SOUTHERN ELECTRONICS CORP, S-3, 1997-09-05

SOUTHERN ELECTRONICS CORP
S-3, 1997-09-05
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE

Previous: SOUTHERN ELECTRONICS CORP, S-8, 1997-09-05

Next: SILICON GRAPHICS INC /CA/, 8-A12B, 1997-09-05

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 5, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

SOUTHERN ELECTRONICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 22-2715444
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)

4916 NORTH ROYAL ATLANTA DRIVE, ATLANTA, GEORGIA 30085
(770) 491-8962
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

RAY D. RISNER
SOUTHERN ELECTRONICS CORPORATION
4916 NORTH ROYAL ATLANTA DRIVE
ATLANTA, GEORGIA 30085
(770) 491-8962
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C>
LEONARD A. SILVERSTEIN, ESQ. WADE H. STRIBLING, ESQ.
LONG ALDRIDGE & NORMAN LLP NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
SUITE 5300 FIRST UNION PLAZA, SUITE 1400
303 PEACHTREE STREET 999 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308 ATLANTA, GEORGIA 30309
(404) 527-4000 (404) 817-6000
FACSIMILE (404) 527-4198 FACSIMILE (404) 817-6050
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]

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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

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 statement 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. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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

CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE
TITLE OF SECURITIES TO TO BE OFFERING PRICE OFFERING AMOUNT OF
BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share......... 3,450,000 $16.125 $55,631,250 $16,858
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Includes 450,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee and
calculated pursuant to Rule 457(c) under the Securities Act of 1933.

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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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

SUBJECT TO COMPLETION DATED , 1997

3,000,000 SHARES

SOUTHERN ELECTRONICS CORPORATION

COMMON STOCK

-----------

All of the 3,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), offered hereby (the "Offering") are being sold by Southern
Electronics Corporation (the "Company"). The Common Stock is listed on the
Nasdaq National Market under the trading symbol "SECX." On September 2, 1997,
the last reported sale price of the Common Stock on the Nasdaq National Market
was $16.125 per share. See "Price Range of Common Stock."
LOGO

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

-----------

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.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------
<S> <C> <C> <C>
Per Share....................... $ $ $
- ------------------------------------------------------------------
Total(3)........................ $ $ $
- ------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $550,000, which are payable by the
Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
450,000 additional shares of Common Stock on the same terms and conditions
as set forth above solely to cover over-allotments, if any. If such option
is exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

-----------

The Common Stock is offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them and subject to certain
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer or to reject any orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made on or about ,
1997.

A.G. EDWARDS & SONS, INC.

CLEARY GULL REILAND & MCDEVITT INC.

INTERSTATE/JOHNSON LANE
CORPORATION

C.L. KING & ASSOCIATES, INC.

The date of this Prospectus is , 1997
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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>

[Inside front cover]

GRAPHIC DEPICTS BACKGROUND MAP OF NORTH AMERICA AND
SOUTH AMERICA SUPERIMPOSED WITH LOGOS OF MAJOR VENDORS
FOR WHICH THE COMPANY IS A DISTRIBUTOR.

UNITED STATES AND LATIN AMERICAN DISTRIBUTOR OF LEADING MICROCOMPUTER AND
WIRELESS TELEPHONE PRODUCTS

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE OVER-ALLOTMENT AND STABILIZING TRANSACTIONS, THE
PURCHASE OF COMMON STOCK TO COVER SHORT POSITIONS AND THE IMPOSITION OF PEN-
ALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET
IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED. SEE "UNDERWRITING."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and the Notes thereto
appearing elsewhere in this Prospectus. Prospective investors should carefully
consider the matters set forth under "Risk Factors" herein. As used herein, the
term "Company" means Southern Electronics Corporation and its subsidiary, SED
International, Inc. ("SED International"), unless the context otherwise
indicates. Unless otherwise indicated, all financial information and share data
in this Prospectus assume no exercise of the over-allotment option described
under "Underwriting" or options granted or reserved under the Company's stock
option plans. All references to the Company's fiscal year refer to the year
ended June 30 of that year. Industry information used in this Prospectus was
obtained from industry sources that the Company believes to be reliable, but
such information has not been independently verified.

