made to acquire control of the
Company.

PLAN OF DISTRIBUTION

The Company has been advised by the Selling Stockholders that they or their
pledgees, donees, transferees or other successors in interest intend to sell all
or a portion of the shares offered hereby from time to time on the Nasdaq
National Market and that sales will be made at prices prevailing at the times of
such sales. Such persons may also make private sales directly or through a
broker or brokers, who may act as agent or as principal. The Company will
receive no part of the proceeds of sales made hereunder.

Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders and/or purchasers of the shares
offered hereby. Usual and customary brokerage fees will be paid by the Selling
Stockholders. Broker-dealers may agree with the Selling Stockholders to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the Selling
Stockholders, to purchase as principal any unsold shares at the price required
to fulfill the broker-dealer commitment to the Selling Stockholders.
Broker-dealers who acquire shares as principal may thereafter resell such shares
from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) on the Nasdaq National
Market, in negotiated transactions or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.

The Company has advised the Selling Stockholders that Regulation M
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), may apply to their sales in the market, has furnished the
Selling Stockholders with a copy of this regulation and has informed them of
the need for delivery of copies of this Prospectus. The Selling Stockholders
may indemnify any broker-dealer that participates in transactions involving
the sale of the shares against certain liabilities, including liabilities
arising under the Securities Act. Any commissions paid or any discounts or
concessions allowed to any such broker-dealers, and any profits received on
the resale of such shares, may be deemed to be underwriting discounts and
commissions under the Securities Act if any such broker-dealers purchase
shares as principal.

Any securities covered by this Prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.

There can be no assurance that the Selling Stockholders will sell any or all
of the shares of Common Stock offered by them hereunder.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C. As of the
date of this Prospectus, a general partnership composed of certain members of
Elias, Matz, Tiernan & Herrick L.L.P. beneficially owned 15.9% of LLC.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996
included in this Prospectus have been so included and in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

The consolidated financial statements of DDP, as of December 31, 1995 and
1994 and May 30, 1996 and for each of the two years in the period ended December
31, 1995 and for the period of January 1, 1996

65
<PAGE>
through May 30, 1996 included in this Prospectus have been so included and in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (which includes all amendments thereto) under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto,
certain items of which are omitted from the Prospectus as permitted by the rules
and regulations promulgated by the Commission. For further information
pertaining to the Company and the Common Stock, reference is made to the
Registration Statement and the exhibits and schedules thereto, which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission, Washington, D.C. 20549. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete and, in each instance, reference is made
to the copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended and in accordance therewith files reports and
other information with the Commission. Such reports and other information
(including proxy and information statements) filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following Regional Offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10007; and Chicago Regional
Office, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
prescribed rates. In addition, the Commission maintains a Web site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company. As long as the Company remains listed on the
National Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq")
National Market System after the Offering, such information may also be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C., 20006.

66
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
INTERIM FINANCIAL STATEMENTS OF THE COMPANY

Consolidated Balance Sheet (Unaudited) as of June 30, 1997.......................... F-2

Consolidated Statements of Operations (Unaudited) for the six months ended June 30,
1996 and 1997...................................................................... F-3

Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30,
1996 and 1997...................................................................... F-4

Notes to Consolidated Financial Statements (Unaudited)............................... F-5

ANNUAL FINANCIAL STATEMENTS OF THE COMPANY

Report of Independent Accountants.................................................... F-6

Consolidated Balance Sheets as of December 31, 1995 and 1996......................... F-7

Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and
1996............................................................................... F-8

Consolidated Statements of Cash Flows for the year ended December 31, 1994, 1995 and
1996............................................................................... F-9

Notes to Consolidated Financial Statements........................................... F-10

AUDITED FINANCIAL STATEMENTS OF DDP

Report of Independent Accountants.................................................... F-21

Consolidated Balance Sheets as of December 31, 1994 and 1995 and May 30, 1996........ F-22

Consolidated Statements of Operations for the years ended December 31, 1994 and 1995
and for the period from January 1, 1996 to May 30, 1996............................ F-23

Consolidated Statements of Cash Flows for the years ended December 31, 1994 and 1995
and for the period from January 1, 1996 to May 30, 1996............................ F-24

Notes to Consolidated Financial Statements........................................... F-25
</TABLE>

F-1
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

CONSOLIDATED BALANCE SHEET

(UNAUDITED)
JUNE 30,
1997
-----------
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . $ 94,819
Accounts receivable. . . . . . . . . . . . 9,949,305
Inventories. . . . . . . . . . . . . . . . 5,960,682
Prepaid expenses . . . . . . . . . . . . . 133,580
Deferred income tax assets . . . . . . . . 35,496
-----------
Total current assets. . . . . . . . . . 16,173,882
-----------

Property and equipment - net of accumulated
depreciation . . . . . . . . . . . . . . . 1,246,909
-----------
Other assets:
Deposits . . . . . . . . . . . . . . . . . 36,009
Cash surrender value officers' life insurance 571,986
Intangible assets. . . . . . . . . . . . . 2,025,317
-----------
Total other assets . . . . . . . . . . 2,633,312
-----------
Total assets. . . . . . . . . . . . . . $20,054,103
-----------
-----------

Liabilities and Stockholders' Equity
Current Liabilities:
Line-of-credit . . . . . . . . . . . . . . $ 1,343,772
Accounts payable - trade . . . . . . . . . 3,400,118
Accrued expenses, payroll taxes and
withholdings . . . . . . . . . . . . . . 1,124,192
Current portion of long-term debt . . . . 35,567
-----------

Total current liabilities . . . . . . . 5,903,649
Long-term debt . . . . . . . . . . . . . . 72,225
Deferred income taxes. . . . . . . . . . . 61,249
-----------

Total liabilities . . . . . . . . . . . 6,037,123
-----------
Stockholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized; none outstanding at
June 30, 1997 . . . . . . . . . . . . . . 0
Common stock, no par value; 30,000,000 shares
authorized, 3,644,383 shares outstanding at
June 30, 1997 . . . . . . . . . . . . . . 0
Additional paid-in capital . . . . . . . 9,349,249
Retained earnings. . . . . . . . . . . . . 4,682,731
-----------
14,031,980
Less - Treasury common stock, at cost
1,200 shares . . . . . . . . . . . . . . 15,000
-----------

Total stockholders' equity. . . . . . . 14,016,980
-----------

Total liabilities and stockholders'
equity. . . . . . . . . . . . . . . . $20,054,103
-----------
-----------

The accompanying notes are an integral part of these consolidated
financial statements.

F-2
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
-------------------------------
1996 1997
------------- -------------
Net sales. . . . . . . . . . . . . . . . . . $ 26,247,459 $ 42,349,759
Operating costs:
Cost of sales. . . . . . . . . . . . . . . . 21,161,836 35,008,008
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . 4,033,438 5,757,311
------------- -------------

Total operating costs. . . . . . . . . . 25,195,274 40,765,319
------------- -------------

Operating income . . . . . . . . . . . . . . 1,052,185 1,584,440
Interest expense . . . . . . . . . . . . . . (142,587) (24,584)
Other income . . . . . . . . . . . . . . . . 11,114 26,593
------------- -------------

Income before income taxes . . . . . . . . . 920,712 1,586,449
Provision for income taxes . . . . . . . . . 382,079 642,512
------------- -------------

Net income . . . . . . . . . . . . . . . . . $ 538,633 $ 943,937
------------- -------------
------------- -------------

Earnings per share of common stock . . . . . $ 0.23 $ 0.26
------------- -------------
------------- -------------

Weighted average number of common
shares outstanding . . . . . . . . . . . . 2,388,000 3,573,853
------------- -------------
------------- -------------

The accompanying notes are an integral part of these consolidated
financial statements.

F-3
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
-------------------------------

1996 1997
------------- -------------
Cash flows (used in) provided by
operating activities: Net income . . . . . $ 538,633 $ 943,937
Adjustments to reconcile net income to
cash (used in) provided by operating
activities:
Depreciation and amortization. . . . . . . . 144,679 168,455
Changes in assets and liabilities net of
effects of acquisitions of businesses:
Accounts receivable. . . . . . . . . . . . (1,363,445) (1,273,313)
Inventories. . . . . . . . . . . . . . . . 262,765 403,058
Prepaid expenses . . . . . . . . . . . . . (35,953) 279,758
Deposits . . . . . . . . . . . . . . . . . (107,432) (7,732)
Accounts payable - trade . . . . . . . . . 563,953 (1,310,291)
Accrued expenses . . . . . . . . . . . . . (17,752) 137,869
Accrued income taxes . . . . . . . . . . . (215,064) 19,296
------------- -------------

Cash used in operating activities. . . . . (229,616) (638,963)
------------- -------------

Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . (62,530) (166,015)
Investment in cash surrender value officers'
life insurance . . . . . . . . . . . . . (6,803) 0
Acquisition of Imperial Data Supply
Corporation. . . . . . . . . . . . . . . 0 (1,000,000)
Cash included in acquisitions. . . . . . . 109,467 8,626
------------- -------------

Cash (used in) provided by investing
activities . . . . . . . . . . . . . . . 40,134 (1,157,389)
------------- -------------

Cash flows from financing activities:
Borrowings under line-of-credit. . . . . . 6,041,274 4,792,953
Payments under line-of-credit. . . . . . . (5,772,741) (3,604,174)
Principal payments on long-term debt . . . (3,637) (18,243)
Payments under non-competition agreements. (60,240) (60,240)
------------- -------------

Cash provided by financing activities. . . 204,656 1,110,296
------------- -------------

Net (decrease) increase in cash. . . . . . . 15,174 (686,056)
Cash - Beginning of period . . . . . . . . 1,900 780,875
------------- -------------

Cash - End of period . . . . . . . . . . . $ 17,074 $ 94,819
------------- -------------
------------- -------------

Supplemental cash flow information:
Cash paid for interest . . . . . . . . . . $ 133,458 $ 25,066
Cash paid for income taxes . . . . . . . . $ 648,189 $ 593,941

The accompanying notes are an integral part of these consolidated
financial statements.

F-4
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 - GENERAL

The accompanying unaudited consolidated financial statements have been
prepared in accordance with Rule 10-01 of SEC Regulation S-X. Consequently,
they do not include all the disclosures required under generally accepted
accounting principles for complete financial statements. However, in the
opinion of the management of Miami Computer Supply Corporation (the "Company"),
the consolidated financial statements presented herein contain all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows of the Company and
its consolidated subsidiaries.

NOTE 2 - ORGANIZATION

The Company sells a wide variety of computer supplies to corporate
customers, governmental agencies, universities, hospitals and, to a lesser
extent, computer supply dealers. Its primary sales products include laser
toner, ink jet cartridges, printer ribbons, computer tape cartridges, diskettes,
presentation products, paper supplies and printer cartridges.

NOTE 3 - ACQUISITIONS

Effective May 30, 1996, Pittsburgh Investment Group, LLC ("LLC")
contributed its stock in Diversified Data Products, Inc. ("DDP") to the Company.
The acquisition has been accounted for using the purchase method of accounting,
and accordingly, the purchase price has been allocated to the assets based upon
the fair value of the liabilities assumed as of May 30, 1996.

In connection with the acquisition of DDP, LLC issued a loan to certain
former stockholders in an amount of $250,000. This amount was subject to
repayment based upon DDP generating specified income levels for the period May
30, 1996 to December 31, 1996. DDP generated such income levels for this
period, and accordingly the loan was forgiven. The value of the assets acquired
has been adjusted to reflect this additional consideration.

The operating results of DDP have been included in the statement of
operations from the date of acquisition. The following unaudited pro forma
information has been prepared assuming that this acquisition had taken place at
the beginning of the respective period. This pro forma financial information is
presented for informational purposes only and may not be indicative of what the
actual results of operations might have been if the acquisition had been
effective at the beginning of 1996 (in thousands, except per share data).