THE COMPANY

The Company is a leading international distributor of microcomputer products,
including personal computers, printers and other peripherals and networking
products throughout the United States and Latin America. The Company offers a
broad inventory of more than 3,500 products from approximately 125 vendors,
including such market leaders as Seagate, Hewlett-Packard, Maxtor, Samsung,
3Com, Intel, Creative Labs, Acer, Canon, Epson, IBM and Novell, to an active
base of over 12,000 reseller customers through a dedicated and highly motivated
sales force. The Company believes it is the fourth largest microcomputer
products distributor in the United States, where it recently has expanded its
vendor lines, sales force and warehouse locations, and a leading microcomputer
products distributor to Latin America, one of the fastest growing markets in
the world for personal computers. The Company distributes products in the
United States from its strategically located warehouses in Atlanta, Georgia,
Miami, Florida and City of Industry, California, while servicing Latin America
from its Miami facility. The Company's net sales increased to $646.3 million in
fiscal 1997 from $398.8 million in fiscal 1995, and its net earnings increased
to $7.9 million in fiscal 1997 from $5.2 million in fiscal 1995, representing
compound annual growth rates of 27.3% and 23.0%, respectively.

The Company also distributes wireless telephone products in the United States
and to Latin America. The Company is a direct distributor of wireless telephone
products for OKI Telecom and an indirect distributor for other leading wireless
telephone product vendors such as Motorola, Ericsson, Nokia and NEC. In fiscal
1997, the Company's net sales of microcomputer products generated approximately
91.0% of total net sales and wireless telephone products represented the
remaining 9.0%.

Over the past two years, the Company has transformed itself from a regional
United States distributor into an international distributor with leading brand
name vendor lines, a nationwide presence in the United States and a leadership
position in Latin America. As a result of a transaction with Globelle, Inc.
("Globelle") in June 1997, the Company has acquired the distribution rights for
certain significant vendor lines in the United States, including Hewlett-
Packard and Intel, and subsequently hired 36 experienced salespeople formerly
with Globelle. See "--Recent Developments." The addition of the new brand name
vendor lines and salespeople, coupled with the opening of a warehouse facility
in California in May 1997, provide the Company with greater sales penetration
in the western United States and more efficient nationwide distribution
capabilities. Beginning in December 1995, the Company substantially increased
its sales to Latin America with the acquisition of U.S. Computer of North
America, Inc. ("U.S. Computer"). As a result of this acquisition and the
Company's increased focus on the region, net sales to Latin America have
increased to $290.7 million or 45.0% of total net sales in fiscal 1997 from
$14.3 million in fiscal 1994.

The microcomputer products distribution industry has experienced significant
growth that has exceeded that of the overall microcomputer industry as a result
of the worldwide increase in the demand for microcomputer

3
<PAGE>

products coupled with vendors' increasing reliance on the distributor sales
channel. Vendors, faced with declining unit prices and marketing to a large and
varied end-user base, have increasingly turned to distributors to outsource a
portion of their marketing, credit, delivery and technical support.
Distributors can typically sell products to their reseller customer bases less
expensively than vendors because distributors sell across multiple product
lines and have lower cost structures streamlined exclusively for the
distribution process.

Dataquest Incorporated, a global market research firm ("Dataquest"), projects
that demand for personal computers in the United States will increase to $129.3
billion in 2001 from $60.1 billion in 1996 and in Latin America will increase
to $16.4 billion in 2001 from $6.3 billion in 1996, representing compound
annual growth rates of 16.5% and 21.3%, respectively. Based on industry data,
the personal computer penetration rate in the United States is projected to
increase to 55.7% in 2000 from 34.7% in 1995, compared to Latin America, which
is projected to increase to 5.0% in 2000 from 2.0% in 1995. While the
microcomputer products distribution industry has experienced significant growth
in recent years, the competitive environment has simultaneously become more
intense, leading to accelerating industry consolidation and declining gross
margins. As a result, the Company has placed greater emphasis on the
conservative management of relative selling, general and administrative
expenses to offset potential declines in operating margins.

The Company's objectives are to strengthen its position as a leading
microcomputer products distributor in the United States and Latin America and
build upon its position as a wireless telephone products distributor in these
regions by capitalizing on (i) its recently expanded scope of operations in the
United States, and (ii) the expected growth in demand for microcomputer and
wireless telephone products in the United States and Latin America. To achieve
these objectives, the Company will employ the following strategies:

. Continue to Add and Enhance Alliances with Core Vendors. The Company will
continue to add new alliances and enhance existing alliances with leading
microcomputer and wireless telephone products vendors. For example, in July
1997, the Company added Hewlett-Packard and Intel to its United States
vendor base, both of which represent high profile marketing opportunities
previously unavailable to the Company. The Company believes that the
addition of Hewlett-Packard and Intel, in combination with its existing
vendor lines, will lead to substantial marketing opportunities to its
existing customer base and enhance the Company's ability to develop new
customer relationships. Additionally, the Company believes that a strategy
focused on core vendors results in more effective marketing of those
vendors' products through greater sales force expertise and strengthens the
Company's vendor relationships through increased purchases and sales.
Accordingly, the Company has concentrated its efforts on approximately 125
vendors.

. Further Penetrate Latin American Market. The Company will seek to further
penetrate the Latin American market. The Company began distributing products
to Latin America in December 1994 and believes it is well positioned to
capitalize on the expected substantial growth in demand for personal
computers in the region as a result of its existing relationships with Latin
American customers and its ability to distribute core vendor products. The
Company believes that its marketing approach focusing on customer
relationships is well suited to the Latin American market, where business
relationships are especially critical to market penetration. Recently, the
Company opened a sales office in Bogota, Colombia to facilitate sales in
this region and intends to add facilities elsewhere in Latin America.

. Maintain Low Cost Operating Structure. The Company will strive to maintain a
low cost operating structure by focusing on a variety of factors, including
electronic commerce, sophisticated management information systems,
centralized management, economies of scale in product purchasing, financing
and working capital management, and stringent cost controls. Over the last
four years, the Company has reduced selling, general and administrative
expenses as a percentage of net sales to 3.7% in fiscal 1997 from 5.2% in
fiscal 1993.

4
<PAGE>

. Grow Through Strategic Acquisitions. The Company will seek to grow through
strategic acquisitions in order to (i) obtain new vendor lines, (ii) expand
its geographic presence, and (iii) increase its sales force. The
microcomputer products distribution industry continues to consolidate on a
global basis driven by efficiency gains derived primarily through economies
of scale. This trend has made growth through internal sources or by
acquisitions imperative to maintaining competitiveness. In both the United
States and Latin America, the Company generally seeks acquisition candidates
that have strong, entrepreneurial management teams experienced in their
local market who desire to continue operating their businesses, and that
have core vendor lines and experienced salespeople. In order to reduce
financial risk and enhance operational performance, the Company will seek to
structure acquisitions with an earnout component based on the performance of
the acquired company over a specified period, generally payable in shares of
Common Stock or, at the election of the Company, in cash or a combination of
cash and Common Stock. The Company offers its acquisition candidates the
opportunity for financial liquidity, economies of scale and access to a
broader product line with volume pricing.

RECENT DEVELOPMENTS

As a result of a transaction with Globelle in June 1997, the Company has
acquired the distribution rights for certain significant vendor lines in the
United States, including Hewlett-Packard and Intel, and subsequently hired 36
experienced salespeople formerly with Globelle to benefit from their pre-
existing customer relationships. In addition, the Company anticipates entering
into additional authorized United States distributor agreements for other
product lines previously sold by Globelle. Because the Globelle transaction was
not an acquisition of a going business concern, management expects a transition
period following the closing of that transaction during which the newly-hired
former salespeople of Globelle and their respective customer base are
acclimated to the Company's policies, procedures and product offerings and the
inventory of new product lines is stocked at the Company's warehouses. The
Globelle transaction affords the Company the opportunity to leverage a national
sales presence with its strategically located national warehouses, thereby
providing timely and efficient product distribution to its customers located
anywhere in the United States. As a result of the Globelle transaction, the
Company expects to incur one-time after tax start-up costs of approximately
$900,000 during its first fiscal quarter ending September 30, 1997. This charge
reflects the costs associated with hiring new salespeople, opening new sales
offices and other related items. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company............... 3,000,000 shares
Common Stock to be outstanding after this Offer- 10,229,640 shares(1)
ing..............................................
Use of proceeds................................... To reduce indebtedness under the Company's
revolving credit agreement. See "Use of
Proceeds."
Nasdaq National Market symbol..................... SECX
</TABLE>
- --------
(1) Does not include an aggregate of 2,124,799 shares of Common Stock reserved
for issuance under various stock option and award plans and agreements. As
of August 31, 1997, there were options outstanding exercisable within 60
days for an aggregate of 1,007,165 shares of Common Stock at a weighted
average exercise price of $5.80 per share. See "Capitalization."

The Company was incorporated in 1986 to continue the operations of the
business of the Company's predecessor, Southern Electronics Distributors, Inc.,
which was engaged in the wholesale distribution of consumer electronics
products. The Company's executive offices are located at 4916 North Royal
Atlanta Drive, Atlanta, Georgia 30085 and its telephone number is (770) 491-
8962.