SIX MONTHS ENDED
JUNE 30, 1996
----------------
Net sales . . . . . . . . . . . . . . . $ 31,465
Net income. . . . . . . . . . . . . . . $ 537
Earnings per share. . . . . . . . . . . $ 0.23

On April 30, 1997 the Company acquired Imperial Data Supply Corporation
("IDS") headquartered in Spokane, Washington with offices in Idaho and Montana.
On July 1, 1997 the Company acquired Data Associates, Inc. ("DA") headquartered
in Roswell, Georgia with offices in Florida, North Carolina and South Carolina.
On July 15, 1997 the Company acquired Force 4 D.P. Supplies, Inc. ("Force 4")
headquartered in Portland, Oregon with offices in Illinois, Washington and Utah.
The impact of these acquisitions are not material to the Company's financial
statements.

F-5
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF MIAMI COMPUTER SUPPLY CORPORATION

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Miami Computer Supply Corporation and its subsidiaries at December
31, 1995 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
February 19, 1997

F-6
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

CONSOLIDATED BALANCE SHEET

DECEMBER 31,
-------------------------------
ASSETS 1995 1996
------------- -------------
Current assets
Cash and cash equivalents. . . . . . . . . $ 1,900 $ 780,875
Accounts receivable (Note 4) . . . . . . . 5,155,236 8,636,657
Inventories. . . . . . . . . . . . . . . . 2,943,504 5,894,838
Prepaid expenses . . . . . . . . . . . . . 37,155 396,450
Deferred tax assets (Note 10) . . . . . . 69,052 35,496
------------- -------------

Total current assets . . . . . . . . . . 8,206,847 15,744,316
------------- -------------

Property and equipment - net of accumulated
depreciation (Note 6) . . . . . . . . . . 535,241 1,016,164
------------- -------------

Other assets:
Deposits . . . . . . . . . . . . . . . . . 96,749 28,302
Cash surrender value officers' life
insurance. . . . . . . . . . . . . . . . 419,779 571,986
Intangible assets (Note 9). . . . . . . . 285,520 414,440
------------- -------------

Total assets . . . . . . . . . . . . . . $ 9,544,136 $ 17,775,208
------------- -------------
------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line-of-credit (Note 5) . . . . . . . . . $ 3,531,467 $ --
Accounts payable - trade . . . . . . . . . 2,132,480 4,308,785
Accrued expenses, payroll taxes and
withholdings . . . . . . . . . . . . . . 805,796 1,188,708
Accrued income taxes . . . . . . . . . . . 221,414 --
Current portion of long-term debt (Note 5) 5,413 35,567
------------- -------------
Total current liabilities. . . . . . . . 6,696,570 5,533,060
Long-term debt (Note 5). . . . . . . . . . 477 64,696
Other long-term liabilities. . . . . . . . . 163,640 43,160
Deferred taxes (Note 10). . . . . . . . . . 51,661 61,249
------------- -------------

Total liabilities. . . . . . . . . . . . 6,912,348 5,702,165
Stockholders' equity (Note 12):
Preferred stock, no par value, 5,000,000 shares
authorized; none outstanding at
December 31, 1995 and December 31, 1996. -- --
Common stock, no par value; 30,000,000
shares authorized, 2,388,000 and 3,538,000
shares outstanding at December 31, 1995
and December 31, 1996, respectively. . . -- --
Additional paid-in capital . . . . . . . . 25,225 8,349,249
Retained earnings. . . . . . . . . . . . . 2,621,563 3,738,794
------------- -------------
2,646,788 12,088,043
Less - Treasury common stock, at cost
(shares 1995-1,200; 1996-1,200). . . . . 15,000 15,000
------------- -------------
Total stockholders' equity . . . . . . . 2,631,788 12,073,043
------------- -------------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . $ 9,544,136 $ 17,775,208
------------- -------------
------------- -------------

The accompanying notes are an integral part of these consolidated
financial statements.

F-7
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . $ 35,690,105 $ 43,320,922 $ 63,427,728
Operating costs:
Cost of sales. . . . . . . . . . . . . . . 28,249,947 34,641,904 52,061,042
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . 6,219,104 7,124,661 8,891,122
Non-cash compensation expense . . . . . . -- -- 279,726
------------- ------------- -------------

Total operating costs. . . . . . . . . . 34,469,051 41,766,565 61,231,890
------------- ------------- -------------

Operating income . . . . . . . . . . . . . . 1,221,054 1,554,357 2,195,838
Interest expense . . . . . . . . . . . . . . (204,406) (274,077) (312,327)
Other (expense)/income . . . . . . . . . . . 10,767 21,722 (10,587)
------------- ------------- -------------

Income before income taxes . . . . . . . . . 1,027,415 1,302,002 1,872,924
Provision for income taxes (Note 10) . . . . 417,680 509,129 755,693
------------- ------------- -------------

Net income . . . . . . . . . . . . . . . . . $ 609,735 $ 792,873 $ 1,117,231
------------- ------------- -------------
------------- ------------- -------------

Earnings per share of common stock . . . . . $ 0.26 $ 0.33 $ 0.44
------------- ------------- -------------
------------- ------------- -------------

Weighted average number of common
shares outstanding . . . . . . . . . . . . 2,320,000 2,388,000 2,532,399
------------- ------------- -------------
------------- ------------- -------------

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-8
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31,
-------------------------------------------
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows (used in) provided by operating
activities:
Net income . . . . . . . . . . . . . . . . . $ 609,735 $ 792,873 $ 1,117,231
Adjustments to reconcile net income to
cash (used in) provided by operating
activities:
Depreciation and amortization. . . . . . . 244,439 292,211 328,500
Provision for obsolete inventory . . . . 24,491 11,791 13,332
Issuance of stock awards . . . . . . . . . -- -- 279,726
Noncash compensation to former Diversified
Data Products, Inc. owner. . . . . . . . -- -- 58,694
Deferred income taxes. . . . . . . . . . . 2,097 (6,876) 32,118
Changes in assets and liabilities net of
effects of acquisitions of businesses:
Accounts receivable. . . . . . . . . . . (975,350) (146,935) (2,637,195)
Inventories. . . . . . . . . . . . . . . (696,691) (623,290) (1,607,704)
Prepaid expenses . . . . . . . . . . . . 23,201 (7,061) (341,336)
Deposits . . . . . . . . . . . . . . . . (23,543) 4,914 68,447
Accounts payable - trade . . . . . . . . 1,021,975 (371,359) 1,341,503
Accrued expenses . . . . . . . . . . . . 176,526 (929) 329,638
Accrued income taxes . . . . . . . . . . 278,019 (62,496) (265,652)
------------- ------------- -------------

Cash (used in) provided by operating
activities . . . . . . . . . . . . . . 684,899 (117,157) (1,282,698)
------------- ------------- -------------

Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . (125,769) (228,866) (511,851)
Investment in cash surrender value
officers' life insurance . . . . . . . . . (75,871) (160,899) (152,207)
Purchase of Paper Rolls & Computer Supplies,
Inc. . . . . . . . . . . . . . . . . . . . (505,986) -- --
Cash included in the acquisition of
Diversified Data Products, Inc . . . . . . -- -- 109,467
------------- ------------- -------------

Cash used in investing activities. . . . . (707,626) (389,765) (554,591)
------------- ------------- -------------

Cash flows from financing activities:
Proceeds from initial public offering. . . . -- -- 7,794,298
Borrowings under line-of-credit. . . . . . . 9,682,562 12,707,419 13,578,915
Payments under line-of-credit. . . . . . . . (9,441,469) (12,108,613) (18,610,382)
Principal payments on long-term debt . . . . (66,905) (66,585) (26,087)
Payments under non-competition agreements . (111,480) (120,480) (120,480)
Purchase of treasury stock . . . . . . . . . (95,000) -- --
Proceeds from sale of treasury stock . . . . 150,000 -- --
------------- ------------- -------------

Cash provided by financing activities. . . 117,708 411,741 2,616,264
------------- ------------- -------------

Net increase (decrease) in cash and cash
equivalents. . . . . . . . . . . . . . . . . 94,981 (95,181) 778,975
Cash and cash equivalents - Beginning of year. 2,100 97,081 1,900
------------- ------------- -------------

Cash and cash equivalents - End of year. . . . $ 97,081 $ 1,900 $ 780,875
------------- ------------- -------------
------------- ------------- -------------

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-9
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND OPERATIONS

Miami Computer Supply Corporation (the "Company") sells a wide variety of
computer supplies to corporate customers, governmental agencies, universities,
hospitals and, to a lesser extent, computer supply dealers. Its primary sales
products include laser printer supplies, printer cartridges, ribbons,
presentation products and paper. The Company operates one centralized
distribution center in Dayton, Ohio and four smaller distribution centers in
Rochester, New York, Louisville, Kentucky, Ann Arbor, Michigan, and Leeds,
England. The Company also maintains 15 sales offices primarily in the Midwest
and Northeast regions of the United States.

Effective May 30, 1996, Pittsburgh Investment Group LLC (LLC) acquired 70
percent of the outstanding shares of the Company for $4.0 million in cash and
$4.0 million in promissory notes. Concurrent with this acquisition, LLC also
acquired from third parties 100 percent of the outstanding common stock of
Diversified Data Products, Inc., a Michigan corporation ("DDP") and contributed
its stock in DDP to the Company. As a result, DDP, a computer supply and office
automation distributor, became a wholly-owned subsidiary of the Company on May
30, 1996. DDP maintains two wholly-owned subsidiaries, Diversified Data
Products, U.K., Ltd., located in the United Kingdom and Compass Export Marketing
("CEM") Overseas Limited, located in Dubai, United Arab Emirates.

The operating results and cash flows of DDP have been included in the
consolidated statements of operations and the consolidated statement of cash
flows for the year ended December 31, 1996 from the date of acquisition.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CONSOLIDATION

All subsidiaries which are wholly-owned are included in the consolidated
financial statements. Intercompany accounts and transactions are eliminated.

REVENUE RECOGNITION

Revenues from the sale of products are recognized upon passage of title to
the customer which coincides with shipment.

INVENTORIES

Inventories are stated at lower of cost or market. Cost is determined
using a weighted average method. Inventories consist primarily of products held
for resale.

FOREIGN CURRENCY TRANSACTIONS

For the Company's subsidiaries located in the United Kingdom and the United
Arab Emirates, the functional currency is the U.S. dollar.

F-10
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and on deposit and highly
liquid debt instruments with maturities generally of three months or less. Cash
equivalents are carried at cost, which approximates fair value.

DERIVATIVE INSTRUMENTS

Forward foreign currency contracts are used to manage currency risks
relating to existing assets or liabilities denominated in a foreign currency.
Gains or losses are recognized in income in the current period. Net contract
values are included in receivables or payables as appropriate.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

CASH AND DEPOSITS - The carrying amount reported in the balance sheet
approximates fair value.

FOREIGN CURRENCY EXCHANGE CONTRACTS - The fair value of the Company's
foreign exchange contracts is estimated based on quoted market prices of
comparable contracts.

SHORT- AND LONG-TERM DEBT - The carrying amounts of the Company's
borrowings approximated their fair value.

PROPERTY, EQUIPMENT, AND CAPITAL LEASES

Property, equipment and capital leases are recorded at cost. Depreciation
and amortization are provided using the straight-line method over the estimated
useful lives of the assets. Depreciation and amortization periods are as
follows:

ESTIMATED
USEFUL LIVES
------------
Furniture and fixtures......... 5 to 7 years
Equipment...................... 3 to 7 years
Leasehold improvements......... 3 to 5 years
Vehicles....................... 5 years

RETIREMENT AND DISPOSAL OF PROPERTIES

The cost of properties retired or otherwise disposed of, together with the
accumulated depreciation provided thereon, is eliminated from the accounts. Any
net gain or loss is recognized in operating income.

LONG-LIVED ASSETS

Effective January 1, 1996, the Company adopted Statements of Financial
Accounting Standards No. 121 ("SFAS No. 121"), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The
adoption of this statement did not have a material affect on the financial
position, results of operations or cash flows of the Company.

INCOME TAXES

Income taxes are recognized during the year in which transactions enter
into the determination of financial statement income. Deferred tax assets and
liabilities are recognized for the future tax consequences of temporary
differences between the book carrying amounts and the tax basis of assets and
liabilities.

F-11
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

INSURANCE

The Company maintains life insurance policies on its key employees which
are recorded at the net cash surrender value. While the Company is the
owner, the Split Dollar Agreements state that the beneficiaries of the insureds
will be entitled to receive the face value of the policies upon the death of the
insureds, less the policies' cash value.

EARNINGS PER SHARE

Earnings per common share is calculated based on the weighted average
number of shares of common stock and common stock equivalents outstanding during
each period, including the weighted average effect of the Company's initial
public offering. See also Notes 12 and 17.

ADVERTISING COSTS

Costs of advertising are expensed as incurred.

NOTE 3. ACQUISITIONS

Effective May 30, 1996, LLC contributed its stock in DDP to the Company.
See also discussion in Note 1. The acquisition of DDP by the Company has been
accounted for using the purchase method of accounting; and accordingly, the
purchase price has been allocated to the assets based upon the fair value of the
liabilities assumed as of May 30, 1996.

The purchase price was allocated as follows:

Cash . . . . . . . . . . . . . $ 109,467
Accounts receivable - net. . . 1,152,626
Inventories. . . . . . . . . . 1,327,685
Other assets . . . . . . . . . 79,484
Goodwill . . . . . . . . . . . 250,000

------------
Purchase price . . . . . . . $ 2,919,262
------------
------------

Goodwill recorded in connection with this acquisition is being amortized on
a straight-line basis over 40 years.

The operating results of DDP have been included in the Company's statement
of operations from the date of acquisition. The following unaudited pro forma
information has been prepared assuming that this acquisition had taken place at
the beginning of the respective periods. This pro forma financial information
is presented for information purposes only and may not be indicative of what the
actual results of operations might have been if the acquisition had been
effective at the beginning of 1995.

YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1996 1997
------------------------------------- ------------ ------------
Net sales......................... $56,677,622 $68,790,997
Net income........................ 811,969 1,131,988
Earnings per share................ $0.34 $0.45

F-12
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 3. ACQUISITIONS - (CONTINUED)

Effective June 30, 1994, the Company acquired the assets and the ongoing
business of Paper Rolls & Computer Supplies, Inc. ("Paper Rolls"), a computer
supply distributor located in Louisville, Kentucky for cash of $505,986. In
addition, the Company agreed to pay $72,000 over a 4-year period beginning July
1, 1994, for agreements with the former owners not to compete and for goodwill.

The acquisition has been accounted for using the purchase method of
accounting; and accordingly, the purchase price has been allocated to the assets
purchased based upon the fair values at the date of acquisition.

The purchase price was allocated as follows:

Accounts receivable - net...................... $ 295,530
Inventories.................................... 155,185
Property and equipment......................... 55,271
Intangible asset - Noncompetition agreement.... 32,000
Goodwill....................................... 40,000
----------
Purchase price............................... $ 577,986
----------
----------

The operating results of Paper Rolls have been included in the Company's
statement of operations from the date of acquisition. The following unaudited
pro forma information has been prepared assuming that this acquisition had taken
place at the beginning of 1994. This pro forma financial information is
presented for information purposes only and may not be indicative of what the
actual results of operations might have been if the acquisition had been
effective at the beginning of 1994.

YEAR ENDED
DECEMBER 31,
-------------
(UNAUDITED) 1994
-------------
Net Sales.................................... $37,362,867
Net income................................... 610,601
Earnings per share........................... $0.26

In connection with the acquisition, employment agreements were entered into
with certain of the former owners. As part of the employment agreement, two of
these officers were each granted an option to purchase up to 6,000 shares of the
Company's stock for a period of four years from the acquisition date at book
value as determined by the Company's Board of Directors on an annual basis. The
exercise price of the options was equivalent to the determined book value.
These options were exercised in 1994.

NOTE 4. ACCOUNTS RECEIVABLE

DECEMBER 31,
----------------------------
1995 1996
------------ -------------
Trade customers.................... $ 5,071,100 $ 8,146,735
Rebates due from suppliers......... 88,799 230,383
Other.............................. 1,337 271,611
Less - Allowance for doubtful
accounts........................ (6,000) (12,072)
------------ ------------
$ 5,155,236 $ 8,636,657
------------ ------------
------------ ------------

F-13
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 5. BORROWING ARRANGEMENTS

The following is a summary of the Company's borrowings:
DECEMBER 31,
-----------------------
1995 1996
----------- ----------
Short-term debt:
Line-of-credit................................. $ 3,531,467 $ --
----------- ---------
----------- ---------
Long-term debt:
Agreement dated January 27, 1993,
maturing on January 26, 1997;
interest rate 10.25%......................... 5,890 477
Capitalized lease obligations (See Note 11).... -- 99,786
Less - Current portion................... (5,413) (35,567)
----------- ---------

Total long-term debt....................... $ 477 $ 64,696
----------- ----------
----------- ----------

The Company's line-of-credit ("Credit Facility") allows borrowings up to
$15,000,000. The Credit Facility matures on September 11, 1998. The agreement
provides for borrowings up to an amount determined pursuant to a borrowing base
formula which includes various categories of collateral. The interest rate for
the Credit Facility is variable and based upon either the LIBOR rate plus 2
percent (7.56 percent at December 31, 1996) or the prime rate (8.25 percent at
December 31, 1996). The Credit Facility contains covenants to maintain a
minimum tangible net worth (as defined by the agreement) and certain interest
coverage ratios at December 31, 1996 the available and unused portion of the
Credit Facility was $9,451,372.

An irrevocable letter of credit in the amount of $390,000 was delivered by
the Company to the former owner of Datron Computer Products, Inc., ("Datron") in
connection with the Company's acquisition of Datron on May 3, 1993, as security
for the performance of all of the Company's obligations under the purchase
agreement. The letter of credit expires on April 30, 1999, and may be drawn
upon if the Company fails to make any payment under the purchase agreement. The
face amount of the letter of credit is reduced $78,000 annually beginning on May
1, 1995. The face amount at year end December 31, 1996 was $234,000. A one
percent annual commitment fee is payable on the letter of credit. No amounts
have been drawn against the letter of credit.

NOTE 6. PROPERTY AND EQUIPMENT

Property and equipment is stated at cost and consists of the following:

DECEMBER 31,
----------------------
1995 1996
---------- ----------
Furniture and fixtures................... $ 252,894 $ 615,475
Equipment................................ 952,173 1,283,602
Leasehold improvements................... 48,059 74,568
Vehicles................................. 98,113 134,369
---------- ----------
1,351,239 2,108,014
Less - Accumulated depreciation....... 815,998 1,091,850
---------- ----------
$ 535,241 $1,016,164
---------- ----------
---------- ----------

NOTE 7. RETIREMENT PLAN

The Company has an employee savings plan (the "Savings Plan") that
qualifies as a deferred salary arrangement under Section 401(k) of the Internal
Revenue Code. All employees 21 years of age with one year or more of service
are eligible to participate in the Savings Plan. The Company matches 50 percent
of the employee contributions, with a maximum contribution of 1.5 percent of the
employee's compensation. Contributions to the Savings Plan were $41,940,
$55,083 and $63,776 for the years ended December 31, 1994, 1995 and 1996,
respectively.

F-14
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 8. PROFIT SHARING PLAN

The Company established a profit sharing plan (the "Profit Plan") as of
January 1, 1995 that covers substantially all administrative employees.
Contributions to the Profit Plan are based on three percent of the Company's
pre-tax profit and are distributed to the employees according to the provisions
of the Profit Plan. Contributions to the Profit Plan by the Company were
$44,852 and $46,079 for the years ended December 31, 1995 and 1996,
respectively.

NOTE 9. INTANGIBLE ASSETS

Intangible assets include noncompetition agreements with the former owners
of Datron Computer Products, Inc., and Paper Rolls & Computer Supplies, Inc.
The agreements have terms of 4 to 5 years. The gross value assigned is
$544,400. Accumulated amortization was $285,280 and $395,760 at December 31,
1995 and December 31, 1996, respectively. Amortization expense approximated
$106,480 for the year ended December 31, 1994, and $110,480 for the years ended
December 31, 1995 and 1996, respectively.

NOTE 10. INCOME TAXES

The provision (benefit) for taxes on income consists of the following:

1994 1995 1996
--------- --------- ---------
Current:
Federal .. . . . . . . . . . . . $ 322,000 $ 395,085 $ 569,980
State .. . . . . . . . . . . . . 93,583 120,920 153,595
--------- --------- ---------
Total. . . . . . . . . . . . . 415,583 516,005 723,575
Deferred:
Federal .. . . . . . . . . . . . (363) (6,296) 22,623
State .. . . . . . . . . . . . . 2,460 (580) 9,495
--------- --------- ---------
Total. . . . . . . . . . . . . 2,097 (6,876) 32,118
--------- --------- ---------

Total tax provision. . . . . . $ 417,680 $ 509,129 $ 755,693
--------- --------- ---------
--------- --------- ---------

Deferred tax assets and liabilities comprise the following:

1995 1996
--------- ----------
Deferred tax assets:
Inventory. . . . . . . . . . . . . . . $ 40,951 $ 4,420
State tax accrual. . . . . . . . . . . 25,704 29,240
Goodwill . . . . . . . . . . . . . . . 7,908 13,180
Other. . . . . . . . . . . . . . . . . 2,397 10,020
--------- ----------
Total deferred tax assets. . . . . . 76,960 56,860
Deferred taxes:
Depreciation . . . . . . . . . . . . . (59,569) (80,830)
Other. . . . . . . . . . . . . . . . . -- (1,783)
--------- ----------
Total deferred taxes . . . . . . . . (59,569) (82,613)
--------- ----------
Net deferred taxes . . . . . . . . . $ 17,391 $ (25,753)
--------- ----------
--------- ----------

A reconciliation of the federal statutory tax rate to the Company's effective
tax rate is as follows:

1994 1995 1996
---------- ---------- ---------
U.S. federal statutory rate
applied to income before tax. . . . $ 349,321 $ 442,681 $ 636,794
State income taxes,
net of federal income tax effect. . 63,388 79,424 105,560
Permanent differences. . . . . . . . 10,617 14,860 13,715
Adjustment to prior year tax accruals (5,941) (27,869) --
Other. . . . . . . . . . . . . . . . 295 33 (376)
---------- ---------- ---------
$ 417,680 $ 509,129 $ 755,693
---------- ---------- ---------
---------- ---------- ---------

F-15
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 10. INCOME TAXES - (CONTINUED)

The effective tax rates were 40.7%, 39.1%, and 40.3% for the years ended
December 31, 1994, 1995 and 1996, respectively.

NOTE 11. LEASES

The Company leases office space (see Note 17) and certain automobiles under
various operating and capital leases. Lease terms range from 1 to 10 years.
Operating leases which expire are generally renewed or replaced by similar
leases and renewal options. The total rental expense under operating leases
amounted to $237,587, $253,856 and $370,845 for the years ended December 31,
1994, 1995 and 1996, respectively.