5
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $ 79,350 $ 79,350
Total assets............................................ 197,329 197,329
Total debt.............................................. 56,000 10,836
Stockholders' equity.................................... 48,896 94,060
</TABLE>

- --------
(1) Adjusted to reflect the sale of 3,000,000 shares of Common Stock offered
hereby at an assumed price of $16.125 per share (based upon the last sale
price per share on September 2, 1997 as reported on the Nasdaq National
Market) and the application of the net proceeds therefrom.

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), which represent the Company's expectations or beliefs,
including, but not limited to, statements concerning sales of the Company's
products and operating income. When used in this Prospectus, the words "may,"
"could," "should," "would," "believe," "anticipate," "estimate," "intend,"
"plan" and similar expressions are intended to identify forward-looking
statements. These statements by their nature involve substantial risks and
uncertainties, certain of which are beyond the Company's control. The Company
cautions that various factors, including the factors described under the
captions "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" as well as general economic conditions and
industry trends, the level of acquisition opportunities available to the
Company and the Company's ability to negotiate the terms of such acquisitions
on a favorable basis, a dependence upon and/or loss of key vendors or
customers, the loss of strategic product shipping relationships, customer
demand, product availability, competition (including pricing and availability),
concentrations of credit risks, distribution efficiencies, capacity constraints
and technological difficulties could cause actual results or outcomes to differ
materially from those expressed in any forward-looking statements of the
Company made by or on behalf of the Company. Any forward-looking statement
speaks only as of the date on which such statement is made, and the Company
undertakes no obligation to update any forward-looking statement or statements
to reflect events or circumstances after the date on which such statement is
made or to reflect the occurrence of an unanticipated event. New factors emerge
from time to time, and it is not possible for management to predict all of such
factors. Further, management cannot assess the impact of each such factor on
the business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any forward-
looking statements.

6
<PAGE>

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating an
investment in the Common Stock offered hereby.

ASSIMILATION OF RECENT AND FUTURE ACQUISITIONS

As a result of a transaction with Globelle in June 1997, the Company has
acquired the distribution rights for certain significant vendor lines in the
United States and subsequently hired 36 experienced salespeople formerly with
Globelle. Because the Globelle transaction was not an acquisition of a going
business concern, management expects a transition period following the closing
of that transaction during which the newly-hired former sales employees of
Globelle and their respective customer base are acclimated to the Company's
policies, procedures and product offerings and the inventory of new product
lines is stocked at the Company's warehouses. As a result of the Globelle
transaction, the Company expects to incur one-time after tax start-up costs of
approximately $900,000 during its first fiscal quarter ending September 30,
1997. This charge reflects the costs associated with hiring new salespeople,
opening new sales offices and other related items.

The Company's management has determined that the Company will continue to
pursue acquisition opportunities in the United States and in Latin America,
both in the Company's existing lines of business as well as in complementary
businesses. Acquisitions involve a number of risks including: the diversion of
management's attention; the assimilation of the operations and personnel of
the acquired companies; the ability to understand and sell newly acquired
product lines; the assumption of potential liabilities, disclosed or
undisclosed, associated with the businesses acquired, which liabilities may
exceed the amount of indemnification available from the sellers; the risk that
the financial and accounting systems utilized by the businesses acquired will
not meet the Company's standards; the risk that the businesses acquired will
not maintain the quality of services that the Company has historically
provided; the potential adverse short-term effects on the Company's operating
results; the dilutive effect on the use of the Company's Common Stock as
consideration for the acquisition; the amortization of acquired intangible
assets; and the inability to attract and retain qualified local management.

There can be no assurance that the Company will consummate future
acquisitions on satisfactory terms, that adequate financing will be available
on favorable terms to the Company or, if any such acquisition should occur,
that it will have a favorable effect on the Company and its business,
financial condition and results of operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and "Business--Strategy."

COMPETITION; DECLINING MARGINS

The microcomputer and wireless telephone products distribution industries
are highly competitive, both in the United States and in Latin America.
Competition in these industries is typically characterized by pricing
pressures, product availability and potential obsolescence, speed and accuracy
of delivery, effectiveness of sales and marketing programs, credit
availability, ability to tailor specific solutions to customer needs, quality
of product lines and services, and availability of technical support and
product information. Additionally, the Company's ability to compete favorably
is principally dependent upon its ability to control inventory and other
operating costs, react timely and appropriately to short- and long-term
trends, price competitively its products, increase its net sales and maintain
economies of scale. The Company's competitors include regional, national and
international microcomputer and wireless distributors, many of which have
substantially greater technical, financial and other resources than the
Company, as well as vendors that sell directly to resellers and large
resellers that sell to other resellers. Major competitors include Ingram
Micro, Inc., Merisel, Inc. and Tech Data Corporation in the United States and
CHS Electronics, Inc. in Latin America. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Overview" and
"Business--Competition."