Following is a summary of future minimum rental payments with respect to
leases that have initial or remaining noncancelable lease terms in excess of 1
year at December 31, 1996:

YEAR ENDING CAPITALIZED OPERATING
DECEMBER 31, LEASES LEASES
------------ ------------ ----------
1997 . . . . . . . . . . . . . $ 41,436 $ 526,253
1998 . . . . . . . . . . . . . 41,436 413,825
1999 . . . . . . . . . . . . . 27,624 348,138
2000 . . . . . . . . . . . . . -- 308,297
2001 . . . . . . . . . . . . . -- 308,297
Later years. . . . . . . . . . -- 1,434,104
---------- ----------
Total minimum lease payments. . . $ 110,496 $3,338,914
---------- ----------
---------- ----------

Imputed interest . . . . . . . . . . . (10,710)

Present value of minimum
capitalized lease payments . . . . . 99,786
Current portion. . . . . . . . . . . . ( 35,090)
----------

Long-term capitalized lease
obligation . . . . . . . . . . . . . $ 64,696
----------
----------

F-16
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 12. COMMON STOCKHOLDERS' EQUITY

ADDITIONAL
SHARES UNEARNED PAID-IN RETAINED TREASURY
OUTSTANDING COMPENSATION CAPITAL EARNINGS STOCK
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1993 . . . . . . . . . . . 2,383,600 $ -- $ 25,225 $ 1,218,955 $ (70,000)
Net income . . . . . . . . . -- -- -- 609,735 --
Purchase of treasury stock . (7,600) -- -- -- (95,000)
Sales of treasury stock. . . 12,000 -- -- -- 150,000
------------ ------------ ------------ ------------ ------------
Balance, December 31,
1994 . . . . . . . . . . . 2,388,000 -- 25,225 1,828,690 (15,000)
Net income . . . . . . . . . -- -- -- 792,873 --
------------ ------------ ------------ ------------ ------------
Balance, December 31,
1995 . . . . . . . . . . . 2,388,000 -- 25,225 2,621,563 (15,000)
Net income . . . . . . . . . -- -- -- 1,117,231 --
Stock awards issued. . . . . -- (279,726) 279,726 -- --
Compensation expense
recognized . . . . . . . . -- 279,726 -- -- --
Net proceeds from initial
public offering. . . . . . 1,150,000 -- 7,794,298 -- --
Additional consideration
DDP acquisition (See Note 3) -- -- 250,000 -- --
------------ ------------ ------------ ------------ ------------
Balance, December 31,
1996 . . . . . . . . . . . 3,538,000 $ 0 $ 8,349,249 $ 3,738,794 $ (15,000)
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------

</TABLE>

On December 1, 1995, the Articles of Incorporation of the Company were
amended and restated to provide for voting and nonvoting shares. As of the same
date, the Board of Directors approved a stock dividend of nine nonvoting shares
for each voting share outstanding as of that date. All applicable share and per
share data have been adjusted for the stock dividend.

On September 25, 1996, the Stockholders approved a recapitalization of the
Company's common equity and 200-for-1 stock split as of that date. All
applicable share and per share data have been adjusted to reflect the stock
split.

On November 15, 1996, the Company completed an initial public offering of
1,150,000 shares of common stock (including an underwriters' overallotment
option of 150,000 shares) to the public at a price of $8.50 per share. Net
proceeds to the Company after deducting underwriting fees and expenses amounted
to $7,794,298. The proceeds were used to repay all outstanding indebtedness
under the Credit Facility and for other corporate purposes.

In conjunction with the purchase of DDP by LLC, LLC agreed to provide the
three selling stockholders of DDP a stock incentive so long as such stockholders
remain employees of the Company. LLC agreed to transfer a total of 58,520 shares
of the Company's common stock owned by LLC to the employees over three year
period ending December 31, 1998. However, upon the initial public offering of
the Company's common stock, all such shares vested. The market value of the
stock award was recognized as compensation expense at the initial public
offering date.

NOTE 13. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash payments for the following items amounted to:

DECEMBER 31,
---------------------------------
1994 1995 1996
-------- -------- --------
Interest..................... $204,377 $263,846 $325,355
Income taxes................. $140,733 $578,501 $1,006,896

During 1996, $113,650 of leased assets and obligations were capitalized.

F-17
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 14. COMMITMENTS AND CONTINGENCIES

The Company sells its products to corporate customers, governmental
agencies, universities, hospitals and, to a lesser extent, computer supply
dealers primarily in the Midwest and Northeast regions of the United States.
Credit risk with respect to trade accounts receivable is generally diversified
due to the large number of entities comprising the Company's customer base.

In connection with the Datron acquisition, the Company is obligated to make
income participation payments to the former owner based on the Company's gross
profits for the five years ending April 30, 1999. The annual payment under this
provision shall not exceed $17,520 in any one year. For 1994, 1995 and 1996, no
payments were made. Under purchase accounting principles, purchase
consideration that is payable upon the outcome of a contingency is not recorded
at the acquisition date unless the outcome of the contingency is determinable
beyond reasonable doubt. At such time, as the payments of amounts under the
provision becomes finally determined, the additional liability will be recorded,
and the value of the assets acquired will be increased in like amount.

NOTE 15. INSURANCE

The Company has a self-insurance medical plan which covers $37,000 per
individual insured per year for the policy year ended March 1, 1997. Medical
claims in excess of this amount are insured with a commercial insurance carrier.
In connection with this plan, the Company maintains cash and short term U.S.
treasury notes on deposit totaling $79,409 and $5,622 at December 31, 1995 and
1996, respectively.

The Company recorded expenses under the self-insurance medical plan of
$193,771, $176,850 and $218,855 for the years ended December 31, 1994, 1995 and
1996, respectively.

NOTE 16. STOCK OPTION PLANS

1996 STOCK OPTION PLAN

The 1996 Stock Option Plan, which was approved by the Board of Directors,
on September 19, 1996 authorizes the granting of options to purchase up to
250,000 shares of Common Stock to eligible officers and key management employees
at not less than the market value on the date the options are granted. The
option period may not exceed ten years from the date of grant. During 1996,
options to purchase 111,000 shares of Common Stock were issued at $8.50 per
share. Such options vest ratably over a three year period. No options were
exercised in 1996.

NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

The Non-employee Directors Stock Option Plan (the "Directors Plan")
authorized the granting of options to purchase a total of 100,000 shares of
Common Stock.

The Directors Plan authorized the granting of options to purchase 15,000
shares of Common Stock to each director who is not an employee of the Company at
the first annual meeting of shareholders following the Company's initial public
offering at not less than the market value on the date the options are granted.
The option period may not exceed ten years from the date of grant. The options
will vest ratably over a three year period.

Additionally, the Directors Plan authorized the granting of options to
purchase 5,000 shares of Common Stock, not to exceed 15,000 shares for any
non-employee director elected subsequent to the first annual meeting of
shareholders. Any options granted subsequent to the initial meeting of
shareholders vest ratably over a three year period.

No options were granted in 1996 under this plan.

ACCOUNTING FOR STOCK AWARDS AND STOCK OPTIONS

In October 1995, the FASB issues SFAS No. 123, "Accounting for Stock-Based
Compensation." As permitted by the standard, the Company has elected to
continue to follow existing accounting guidance, Accounting Primciples Board
Opinion No. 25 and related interpretations (APB No. 25), for stock based
compensation. However, SFAS No. 123 requires companies

F-18
<PAGE>

MIAMI COMPUTER SUPPLY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 16. STOCK OPTION PLANS - (CONTINUED)

electing to follow existing accounting rules to disclose the pro forma effects
as if the fair value based method of accounting had been applied. The Company
recorded compensation expense of $0 for the years ended December 31, 1994 and
1995 respectively, and $279,726 for the year ended December 31, 1996 in
connection with stock compensation awards. In accordance with APB No. 25, no
compensation expense has been recognized for the Company's stock options issued
in November 1996.

The fair value of stock options granted during 1996 was $3.94. The fair
value of the options were estimated on the date of grant using the Black-Scholes
option pricing model with the following assumptions: dividend yield of 0%,
expected volatility of 50%, risk-free interest rate of 6.5% and expected lives
of four years. If compensation expense for the Company's stock options issued
in 1996 had been determined based on the fair value at the grant date for such
award in accordance with SFAS No. 123, the effect on the Company's net income
and earnings per share for 1996 would have been immaterial.

NOTE 17. TRANSACTIONS WITH RELATED PARTIES

The Company has entered into a lease with Draft Partnership ("Lessor") for
a 30,000 square foot office and warehouse building in Dayton, Ohio. The general
partners of Draft Partnership are James F. Rowland, owning a 50.0% partnership
interest, and Messrs. Schwarz, Winstel, Newkold and Turvy, each of whom are
officers of the Company owning a 12.5% partnership interest. The lease is for a
term of ten years commencing on November 1, 1996 for a base monthly rental of
$20,000 plus the difference between $1.5 million and the total cost of
construction ($23,691 total monthly rental based upon total cost of
construction) subject to a proportionate increase each year after July 1999
based on the increase in the Consumer Price Index.

NOTE 18. SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

The following table sets forth selected quarterly financial data for 1995
and 1996.

<TABLE>
<CAPTION>
1 ST 2 ND 3 RD 4 TH
1995 QUARTER QUARTER QUARTER QUARTER
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . $11,094,560 $10,640,702 $10,442,436 $11,143,224
Operating costs:
Cost of sales. . . . . . . . . . . . . . . . . . . . 9,098,176 8,406,785 8,429,572 8,707,371
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . 1,755,252 1,776,029 1,649,687 1,943,693
----------- ----------- ----------- -----------

Total operating costs. . . . . . . . . . . . . . . 10,853,428 10,182,814 10,079,259 10,651,064
----------- ----------- ----------- -----------

Operating income . . . . . . . . . . . . . . . . . . . 241,132 457,888 363,177 492,160
Interest expense . . . . . . . . . . . . . . . . . . . (62,935) (78,867) (74,884) (57,391)
Other (expense)/income . . . . . . . . . . . . . . . . 2,790 2,696 10,305 5,931
----------- ----------- ----------- -----------

Income before income taxes . . . . . . . . . . . . . . 180,987 381,717 298,598 440,700
Provision for income taxes . . . . . . . . . . . . . . 70,766 149,251 116,752 172,360
----------- ----------- ----------- -----------

Net income . . . . . . . . . . . . . . . . . . . . . . $ 110,221 $ 232,466 $ 181,846 $ 268,340
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Earnings per share of common stock . . . . . . . . . . $ 0.05 $ 0.10 $ 0.08 $ 0.11
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Weighted average number of common
shares outstanding . . . . . . . . . . . . . . . . . 2,388,000 2,388,000 2,388,000 2,388,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

</TABLE>

F-19
<PAGE>

NOTE 18. SELECTED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED): - (CONTINUED)

<TABLE>
<CAPTION>
1 ST 2 ND 3 RD 4 TH
1996 QUARTER QUARTER(1) QUARTER(1) QUARTER(1)
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . $12,555,983 $13,691,476 $17,822,544 $19,357,725
Operating Costs:
Cost of sales. . . . . . . . . . . . . . . . . . . . 10,029,524 11,132,312 14,781,598 16,117,608
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . 1,880,514 2,152,924 2,307,844 2,549,840
Non-cash compensation expense. . . . . . . . . . . . -- -- -- 279,726
----------- ----------- ----------- -----------

Total operating costs. . . . . . . . . . . . . . . 11,910,038 13,285,236 17,089,442 18,947,174
----------- ----------- ----------- -----------

Operating income . . . . . . . . . . . . . . . . . . . 645,945 406,240 733,102 410,551
Interest expense . . . . . . . . . . . . . . . . . . . (66,938) (75,649) (100,588) (69,152)
Other (expense)/income . . . . . . . . . . . . . . . . 7,938 3,176 6,884 (28,585)
----------- ----------- ----------- -----------

Income before income taxes . . . . . . . . . . . . . . 586,945 333,767 639,398 312,814
Provision for income taxes . . . . . . . . . . . . . . 243,582 138,497 265,352 108,262
----------- ----------- ----------- -----------

Net income . . . . . . . . . . . . . . . . . . . . . . $ 343,363 $ 195,270 $ 374,046 $ 204,552
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Earnings per share of common stock . . . . . . . . . . $ 0.14 $ 0.08 $ 0.16 $ 0.07
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Weighted average number of common
shares outstanding . . . . . . . . . . . . . . . . . 2,388,000 2,388,000 2,388,000 2,962,457
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

</TABLE>

(1) Reflects the acquisition of DDP on May 30, 1996.

F-20
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholder of
Diversified Data Products, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of cash flows present fairly,
in all material respects, the financial position of Diversified Data Products,
Inc. and its subsidiaries (the Company), at May 30, 1996, and December 31, 1994
and 1995, and the results of their operations and their cash flows for the
period January 1, 1996 through May 30, 1996, and for each of the two years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion express above.

As discussed in Note 12 to the consolidated financial statements, all of
the Company's outstanding common stock was acquired by a third party on May 30,
1996.

PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
July 31, 1996

F-21
<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994 AND 1995, AND MAY 30, 1996
<TABLE>
<CAPTION>

DECEMBER 31, MAY 30,
--------------------------- ------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents. . . . . . . . . . . . . . $ 9,389 $ 11,760 $ 109,467
Accounts receivable, less allowance for doubtful
accounts of $2,038, $5,000 and $5,000. . . . . . . 1,601,559 1,125,958 1,152,626
Inventories. . . . . . . . . . . . . . . . . . . . . 1,463,223 2,212,249 1,327,685
Prepaid expenses . . . . . . . . . . . . . . . . . . 8,453 23,271 17,959
Deferred tax asset . . . . . . . . . . . . . . . . . 693 1,700 1,700
------------ ------------ ------------
Total current assets. . . . . . . . . . . . . 3,083,317 3,374,938 2,609,437
Property and equipment - Net of accumulated
depreciation (Note 4) . . . . . . . . . . . . . . 137,217 95,512 81,512
Goodwill - net of accumulated amortization (Note 3). 128,171 124,820 123,424
------------ ------------ ------------
Total assets. . . . . . . . . . . . . . . . . $ 3,348,705 $ 3,595,270 $ 2,814,373
------------ ------------ ------------
------------ ------------ ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft . . . . . . . . . . . . . . . . . . . $ 171,819 $ 39,084 $ 256,398
Line-of-credit (Note 5). . . . . . . . . . . . . . . 1,500,000 1,500,000 1,500,000
Accounts payable . . . . . . . . . . . . . . . . . . 1,023,730 1,369,544 839,860
Accrued income taxes . . . . . . . . . . . . . . . . 26,234 6,868 --
Accrued liabilities. . . . . . . . . . . . . . . . . 3,711 50,984 53,274
Current portion of long-term debt. . . . . . . . . . 12,000 12,000 7,000
------------ ------------ ------------
Total current liabilities . . . . . . . . . . 2,737,494 2,978,480 2,656,532
Deferred taxes (Note 7). . . . . . . . . . . . . . . 14,247 12,730 12,730
Long-term debt (Note 5). . . . . . . . . . . . . . . 12,000 -- --
------------ ------------ ------------
Total liabilities . . . . . . . . . . . . . . 2,763,741 2,991,210 2,669,262
Stockholders' equity (Note 8 and Note 12):
Common stock, $1 par value, 50,000 shares authorized,
8,250 shares issued and outstanding at December 31,
1994, December 31, 1995, and May 30, 1996. . . . . 8,250 8,250 8,250
Additional paid-in capital . . . . . . . . . . . . . . 139,095 139,095 136,861
Retained earnings. . . . . . . . . . . . . . . . . . 437,619 456,715 --
------------ ------------ ------------
Total stockholders' equity. . . . . . . . . . 584,964 604,060 145,111
------------ ------------ ------------
Total liabilities and stockholders' equity. . $ 3,348,705 $ 3,595,270 $ 2,814,373
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-22

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994 AND 1995,
AND THE PERIOD JANUARY 1, 1996 THROUGH MAY 30, 1996

YEAR ENDED PERIOD ENDED
DECEMBER 31, MAY 30,
---------------------------- -------------
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . $ 18,068,615 $ 13,356,700 $ 5,363,269
Operating costs:
Cost of sales. . . . . . . . . . . . . . . . . . . . 16,388,187 12,138,992 4,933,563
Selling, general and administrative expenses . . . . 1,469,235 1,015,270 335,420
------------- ------------- -------------
Total operating costs. . . . . . . . . . . . . . . 17,857,422 13,154,262 5,268,983
------------- ------------- -------------

Operating income . . . . . . . . . . . . . . . . . . . 211,193 202,438 94,286
Interest expense . . . . . . . . . . . . . . . . . . . 142,508 167,150 63,384
Other income (expense) - net . . . . . . . . . . . . . 2,003 4,918 5
------------- ------------- -------------
Income before income taxes . . . . . . . . . . . . . . 70,688 40,206 30,907

Provision for income taxes (Note 7). . . . . . . . . . 35,757 21,110 16,150
------------- ------------- -------------
Net income . . . . . . . . . . . . . . . . . . . . . . $ 34,931 $ 19,096 $ 14,757
------------- ------------- -------------
------------- ------------- -------------

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-23

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1995,
AND THE PERIOD JANUARY 1, 1996 THROUGH MAY 30, 1996
<TABLE>
<CAPTION>

YEAR ENDED PERIOD ENDED
DECEMBER 31, MAY 30,
--------------------------- ------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows (used in) provided by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 34,931 $ 19,096 $ 14,757
Adjustments to reconcile net income to cash (used in)
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . 29,238 36,076 15,396
Gain on disposition of furniture, fixtures and
equipment . . . . . . . . . . . . . . . . . . . . . -- (335) --
Deferred taxes . . . . . . . . . . . . . . . . . . . . 13,554 (2,524) --
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . (575,318) 427,060 (26,668)
Inventories . . . . . . . . . . . . . . . . . . . . (145,844) (700,495) 884,564
Prepaid expenses. . . . . . . . . . . . . . . . . . (8,453) (14,818) 5,312
Other assets. . . . . . . . . . . . . . . . . . . . 5,300 -- --
Accounts payable. . . . . . . . . . . . . . . . . . 338,862 345,814 (529,684)
Accrued liabilities . . . . . . . . . . . . . . . . 2,460 47,273 2,290
Accrued income taxes. . . . . . . . . . . . . . . . (46,766) (19,366) (6,868)
------------ ------------ ------------
Cash (used in) provided by operating activities . (352,036) 137,781 359,099
------------ ------------ ------------

Cash flows from investing activities:
Proceeds from sale of property and equipment . . . . . . -- 9,315 --
Purchases of furniture, fixtures and equipment . . . . . (86,277) -- --
------------ ------------ ------------
Cash (used in) provided by investing activities . (86,277) 9,315 --
------------ ------------ ------------

Cash flows from financing activities:
Dividend payment . . . . . . . . . . . . . . . . . . . . -- -- (473,706)
Proceeds from line of credit . . . . . . . . . . . . . . 766,807 1,500,000 450,000
Payments under line of credit. . . . . . . . . . . . . . (500,000) (1,500,000) (450,000)
Payments of notes payable. . . . . . . . . . . . . . . . (12,000) (12,000) (5,000)
Proceeds (payments) of bank overdraft. . . . . . . . . . 171,819 (132,725) 217,314
------------ ------------ ------------
Cash provided by (used in) financing activities. . . . 426,626 (144,725) (261,392)
------------ ------------ ------------

(Decrease) increase in cash and cash equivalents . . . . . (11,687) 2,371 97,707
Cash and cash equivalents at beginning of period . . . . . 21,076 9,389 11,760
------------ ------------ ------------
Cash and cash equivalents at end of period . . . . . . . . $ 9,389 $ 11,760 $ 109,467
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

The accompanying notes are an integral part of these consolidated
financial statements.

F-24

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND OPERATIONS

The accompanying consolidated financial statements include the accounts of
Diversified Data Products, Inc. (the "Company"), its wholly owned subsidiaries,
Diversified Data Products U.K., Ltd., located in the United Kingdom and Compass
Export Marketing (CEM) Overseas, Limited located in Dubai, United Arab Emirates.
The Company is engaged in the purchase and distribution of computer supplies on
a domestic and international basis. Substantially all of the Company's sales
are to companies engaged in the retail distribution of computer supplies.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The period ended May 30, 1996, as referred to throughout the consolidated
financial statements comprises January 1, 1996 through May 30, 1996 ("period
ended May 30, 1996").

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

CONSOLIDATION

All subsidiaries which are wholly owned and under common control are
included in the consolidated financial statements. Intercompany accounts and
transactions are eliminated.

REVENUE RECOGNITION

Revenues from the sale of products are recognized upon passage of title to
the customer, which coincides with shipment.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on deposit and highly liquid
investments with original maturities of 3 months or less.

INVENTORIES

Inventories are stated at lower of cost or market. Cost is determined
using a weighted average method. Inventories consist primarily of purchased
goods held for resale.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation and amortization
are provided using the straight-line method over the estimated useful lives of
the assets. Depreciation and amortization periods are as follows:

ESTIMATED
USEFUL LIVES
------------
Furniture and fixtures . . . . . . 5 to 7
Equipment. . . . . . . . . . . . . 5
Vehicles . . . . . . . . . . . . . 5

F-25

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

RETIREMENT AND DISPOSAL OF PROPERTIES

The cost of properties retired or otherwise disposed of, together with the
accumulated depreciation provided thereon, is eliminated from the accounts. The
net gain or loss is recognized in other income and expense.

LONG-LIVED ASSETS

The Company assesses impairment of assets on an annual basis using a
discounted cash flow approach.

INCOME TAXES

Income taxes are recognized in the year in which transactions enter into
the determination of financial statement income. Deferred tax assets and
liabilities are recognized for the future tax consequences of temporary
differences between the book carrying amounts and the tax basis of assets and
liabilities.

FOREIGN CURRENCY TRANSACTIONS

For the Company's subsidiaries located in the United Kingdom and the United
Arab Emirates, the functional currency is the U.S. dollar.

DERIVATIVE INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

Cash and cash equivalents - The carrying amount reported in the
balance sheet approximates fair value.

Foreign currency exchange contracts - The fair value of the Company's
foreign exchange contracts is estimated based on quoted market prices of
comparable contracts.

Short- and long-term debt - The carrying amounts of the Company's
borrowings approximate their fair value.

NOTE 3. PURCHASE OF COMPASS EXPORT MARKETING

On March 31, 1993, the Company purchased Compass Export Marketing U.K. (CEM
U.K.) and a company under common control of CEM U.K., CEM-Overseas. The
transaction was accounted for as a purchase in accordance with Accounting
Principles Board (APB) Opinion No. 16. CEM U.K. became a wholly owned subsidiary
of the Company and changed its name to Diversified Data Products U.K., Ltd. The
purchase price for CEM U.K. and CEM-Overseas totaled approximately $710,000,
including the assumption of liabilities. DDP issued 2,750 shares of DDP common
stock to the shareholder of CEM in exchanges for 100 percent ownership of CEM
U.K. and CEM-Overseas. Goodwill of approximately $134,000 was recorded in
connection with this acquisition and is being amortized on a straight-line basis
over 40 years.

F-26

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 3. PURCHASE OF COMPASS EXPORT MARKETING - (CONTINUED)

Accumulated amortization was $5,864, $9,215 and $10,611 at December 31,
1994, December 31, 1995 and May 30, 1996, respectively. The amortization life
chosen was based upon the long-term business plan of the Company to expand
operations internationally.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
<TABLE>
<CAPTION>

DECEMBER 31, MAY 30,
-------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Furniture and fixtures . . . . . . . . . . . $ 153,122 $ 153,122 $ 153,122
Vehicles . . . . . . . . . . . . . . . . . . 44,130 35,150 35,150
----------- ----------- -----------
197,252 188,272 188,272
Less - Accumulated depreciation. . . . . . (60,035) (92,760) (106,760)
----------- ----------- -----------
$ 137,217 $ 95,512 $ 81,512
----------- ----------- -----------
----------- ----------- -----------

</TABLE>

NOTE 5. BORROWING ARRANGEMENTS

DECEMBER 31, MAY 30,
-------------------------- -----------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Short-term debt:
Line-of-credit, due on demand. . . . . . . $ 1,500,000 $ 1,500,000 $ 1,500,000
----------- ----------- -----------
Long-term debt: Agreement dated October 6,
1993, maturing on November 30, 1996. . . $ 24,000 $ 12,000 $ 7,000
Less - Current portion . . . . . . . . (12,000) (12,000) (7,000)
----------- ----------- -----------
Total long-term debt. . . . . . . $ 12,000 $ -- $ --
----------- ----------- -----------
----------- ----------- -----------

</TABLE>

The Company's line-of-credit allows borrowings up to $1,500,000. The
line-of-credit bears interest at prime rate plus 1.75 to 2.0 percent (10.0
percent at May 30, 1996, and 9.75 percent at December 31, 1995, payable
monthly). This line-of-credit is collateralized by all the assets of the
Company, and is guaranteed by the officer shareholders. The line-of-credit
expired on April 30, 1996, and was extended on substantially similar terms
through July 31, 1996. See also Note 12 regarding repayment of the
line-of-credit.