Currently, the Company and its competitors are experiencing declining gross
margins as a result of the highly competitive nature of the industry, which
the Company expects to continue for the foreseeable future and

7
<PAGE>

which could have a material adverse effect on the Company's business,
financial condition and results of operations.

RELIANCE ON CORE VENDORS

The Company purchases goods from approximately 125 vendors and has
negotiated favorable terms from certain vendors by purchasing a substantial
volume of those vendors' products. In fiscal 1997, products purchased from
Seagate, Hewlett-Packard and Maxtor accounted for 19.7%, 11.5% and 11.5%,
respectively, of the Company's total purchases and the loss of any one of
these three vendors could materially adversely affect the financial condition
of the Company. There can be no assurance that the Company will be able to
maintain its existing vendor relationships or secure additional vendors as
needed. The Company's vendor relationships typically are non-exclusive and
subject to annual renewal, terminable by either party on short notice, and
contain territorial restrictions that limit the countries in which the Company
is permitted to distribute the products. The loss of a major vendor, the
deterioration of the Company's relationship with a major vendor, the loss or
deterioration of vendor support for certain Company-provided services, the
decline in demand for a particular vendor's product, or the failure of the
Company to establish good relationships with major new vendors could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Products and Vendors."

MANAGEMENT OF GROWTH

The Company's recent growth has required it to make significant additions in
personnel, has increased significantly the Company's working capital
requirements, and has placed, and is expected to continue to place,
significant demand on the Company's management, operating and financial
systems and other resources. There can be no assurance that the pressures
placed upon the Company's management, operating and financial systems and
other resources will not have a material adverse effect on the Company's
business, financial condition and result of operations. Nor can there be any
assurance that the Company will be able to attract or retain sufficient
personnel to continue the Company's growth strategies. The Company expects to
continue to invest in its operations, including its financial and management
information systems, and to increase its efforts to hire, retain, motivate and
manage its employees, all of which may significantly increase the Company's
operating expenses. There can be no assurance that the Company will be able to
manage these expected by-products of growth and any failure by the Company to
achieve and manage its growth as planned could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Business--Strategy."

INTERNATIONAL SALES

Approximately 45.0% of the Company's net sales in fiscal 1997 were derived
from customers located in Latin America. Product distribution to the Latin
American market historically has been serviced through the Company's Miami,
Florida warehouse facility with sales denominated in United States dollars.
The Company recently opened a sales office in Bogota, Colombia and anticipates
having a local presence in certain other Latin American countries with sales
from these facilities denominated in the respective currencies of those
countries. Consequently, changes in the value of foreign currencies relative
to the United States dollar could adversely affect the Company's financial
condition and results of operation, and gains and losses on foreign exchange
transactions could contribute to fluctuations of the Company's results of
operations. When possible, the Company may engage in currency hedging
transactions and certain other practices to reduce these risks. There can be
no assurance that fluctuations in foreign currencies would not have an adverse
effect on the Company's financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

The Company's existing and planned international operations are subject to
political and economic uncertainties, including, among other things,
inflation, hyperinflation, risk of renegotiation or modification of existing
agreements or arrangements with governmental authorities, transportation,
tariffs, export controls, foreign exchange restrictions which limit the
repatriation of investments and earnings therefrom, changes in taxation,
hostilities and confiscation of property. Changes related to these matters
could have a material adverse effect on the Company's business, financial
condition and results of operations.

8
<PAGE>

POSSIBLE NEED FOR ADDITIONAL CAPITAL TO FINANCE ACQUISITIONS

The Company has grown through acquisitions and internal expansion, both of
which have resulted in the need for significant amounts of capital. In order
to continue its acquisition strategy, the Company may need to seek additional
funding through public or private financing and may, when attractive sources
of capital become available, elect to obtain capital in anticipation of such
needs. Adequate funds for these purposes may not be available when needed or
may not be available on terms favorable to the Company. If additional funds
are raised by issuing equity securities, dilution to existing stockholders may
result. If funding is insufficient, the Company may be required to delay,
reduce the scope of or eliminate some or all of its expansion programs. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation--Liquidity and Capital Resources."