The note payable bears interest at the prime rate plus 2.5 percent (10.75
percent at May 30, 1996). Payments are due in monthly installments of $1,000
plus interest. The note is collateralized by certain assets of the Company and
is due November 30, 1996.

In connection with the line-of-credit agreement, the Company has agreed to
certain covenants including, but not limited to, maintenance of specified levels
of current assets in excess of current liabilities and maintenance of specified
levels of debt-to-equity ratios. At December 31, 1995, the Company was not in
compliance with certain covenants. A waiver of covenant compliance was received
for the related violations at December 31, 1995, extending through December 31,
1996.

NOTE 6. OPERATING LEASES

The Company leases office space and vehicles under various operating
leases. Leases which expire are generally renewed or replaced by similar leases
and renewal options.

F-27

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 6. OPERATING LEASES - (CONTINUED)

The approximate minimum annual lease payments for noncancelable lease
agreements with terms in excess of one year are approximately as follows:

1996. . . . . . . . . . . . . . . . . . $ 74,000
1997. . . . . . . . . . . . . . . . . . 51,000
1998. . . . . . . . . . . . . . . . . . 39,000
-----------
$ 164,000
-----------
-----------

NOTE 7. INCOME TAXES

The provision for income taxes consists of the following:

1994 1995
--------- ---------
Current federal . . . . . . . . . . . . $ 22,203 $ 11,134
Current foreign . . . . . . . . . . . . -- 12,500
Deferred federal (benefit) expense. . . 13,554 (2,524)
--------- ---------
Total tax expense. . . . . . . . . $ 35,757 $ 21,110
--------- ---------
--------- ---------

Deferred tax assets and liabilities include the following:

DECEMBER 31,
-------------------------
1994 1995
-------------------------
Deferred tax assets:
Receivables . . . . . . . . . . . . . $ 693 $ 1,700
Deferred taxes:
Property, plant and equipment . . . . (14,247) (12,730)
----------- ----------

Net deferred taxes. . . . . . . . . . . $ (13,554) $ (11,030)
----------- ----------
----------- ----------

The difference between the U.S. federal income tax statutory rate and the
Company's effective income tax rate is as follows:

1994 1995
--------- ---------
U.S. federal statutory rate
applied to income before tax. . . . . $ 24,035 $ 13,670
Graduated tax rates . . . . . . . . . . (11,527) (10,809)
Permanent differences . . . . . . . . . 8,388 8,056
Foreign tax rates . . . . . . . . . . . 10,405 10,039
Adjustment to prior year tax accrual. . 3,518 --
Other . . . . . . . . . . . . . . . . . 938 154
--------- ---------
Provision for income taxes. . . . . . . $ 35,757 $ 21,110
--------- ---------
--------- ---------

The 1996 provision for income taxes was recorded using an estimated
effective tax rate of approximately 50 percent.

NOTE 8. STOCKHOLDERS' EQUITY

The authorized capital stock of the Company consists of 50,000 shares of
common stock, $1.00 par value, of which 8,250 shares were outstanding as of
December 31, 1994, December 31, 1995, and May 30, 1996. A liquidating dividend
was paid to the shareholders prior to the close of business on May 30, 1996.
See Note 12.

F-28

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 8. STOCKHOLDERS' EQUITY - (CONTINUED)

Changes in stockholders' equity are as follows:
<TABLE>
<CAPTION>

ADDITIONAL
SHARES COMMON PAID IN RETAINED
OUTSTANDING STOCK CAPITAL EARNINGS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, January 1, 1994. . 8,250 $ 8,250 $ 139,095 $ 402,688
Net income . . . . . . . . -- -- -- 34,931
----------- ----------- ----------- -----------
Balance, December 31. 1994. 8,250 $ 8,250 $ 139,095 $ 437,619
Net income. . . . . . . . . -- -- -- 19,096
----------- ----------- ----------- -----------
Balance, December 31, 1995. 8,250 $ 8,250 $ 139,095 $ 456,715
Net income. . . . . . . . . -- -- -- 14,757
Dividend payment. . . . . . -- -- (2,234) (471,472)
----------- ----------- ----------- -----------
Balance, May 30, 1996 . . . 8,250 $ 8,250 $ 136,861 $ --
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

</TABLE>

NOTE 9. CASH FLOWS

Cash paid during 1994, 1995 and for the period ended May 30, 1996, for
interest and income taxes was as follows:

DECEMBER 31, MAY 30,
------------------------- ----------
1994 1995 1996
---------- ---------- ----------
Interest. . . . . . . . . . $ 133,509 $ 152,590 $ 63,384
Income taxes. . . . . . . . $ 68,976 $ 43,000 $ 25,000

During the year ended December 31, 1995, the Company accepted $48,531 of
inventory in satisfaction of an account receivable of the same amount. The
value of the inventory accepted was based upon negotiated terms between the
parties.

NOTE 10. DERIVATIVE INSTRUMENTS - FORWARD FOREIGN CURRENCY CONTRACTS

The Company remains at risk for possible changes in the market value of the
derivative instrument; however, such risk should be mitigated by changes in the
underlying hedged item. The Company is also exposed to credit risk in the event
of nonperformance by counter parties. The creditworthiness of counter parties
is subject to continuing review and full performance is anticipated.

The following table sets forth quantitative information of the derivative
instruments:
<TABLE>
<CAPTION>

FAIR VALUE CARRYING AMOUNT RECORDED AGGREGATE
ASSETS ASSETS DEFERRED CONTRACT
(LIABILITIES)(a) (LIABILITIES) GAIN OR (LOSS) VALUES (b)
--------------- --------------- --------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>

December 31, 1995:
Forward foreign currency contracts ( c )
Payables . . . . . . . . . . . . . . . . . $ (203) $ (1) $ -- $ 202
------------ ------------ ------------ ------------
Total . . . . . . . . . . . . . . . . $ (203) $ (1) $ -- $ 202
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

May 30, 1996:
Forward foreign currency contracts ( c )
Payables . . . . . . . . . . . . . . . . . $ (403) $ (4) $ -- $ 399
Receivables. . . . . . . . . . . . . . . . 110 (2) -- 112
------------ ------------ ------------ ------------
Total . . . . . . . . . . . . . . . . $ (293) $ (6) $ -- $ 511
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

</TABLE>

- ------------------------

F-29

<PAGE>

DIVERSIFIED DATA PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 10. DERIVATIVE INSTRUMENTS - FORWARD FOREIGN CURRENCY CONTRACTS -
(CONTINUED)

(a) The fair value amounts for currency contracts are based on dealer quotes of
forward prices covering the remaining duration of the foreign exchange
contract.
(b) Contract or notional amounts do not quantify risk exposure, but are used in
the calculation of cash settlements under the contracts. The contract or
notional amounts do not reflect the extent to which positions may offset
one another.
(c) The forward foreign currency contracts mature in 1996.

The Company had no outstanding forward foreign currency contracts at
December 31. 1994.

NOTE 11. BUSINESS SEGMENT INFORMATION - RESULTS OF FOREIGN OPERATIONS

The Company operates in one business segment that sells computer and office
automation supplies. Included in the segment information are U.S. operations
and two non-U.S. operations which are wholly owned subsidiaries located in
Leeds, United Kindom and Dubai, United Arab Emirates.
<TABLE>
<CAPTION>

NON-U.S.
1994 TOTAL U.S. OPERATIONS OPERATIONS
- -------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Net sales. . . . . . . . . . . . $ 18,068,615 $ 13,041,663 $ 5,026,952
Identifiable assets. . . . . . . $ 3,348,705 $ 2,098,227 $ 1,250,478
Income before taxes. . . . . . . $ 70,688 $ 101,292 $ (30,604)

NON-U.S.
1995 TOTAL U.S. OPERATIONS OPERATIONS
- -------------------------------- --------------- --------------- ---------------
Net sales. . . . . . . . . . . . $ 13,356,700 $ 8,382,644 $ 4,974,056
Identifiable assets. . . . . . . $ 3,595,270 $ 2,106,760 $ 1,488,510
Income before taxes. . . . . . . $ 40,206 $ 38,061 $ 2,145

NON-U.S.
PERIOD ENDED MAY 30, 1996 TOTAL U.S. OPERATIONS OPERATIONS
- -------------------------------- --------------- --------------- ---------------
Net sales. . . . . . . . . . . . $ 5,363,269 $ 3,812,154 $ 1,551,115
Identifiable assets. . . . . . . $ 2,814,373 $ 1,718,828 $ 1,095,545
Income before taxes. . . . . . . $ 30,907 $ 56,662 $ (25,755)

</TABLE>

Export sales from the U.S. approximated 16% of the total consolidated net
sales for the year ended December 31, 1995. Such sales were made primarily to
customers in Asia. Export sales for the year ended December 31, 1994 and the
period January 1, 1996 through May 30, 1996 were not significant.

NOTE 12. CHANGE IN OWNERSHIP

May 30, 1996, the Company's stockholders sold their interest in the Company
to Pittsburgh Investment Group (LLC). Immediately thereafter, LLC contributed
all of such shares of DDP to Miami Computer Supply Corpration, and Ohio
corporation (MCSC), resulting in DDP becoming a wholly owned subsidiary of MCSC.

Prior to the stockholders of DDP selling their investment in the Company, a
liquidating dividend totaling $473,706 was distributed.

In June 1996, MCSC advanced the Company the funds necessary to repay the
line-of-credit balance.

F-30

<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 10
Use of Proceeds........................................................... 15
Market for the Registrant's Common Equity and Related Stockholder
Matters................................................................. 15
Dividend Policy........................................................... 15
Capitalization............................................................ 16
Selected Consolidated Financial and Operating Data........................ 16
Unaudited Pro Forma Financial Data........................................ 19
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 21
Business.................................................................. 30
Management................................................................ 44
Certain Transactions...................................................... 53
Selling Stockholders...................................................... 56
Principal Stockholders.................................................... 57
Description of Capital Stock.............................................. 58
Restrictions on Acquisition of the Company................................ 60
Plan of Distribution...................................................... 65
Legal Matters............................................................. 65
Experts................................................................... 65
Additional Information.................................................... 66
Index to Financial Statements............................................. F-1
</TABLE>

391,109 SHARES

[LOGO]

MIAMI COMPUTER SUPPLY CORPORATION

COMMON STOCK

---------------------

PROSPECTUS

SEPTEMBER 24, 1997
------------------------

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except the
Securities and Exchange Commission filing fee are estimates.

<TABLE>
<S> <C>
SEC filing fees....................................................... $ 1,580
Printing, postage and mailing......................................... *
Legal fees and expenses............................................... *
Blue Sky fees and expenses............................................ *
Accounting fees and expenses.......................................... *
Miscellaneous fees and expenses....................................... *
---
Total............................................................... $ *
---
---
</TABLE>

- ------------------------

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is an Ohio corporation. Section 1701.59 of the Ohio General
Corporation law states:

"(B) A director shall perform his duties as a director, including his duties
as a member of any committee of the directors upon which he may serve, in good
faith, in a manner he reasonably believes to be in or not opposed to the best
interests of the corporation, and with the care that an ordinarily prudent
person in a like position would use under similar circumstances. In performing
his duties, a director is entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, that are
prepared or presented by:

(1) One or more directors, officers, or employees of the corporation who
the director reasonably believes are reliable and competent in the matters
prepared or presented;

(2) Counsel, public accountants, or other persons as to matters that the
director reasonably believes are within the person's professional or expert
competence;

(3) A committee of the directors upon which he does not serve, duly
established in accordance with a provision of the articles or the
regulations, as to matters within its designated authority, which committee
the director reasonably believes to merit confidence.