DEPENDENCE ON INDEPENDENT SHIPPING COMPANIES

The Company relies almost entirely on arrangements with independent shipping
companies for the delivery of products to its United States customers.
Currently United Parcel Service ("UPS"), Federal Express Corporation and
Western Parcel Service, Inc. deliver the substantial majority of the Company's
products to its United States customers. The Company estimates that 20.0% of
net sales currently are shipped via UPS. Products distributed to the Latin
American market are delivered to the foreign purchasers or their agents or
representatives at the Company's Miami, Florida warehouse from which they are
exported to Latin America.

The termination of the Company's arrangements with one or more of its major
independent shipping companies or the failure or inability of one or more of
these independent shipping companies to deliver products from vendors to the
Company or products from the Company to its resellers or their end-user
customers could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance that
the services of any of these independent shipping companies will continue to
be available to the Company on terms as favorable as those currently available
or that these companies will choose or be able to perform their required
shipping services for the Company. In particular, the August 4, 1997 UPS
employee work stoppage, had it continued over an extended period, could have
had a material adverse effect on the Company's business, financial condition
and results of operations.

DEPENDENCE ON KEY PERSONNEL

The Company believes it has benefited substantially from the active
participation of its Chairman of the Board and Chief Executive Officer, Gerald
Diamond. In addition to the Company's particular dependence on the services of
Mr. Diamond, the Company is highly dependent on its ability to retain its
current personnel and to continue to attract and retain other qualified
personnel. The Company has entered into an employment agreement with Mr.
Diamond expiring June 30, 2002 with automatic one year renewals upon the
expiration of each year of employment under the employment contract. The
Company's future operations could be materially adversely affected if, for any
reason, the services of Mr. Diamond should cease or the Company is unable to
attract and retain other qualified employees to meet the Company's needs. See
"Management."

POTENTIAL QUARTERLY FLUCTUATIONS; SEASONALITY

The Company may experience fluctuations in its net sales and net income on a
quarterly basis as a result of many factors, including availability of vendor
products and customer demand for those products, variables in the
microcomputer and wireless telecommunications industries, in general, and the
delayed production of sales following the closing of an acquisition as a
result of the transition period necessary to acclimate newly hired employees
and their respective customer base to the Company's policies, procedures and
product offerings. The Company's sales currently are not subject to material
seasonal fluctuations, although no assurance can be given that seasonal
fluctuations will not develop, especially during the holiday seasons in the
United States and Latin America. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation--Quarterly Data; Seasonality."

9
<PAGE>

EFFECTS OF CHANGING TECHNOLOGY

The microcomputer and wireless telecommunications industries are both
subject to rapid technological change, new and enhanced product specification
requirements, and evolving industry standards. These changes may cause rapid
obsolescence of inventory and corresponding valuation reductions in that
inventory. Although the Company believes it has adequate price protection and
other arrangements with its vendors to avoid bearing the costs associated with
these changes, no assurance can be made that future technological or other
changes will not have a material adverse effect on the business, financial
condition or results of operations of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview " and "Business--Products and Vendors."

EFFECTS OF CHANGING METHODS OF DISTRIBUTION

The methods by which microcomputer and wireless telephone vendors distribute
their products are constantly evolving. Certain vendors have announced plans
to sell their products directly to end-users, thereby by-passing the
distributor channel altogether. Furthermore, several major vendors have
announced they are considering strategies pursuant to which distributors like
the Company may be required to provide additional value-added services such as
basic product assembly and configuration of products prior to distributing
these products to resellers. There can be no assurance that the Company will
be able to establish assembly and configuration services satisfactory to its
vendors' potential expectations, the failure of which could have a material
adverse effect on the business, financial condition and results of operations
of the Company.

SHARE PRICE VOLATILITY

The market price of the Common Stock could be subject to wide fluctuations
in response to quarterly variations in the Company's results of operations,
changes in earnings estimates by research analysts, conditions in the
microcomputer and wireless telecommunications industries, or general market or
economic conditions, among other factors. In addition, in recent years, the
stock market has experienced extreme price and volume fluctuations, which
often have been unrelated to the operating performance of particular
companies. Such market fluctuations could materially adversely affect the
market price for the Common Stock. In addition, any announcement with respect
to any variance in the Company's revenue or earnings from levels generally
expected by securities analysts for a given period could have an immediate and
significant effect on the trading price of the Common Stock. See "Price Range
of Common Stock."

CERTAIN ANTI-TAKEOVER PROVISIONS

The Company has implemented a stockholder rights plan (the "Stockholder
Rights Plan") pursuant to which each stockholder of record of the Company will
be entitled to purchase a specified number of shares of Common Stock at a
formula purchase price per share upon the earlier of (i) ten days following a
public announcement that a person or group of affiliated or associated persons
has acquired beneficial ownership of 12.0% or more of the outstanding shares
of Common Stock of the Company or (ii) ten days following the commencement of
a tender offer or an exchange offer that would result in a person or group of
affiliated or associated persons beneficially owning 12.0% or more of such
outstanding shares of Common Stock. The Company's Board of Directors also has
the authority to issue 129,500 shares of preferred stock in one or more series
and to fix the powers, designations, preferences and relative rights without
any further corporate action by the Company's stockholders. The issuance of
either or both Common Stock under the Stockholder Rights Plan and preferred
stock could dilute the voting power of holders of Common Stock and could have
the effect of delaying, deferring or preventing a change in control of the
Company. The foregoing provisions and certain other provisions in the
Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and Amended and Restated By-Laws (the "By-Laws"), as well as
Delaware law, could operate in a manner that could discourage or render more
difficult a takeover of the Company or the removal of management or negatively
affect the amount certain investors may be willing to pay in the future for
shares of Common Stock. See "Principal Stockholders" and "Description of
Capital Stock."

10
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after this
Offering, including sales pursuant to Rule 144 promulgated under the
Securities Act, or otherwise, or the perception that such sales could occur,
may adversely affect the market price of the Company's Common Stock. Upon
completion of this Offering, the Company will have 10,229,640 shares of Common
Stock outstanding (10,679,640 shares if the Underwriters' over-allotment
option is exercised in full). Of these shares, all of the 3,000,000 shares
sold in this Offering (plus an additional 450,000 shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradable without
restriction or further registration under the Securities Act. Of the remaining
7,229,640 shares, 1,159 shares are deemed "restricted shares" under Rule 144
because they were originally issued and sold by the Company in private
transactions in reliance upon exemptions under the Securities Act and have not
been registered for resale under the Securities Act. Of those shares, 283
shares are held by persons deemed "affiliates" of the Company as such term is
defined in Rule 144 and 876 shares are held by persons who are not deemed
affiliates of the Company. The restricted shares may not be sold except in
compliance with the registration requirements of the Securities Act or
pursuant to an exemption from registration such as the exemption provided by
Rule 144 under the Securities Act. Of the restricted shares, all of the shares
held by non-affiliates are eligible for immediate resale under the provisions
of Rule 144(k) under the Securities Act. An aggregate of 992,344 shares
(inclusive of 504,328 shares registered for resale under the Securities Act)
held by executive officers, directors and certain stockholders are subject to
lock-up agreements that prohibit their resale prior to 90 days from the date
of this Prospectus without the prior consent of A.G. Edwards & Sons, Inc. and
thereafter may be sold subject to the provisions of Rule 144 or the resale
registration statement, as the case may be. Accordingly, the 9,237,296 shares
of Common Stock (9,687,296 shares if the Underwriters' over-allotment option
is exercised in full) not held by affiliates, not subject to the lock-up
agreements and otherwise registered may be freely tradeable. See "Description
of Capital Stock," "Shares Eligible for Future Sale" and "Underwriting."

USE OF PROCEEDS

The net proceeds to the Company (after deducting the underwriting discount
and estimated offering expenses) from the sale of 3,000,000 shares of Common
Stock offered hereby, assuming a public offering price of $16.125 per share
(based upon the last sale price per share on September 2, 1997 as reported on
the Nasdaq National Market), are estimated to be approximately $45.2 million
($52.0 million if the Underwriters' over-allotment option is exercised in
full). The Company intends to use the net proceeds of the Offering to repay
outstanding indebtedness under its $100.0 million revolving credit facility
with its lenders, which expires on August 13, 2000 (the "Credit Agreement").
At August 31, 1997, $55.1 million principal and accrued and unpaid interest
were outstanding under the Credit Agreement at a weighted average interest
rate of 8.57% per annum. This indebtedness was incurred, in part, to finance
the Globelle transaction. Pending such use, the net proceeds of the Offering
will be invested in short-term, investment grade, interest-bearing securities.
The Company expects that the additional availability under its Credit
Agreement following completion of this Offering will enable the Company to
take greater advantage of vendor discounts for early payment, special vendor
pricing and buying opportunities, and potential acquisitions. At the present
time, the Company has not entered into binding agreements with respect to
certain contemplated acquisitions of similar or complementary businesses and
no assurance can be given that any such acquisitions will be consummated or
when additional acquisitions will occur. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

11
<PAGE>

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock.
The Company currently intends to retain earnings to finance the growth and
development of its business and does not anticipate paying cash dividends in
the foreseeable future. Future policy with respect to payment of dividends on
the Common Stock will be determined by the Board of Directors based upon
conditions then existing, including the Company's earnings and financial
condition, capital requirements and other relevant factors. SED International,
the earnings of which would be the primary source of any dividend payments,
and the Company are parties to the Credit Agreement which contains certain
financial covenants that may impact the Company's ability to pay dividends,
should it choose to do so. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."