(1) A director shall not be found to have violated his duties under
division (B) of this section unless it is proved by clear and convincing
evidence that the director has not acted in good faith, in a manner he
reasonably believes to be in or not opposed to the best interests of the
corporation, or with the care that an ordinarily prudent person in a like
position would use under similar circumstances in any action brought against
a director, including actions involving or affecting any of the following:

(a) A change or potential change in control of the corporation,
including a determination to resist a change or potential change in
control made pursuant to division (F)(7) of section 1701.13 of the
Revised Code.

II-1
<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
(b) A termination or potential termination of his service to the
corporation as a director;

(2) A director shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause reliance on
information, opinions, reports, or statements that are prepared or presented
by the persons described in divisions (B)(1) to (3) of this section to be
unwarranted.

(3) Nothing contained in this division limits relief available under
section 1701.60 of the Revised Code.

(D) A director shall be liable in damages for any action he takes or fails
to take as a director only if it is proved by clear and convincing evidence in a
court of competent jurisdiction that his action or failure to act involved an
act or omission undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best interests of the
corporation. Nothing contained in this division affects the liability of
directors under section 1701.95 of the Revised Code or limits relief available
under section 1701.60 of the Revised Code. This division does not apply if, and
only to the extent that, at the time of a director's act or omission that is the
subject of complaint, the articles for the regulations of the corporation state
by specific reference to this division that the provisions of this division do
not apply to the corporation.

(E) For purposes of this section, a director, in determining what he
reasonably believes to be in the best interests of the corporation, shall
consider the interests of the corporation's shareholders and, in his discretion,
may consider any of the following:

(1) The interests of the corporation's employees, suppliers, creditors,
and customers;

(2) The economy of the state and nation;

(3) Community and societal considerations;

(4) The long-term as well as short-term interests of the corporation and
its shareholders, including the possibility that these interests may be best
served by the continued independence of the corporation.

(F) Nothing contained in division (C) or (D) of this section affects the
duties of either of the following:

(1) A director who acts in any capacity other than his capacity as a
director;

(2) A director of a corporation that does not have issued and
outstanding shares that are listed on a national securities exchange or are
regularly quoted in an over-the-counter market by one or more members of a
national or affiliated securities association, who votes for or assents to
any action taken by the directors of the corporation that, in connection
with a change in control of the corporation, directly results in the holder
or holders or a majority of the outstanding shares of the corporation
receiving a greater consideration for their shares than other shareholders."

Section 1701.13(E) of the OGCL states:

"(E)(1) A corporation may indemnify or agree to indemnify any person who was
or is a party, or is threatened to be made a party, to any threatened, pending,
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative, other than an action by or in the right of the
corporation, by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee,

II-2
<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
member, manager, or agent of another corporation, domestic or foreign, nonprofit
or for profit, a limited liability company, or a partnership, joint venture,
trust, or other enterprise, against expenses, including attorney's fees,
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, if he had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of it self, create a presumption that the person did not act in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.

(2) A corporation may indemnify or agree to indemnify any person who was or
is a party, or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor, by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation, as a director, trustee, officer, employee, member,
manager, or agent of another corporation, domestic or foreign, nonprofit or for
profit, a limited liability company, or a partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any of the following:

(a) Any claim, issue, or matter as to which such person is adjudged
to be liable for negligence or misconduct in the performance of his duty
to the corporation unless, and only to the extent that, the court of
common pleas of the court in which such action or suit was brought
determines, upon application, that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses as the
court of common pleas or such other court shall deem proper;

(b) Any action or suit in which the only liability asserted against a
director is pursuant to section 1701.95 of the Revised Code.

(3) To the extent that a director, trustee officer, employee, member,
manager, or agent has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in division (E)(1) or (2) of
this section, or in defense of any claim, issue, or matter therein, he shall
be indemnified against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the action, suit, or
proceeding.

(4) Any indemnification under division (E)(1) or (2) of this section,
unless ordered by a court, shall be made by the corporation only as
authorized in the specific case, upon a determination that indemnification
of the director, trustee, officer, employee, member, manager or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in division (E)(1) or (2) of this section. Such
determination shall be made as follows:

(a) By a majority vote of a quorum consisting of directors of the
indemnifying corporation who were not and are to parties to or threatened
with the action, suit, or proceeding referred to in division (E)(1) or
(2) of this section;

(b) If the quorum described in division (E)(4)(a) of this section is
not obtainable or if a majority vote of a quorum of disinterested
directors so directs, in a written opinion by independent legal counsel
other than an attorney, or a firm having associated with it an attorney,
who has

II-3
<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
been retained by or who has performed services for the corporation or any
person to be indemnified within the past five years;

(d) By the court of common pleas or the court in which the action,
suit, or proceeding referred to in division (E)(1) or (2) of this section
was brought.

Any determination made by the disinterested directors under division
(E)(4)(a) or by independent legal counsel under division (E)(4)(b) of this
section shall be promptly communicated to the person who threatened or brought
the action or suit by or in the right of the corporation under division (E)(2)
of this section, and, within ten days after receipt of such notification, such
person shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness of such
determination.

(5)(a) Unless at the time of a director's act or omission that is the
subject of an action, suit, or proceeding referred to in division (E)(1) or
(2) of this section, the articles or the regulations of a corporation state,
by specific reference to this division, that the provisions of this division
do not apply to the corporation and unless the only liability asserted
against a director in an action, suit, or proceeding referred to in division
(E)(1) or (2) of this section, the articles or the regulations of a
corporation state, by specific reference to this division, that the
provisions of this division do not apply to the corporation and unless the
only liability asserted against a director in an action, suit, or proceeding
referred to in division (E)(1) or (2) of this section is pursuant to section
1701.95 of the Revised Code, expenses, including attorney's fees, incurred
by a director in defending the action, suit, or proceeding shall be paid by
the corporation as they are incurred, in advance of the final disposition of
the action, suit, or proceeding, upon receipt of an undertaking by or on
behalf of the director in which he agrees to do both of the following:

(i) Repay such amount if it is provided by clear and convincing
evidence in a court of competent jurisdiction that his action or failure
to act involved an act or omission undertaken with deliberate intent to
cause injury to the corporation or undertaken with reckless disregard for
the best interests of the corporation;

(ii) Reasonably cooperate with the corporation concerning the action,
suit, or proceeding.

(b) Expenses, including attorney's fees, incurred by a director,
trustee, officer, employee, member, manager, or agent in defending any
action, suit, or proceeding referred to in division (E)(1) or (2) of this
section, may be paid by the corporation as they are incurred, in advance
of the final disposition of the action, suit, or proceeding, as
authorized by the directors in the specific case, upon the receipt of an
undertaking by or on behalf of the director, trustee, officer, employee,
member, manager, or agent to repay such amount, if it ultimately is
determined that he is not entitled to be indemnified by the corporation.

(6) The indemnification authorized by this section shall not be
exclusive of, and shall be in addition to, any other rights granted to those
seeking indemnification under the articles, the regulations, any agreement,
a vote of shareholders or disinterested directors, or otherwise, both as to
action in their official capacities and as to action in another capacity
while holding their offices or positions, and shall continue as to a person
who has ceased to be a director, trustee, officer, employee, member,
manager, or agent and shall inure to the benefit of the heirs, executors,
and administrators of such a person.

(7) A corporation may purchase and maintain insurance or furnish similar
protection, including, but not limited to, trust funds, letters of credit,
or self-insurance, on behalf of or for any person who is

II-4
<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
or was a director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, trustee,
officer, employee, member, manager, or agent of another corporation,
domestic or foreign, nonprofit or for profit, a limited liability company,
or a partnership, joint venture, trust, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under this section.
Insurance may be purchased from or maintained with a person in which the
corporation has a financial interest.

(8) The authority of a corporation to indemnify persons pursuant to
division (E)(1) or (2) of this section does not limit the payment of
expenses as they are incurred, indemnification, insurance, or other
protection that may be provided pursuant to divisions (E)(5), (6), and (7)
of this section. Divisions (E)(1) and (2) of this section do not create any
obligation to repay or return payments made by the corporation pursuant to
division (E)(5)(6), or (7).

(9) As used in division (E) of this section, "corporation" includes all
constituent entities in a consolidation or merger and the new or surviving
corporation, so that any person who is or was a director, officer, employee,
trustee, member, manager, or agent of such a constituent entity, or is or
was serving at the request of such constituent entity as a director,
trustee, officer, employee, member, manager, or agent or another
corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, or a partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with respect
to the new or surviving corporation as he would if he had served the new or
surviving corporation in the same capacity."

The Amended and Restated Articles of Incorporation of the Company also limit
the liability of, and provide indemnification to, directors and officers of the
Company. Article VIII of the Company's Articles states:

"A. LIMITATION OF LIABILITY. No director shall be personally liable to
the Corporation or its stockholders for monetary damages for any act or
omission by such director as a director; provided that a director's
liability shall not be limited or eliminated to the extent that it is proved
by clear and convincing evidence in a court of competent jurisdiction that
his action or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the Corporation, or was undertaken with
reckless disregard for the best interests of the Corporation. No amendment
to or repeal of this Article VIII.A. shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to
such amendment.

B. INDEMNIFICATION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, by reason of the fact that
such person is or was a director, trustee, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, member, manager or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, partnership, joint venture, trust or other enterprise or
employee benefit plan, against liability and expenses (including court costs
and attorney's fees), judgments, fines, excise taxes and amounts paid in
satisfaction, settlement or compromise actually and reasonably incurred by
such person in connection with such action, suit or proceeding to the full
extent authorized by Section 1701.13 of the OGCL or any successor provision
thereto.

C. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by a director,
officer, employee or agent of the Corporation in defending an action, suit
or proceeding described in Article VIII.B. shall

II-5
<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
be paid by the Corporation as they are incurred, in advance of the final
disposition of such action, suit or proceeding, as authorized by the Board
of Directors only upon receipt of written affirmation by or on behalf of
such person in which he agrees to do both of the following: (i) repay such
amount if it is proved by clear and convincing evidence in a court of
competent jurisdiction that his action or failure to act involved an act or
omission undertaken with the deliberate intent to cause injury to the
Corporation or undertaken with reckless disregard for the best interests of
the Corporation, and (ii) reasonably cooperate with the Corporation
concerning the action, suit or proceeding.

D. OTHER RIGHTS AND REMEDIES. The indemnification provided by this
Article VIII shall not be deemed to exclude any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Corporation's Articles of Amendment, any insurance or other agreement, trust
fund, letter of credit, surety bond, vote of stockholders or disinterested
directors or otherwise, both as to actions in their official capacity and as
to actions in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee, member,
manager or agent and shall inure to the benefit of the heirs, executors and
administrators of such person; provided that no indemnification shall be
made to or on behalf of an individual in respect of any of the following:
(i) any claim, issue, or matter as to which such person is adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent that, a court of competent
jurisdiction determines that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court shall deem
proper; or (ii) any action or suit in which the only liability asserted
against a director is pursuant to Section 1701.95 of the OGCL or any
successor thereto.

E. INSURANCE. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee, or agent of the Corporation, or was
serving at the request of the Corporation as a director, officer, employee,
member, manager or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, partnership, joint
venture, trust or another enterprise or employee benefit plan, against any
liability asserted against him or incurred by him in any such capacity, or
arising out of his status, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article or the OGCL.

F. MODIFICATION. The duties of the Corporation to indemnify and to
advance expenses to a director, officer, employee or agent provided in this
Article VIII shall be in the nature of a contract between the Corporation
and each such director, officer, employee or agent and no amendment or
repeal of any provision of this Article VIII shall alter, to the detriment
of such director, officer, employee or agent, the right of such person to
the advance of expenses or indemnification related to a claim based on an
act or failure to act which took place prior to such amendment or repeal."

Article X of the Company's Code of Regulations states:

"(a) A director of the Corporation shall not be personally liable for
monetary damages for action taken, or any failure to take action, as a
director, to the extent set forth in the Corporation's Amended and
Restated Articles of Incorporation, which provisions are incorporated
herein with the same affect as if they were set forth herein.

(b) The Corporation shall indemnify any person who is a director,
officer, employee or agent of the Corporation to the extent set forth in
the Corporation's Amended and Restated Articles of Incorporation, which
provisions are incorporated herein with the same affect as if they were
set forth herein."

II-6
<PAGE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
In addition, the Company has obtained a directors and officers liability
insurance policy relating to certain actions or omissions which may be taken, or
omitted to be taken, by the directors and officers of the Company, as well as a
policy which insures against errors and omissions in the offering documents
relating to the offer and sale of the Common Stock to the public.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The following provides information with respect to all securities of the
Registrant sold by the Registrant within the past three years that were not
registered under the Securities Act:

(a)-(b) The Registrant sold Common Stock as follows:

<TABLE>
<CAPTION>
AMOUNT OF COMMON
DATE OF SALE STOCK SOLD IDENTITY OF PURCHASER(S)
- ------------------------------- ------------------ -------------------------------------------------------------
<S> <C> <C>
April 30, 1997................. 106,383 Imperial Data Supply Corporation
July 1, 1997................... 129,730 Two Stockholders of Data Associates, Inc.
July 15, 1997.................. 154,996 One Stockholder of Force 4 D.P. Supplies, Inc.
</TABLE>

(c) Each transaction was separately negotiated with IDSC and with the
stockholders of DATA and Force 4 and resulted in the acquisition of: (i)
substantially all of the assets and the assumption of certain liabilities of
IDSC; (ii) all of the outstanding capital stock of DATA; and (iii) all of the
outstanding capital stock of Force 4. See also "Business--Business
Strategy,--Acquisition Strategy" in the Prospectus.

(d) Each of the transactions were "transactions by an issuer not
involving any public offering" within the meaning of Section 4(2) and
Regulation D, promulgated thereunder. Form D's and amendments thereto were
filed as a result of each transaction, reference is made thereto.

(e) Not applicable.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The exhibits and financial statement schedules are filed as a part of this
Registration Statement are as follows:

(a) List of Exhibits

<TABLE>
<C> <S>
3.1 Amended and Restated Articles of Incorporation of Miami Computer Supply Corporation.*
3.2 Amended and Restated Code of Regulations of Miami Computer Supply Corporation.*
4.0 Form of Stock Certificate of Miami Computer Supply Corporation.*
5.0 Form of legal opinion of Elias, Matz, Tiernan & Herrick L.L.P.
10.1 Lease by and between Draft Partnership and Miami Computer Supply, Inc. dated October
26, 1995.*
10.2 Lease by and between John Schwarz, Sr., Marcella Schwarz, John Schwarz, Jr. and
Robert T. Schwarz and Miami Computer Supply, Inc. dated June 30, 1994.*
10.3 Miami Computer Supply, Inc. Profit Sharing Plan.*
10.4 Miami Computer Supply, Inc. Section 125C Cafeteria Plan.*
10.5 Commercial Note: Revolving Credit Line by and between Miami Computer Supply, Inc. and
National City Bank of Dayton dated September 11, 1996.*
</TABLE>

II-7
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (CONTINUED)
<TABLE>
<C> <S>
10.6 Epson Authorized Reseller Agreement dated June 28, 1995.*
10.7 Proxima Reseller Agreement dated May 29, 1996.*
10.8 Hewlett Packard U.S. Reseller Channel Agreement as amended January 1, 1996.*
10.9 Lexmark Dealer Agreement dated November 1986.*
10.10 3M Authorized Distributor Agreement dated January 27, 1987.*
10.11 Employment Agreement by and between Miami Computer Supply, Inc. and Albert L. Schwarz
dated May 30, 1996.*
10.12 Employment Agreement by and between Miami Computer Supply, Inc. and Thomas C. Winstel
dated May 30, 1996.*
10.13 Employment Agreement by and between Miami Computer Supply, Inc. and Richard A.
Newkold dated May 30, 1996.*
10.14 Employment Agreement by and between Miami Computer Supply, Inc. and Roger E. Turvy
dated May 30, 1996.*
10.15 Employment Agreement by and between Miami Computer Supply, Inc. and Michael E. Peppel
dated May 30, 1996.*
10.16 Employment Agreement by and between Miami Computer Supply, Inc. and John Huffman, III
dated May 30, 1996.*
10.17 Split Dollar Agreement by and between Miami Computer Supply, Inc. and Albert L.
Schwarz dated December 1, 1995.*
10.18 Split Dollar Agreement by and between Miami Computer Supply, Inc. and Thomas C.
Winstel dated December 1, 1995.*
10.19 Split Dollar Agreement by and between Miami Computer Supply, Inc. and Richard A.
Newkold dated December 1, 1995.*
10.20 Split Dollar Agreement by and between Miami Computer Supply, Inc. and Roger E. Turvy
dated December 1, 1995.*
10.21 Letter from Pittsburgh Investment Group LLC to Albert L. Schwarz dated May 30, 1995
regarding the split dollar agreements.*
10.22 Miami Computer Supply Corporation 1996 Stock Option Plan.*
10.23 Miami Computer Supply Corporation Non-employee Director Stock Option Plan.*
21.0 Subsidiaries of the registrant.
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibit 5.0)
23.2 Consent of Price Waterhouse LLP.
24.0 Power of Attorney (included in Signature Page of this Registration Statement).
27.0 Financial Data Schedule.
</TABLE>

- ------------------------

* Incorporated by reference from the Company's initial public offering
registered on Form S-1, SEC File No. 333-12689.

(b) Financial Statement Schedules

All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.

II-8
<PAGE>
ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act,
each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof;

(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering;

(4) That, for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 420A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and

(5) That, for the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be anew registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-9
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Form S-1 Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dayton, Ohio on
September 24, 1997.

<TABLE>
<S> <C> <C>
MIAMI COMPUTER SUPPLY CORPORATION

By: /s/ ALBERT L. SCHWARZ
------------------------------------------
Albert L. Schwarz
PRESIDENT
</TABLE>

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby authorizes Albert L. Schwarz or Michael E. Peppel to execute in the name
of such person and to file any amendment to this Registration Statement that
Registrant deems appropriate, and appoints each such agent as his
attorney-in-fact to sign on his behalf individually and in each capacity stated
below and file all amendments and post-effective amendments to this Registration
Statement.

NAME TITLE DATE
- ------------------------------ -------------------------- -------------------

/s/ ANTHONY W. LIBERATI
- ------------------------------ Chairman of the Board September 24, 1997
Anthony W. Liberati

/s/ ALBERT L. SCHWARZ Director and President
- ------------------------------ (Principal executive September 24, 1997
Albert L. Schwarz officer)

/s/ ROBERT G. HECHT
- ------------------------------ Director and Vice Chairman September 24, 1997
Robert G. Hecht of the Board

/s/ HARRY F. RADCLIFFE
- ------------------------------ Director and Treasurer September 24, 1997
Harry F. Radcliffe

/s/ THOMAS C. WINSTEL
- ------------------------------ Director, Secretary and September 24, 1997
Thomas C. Winstel Vice President

Vice President--Chief
/s/ MICHAEL E. PEPPEL Financial Officer
- ------------------------------ (Principal financial September 24, 1997
Michael E. Peppel officer and principal
accounting officer)

II-10

<PAGE>

FORM OF OPINION

EXHIBIT 5.0

September __, 1997

Board of Directors
Miami Computer Supply Corporation
4750 Hempstead Station
Dayton, Ohio 45429

RE: REGISTRATION STATEMENT ON FORM S-1

Gentlemen:

At your request, we have examined the Registration Statement on Form S-1
to be filed by Miami Computer Supply Corporation ("MCSC") with the Securities
and Exchange Commission on or about September 19, 1997 (the "Registration
Statement"), in connection with the registration under the Securities Act of
1933, as amended, of up to 391,109 shares of your Common Stock (the
"Shares"). All of the Shares are issued and outstanding and may be offered
for sale for the benefit of the Selling Stockholders named in the
Registration Statement ("Selling Stockholders"). We understand that the
Shares are to be sold from time to time on the Nasdaq National Market, or
otherwise, at prevailing prices or as otherwise described in the Registration
Statement. We have also examined the proceedings taken by MCSC in connection
with the issuance of the Shares.

In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement and
such corporate records, agreements, documents and other instruments, and such
certificates or comparable documents of public officials and of officers and
representatives of the Company, and have made such inquiries of such officers
and representatives, as we have deemed relevant or necessary as a basis for
the opinions hereinafter set forth.

In such examination, we have assumed without independent verification
the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers of the Company. Certain partners of this firm are members of an
investment partnership which owns 15.9% of Pittsburgh Investment Group LLC
("LLC"). LLC owns, as of the date of this letter, 32.6% of the issued and
outstanding Common Stock of the Company.

<PAGE>

Miami Computer Supply Corporation
September __,1997
Page 2

Based on the foregoing, and subject to the qualification stated herein,
as of the date hereof, it is our opinion that the Shares are validly issued,
fully paid and non-assessable. This opinion is being provided solely to the
Company and should not be relied upon by any other persons, including the
Selling Stockholders.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name under the caption "Legal
Matters" in the Prospectus included therein, and any amendments thereto.

Very truly yours,

ELIAS MATZ TIERNAN & HERRICK L.L.P.

By: FORM OF OPINION
-----------------------------
Jeffrey A. Koeppel, a Partner

<PAGE>

Exhibit 21

SUBSIDIARIES OF REGISTRANT

Name Jurisdiction of Incorporation Business Name
- ------------------------------------- ----------------------------- -------------
<S> <C> <C>
Force 4 D.P. Supplies, Inc. Oregon, USA Same as Name

Diversified Data Products, Inc. Michigan, USA Same as Name

Diversified Data Products (U.K.), Ltd. United Kingdom Same as Name

CEM (Overseas) Limited British Virgin Islands Same as Name

</TABLE>

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 19, 1997
relating to the consolidated financial statements of Miami Computer Supply
Corporation, which appears in such Prospectus and of our report dated July
31, 1996 relating to the consolidated financial statements of Diversified
Data Products, Inc., which appears in such Prospectus. We also consent to
the references to us under the heading "Experts", "Summary Financial and
Operating Data" and "Selected Consolidated Financial and Operating Data" in
such Prospectus. However, it should be noted that Price Waterhouse LLP has
not prepared or certified such "Summary Financial and Operating Data" or
"Selected Consolidated Financial and Operating Data."

PRICE WATERHOUSE LLP
Cincinnati, Ohio
September 24, 1997

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 94,819
<SECURITIES> 0
<RECEIVABLES> 9,949,305
<ALLOWANCES> 11,500
<INVENTORY> 5,960,682
<CURRENT-ASSETS> 16,173,882
<PP&E> 1,246,909
<DEPRECIATION> 1,222,573
<TOTAL-ASSETS> 20,054,103
<CURRENT-LIABILITIES> 5,903,649
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,016,980
<TOTAL-LIABILITY-AND-EQUITY> 20,054,103
<SALES> 42,349,759
<TOTAL-REVENUES> 42,349,759
<CGS> 35,008,008
<TOTAL-COSTS> 40,765,319
<OTHER-EXPENSES> 2,009
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,584
<INCOME-PRETAX> 1,586,449
<INCOME-TAX> 642,512
<INCOME-CONTINUING> 943,937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 943,937
<EPS-PRIMARY> .26
<EPS-DILUTED> .26

</TABLE>