PRICE RANGE OF COMMON STOCK

The following table sets forth the range of high and low sale prices per
share for the Company's Common Stock as reported by the Nasdaq National
Market, where the stock trades under the symbol "SECX," for the periods
indicated.

<TABLE>
<CAPTION>
FISCAL YEAR PERIOD HIGH LOW
----------- ------ ------ ------
<C> <S> <C> <C>
1996 First Quarter..................................... $ 6.50 $ 5.00
Second Quarter.................................... 6.25 4.63
Third Quarter..................................... 6.25 4.75
Fourth Quarter.................................... 6.88 5.00
1997 First Quarter..................................... $ 9.50 $ 5.38
Second Quarter.................................... 12.63 8.50
Third Quarter..................................... 12.50 7.81
Fourth Quarter.................................... 13.38 8.25
1998 First Quarter (through September 2, 1997)......... $16.25 $12.75
</TABLE>

On September 2, 1997, the last sale price of the Common Stock as reported on
the Nasdaq National Market was $16.125 per share. As of August 31, 1997, there
were 193 holders of record of the Common Stock. Management of the Company
believes that there are in excess of 400 beneficial holders of Common Stock.

12
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of June 30, 1997 and as adjusted to reflect the sale by the Company
of 3,000,000 shares of Common Stock offered hereby and the application of the
net proceeds therefrom as described in "Use of Proceeds." This table should be
read in conjunction with the Consolidated Financial Statements and related
Notes thereto included elsewhere in this Prospectus:

<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------
AS
ACTUAL ADJUSTED(1)
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Total debt(2)............................................ $ 56,000 $ 10,836
-------- --------
Stockholders' equity:
Preferred stock, $1.00 par value; 129,500 shares
authorized,
none issued............................................ -- --
Common Stock, $.01 par value; 25,000,000 shares
authorized,
7,522,786 (actual) and 10,522,786 (as adjusted) shares
issued(3).............................................. 75 105
Additional paid-in capital.............................. 12,719 57,853
Retained earnings....................................... 39,095 39,095
Treasury stock at cost, 325,590 shares.................. (2,715) (2,715)
Prepaid compensation--stock awards...................... (278) (278)
-------- --------
Total stockholders' equity............................. 48,896 94,060
-------- --------
Total capitalization.................................. $104,896 $104,896
======== ========
</TABLE>
- --------
(1) Assumes an offering price of $16.125 per share (based upon the last sale
price per share on September 2, 1997 as reported on the Nasdaq National
Market).
(2) Total debt represents solely borrowings under the Company's Credit
Agreement. See Note 4 to the Company's Consolidated Financial Statements.
(3) Excludes 1,575,322 shares of Common Stock issuable upon exercise of
outstanding stock options at a weighted average exercise price of $6.47
per share and 199,477 additional shares reserved for issuance under the
Company's stock option and award plans and agreements as of August 31,
1997. The Board of Directors has recommended for stockholder approval at
its Annual Meeting of Stockholders to be held November 11, 1997 an
increase in the authorized number of shares of Common Stock to 100 million
shares and the 1997 Stock Option Plan under which 350,000 shares of Common
Stock will be reserved for issuance. See "Description of Capital Stock"
and "Shares Eligible for Future Sale."

13
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected consolidated financial data for each of the last five fiscal
years ended June 30, 1997 set forth below have been derived from the Company's
audited Consolidated Financial Statements. The following data should be read
in conjunction with the Consolidated Financial Statements and the Notes
thereto appearing elsewhere herein, as well as "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business."

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales......................... $249,472 $296,173 $398,753 $468,298 $646,336
Cost of sales..................... 223,122 271,982 370,548 438,837 607,437
-------- -------- -------- -------- --------
Gross profit...................... 26,350 24,191 28,205 29,461 38,899
Selling, general and
administrative expenses.......... 13,015 14,448 19,104 19,493 23,941
-------- -------- -------- -------- --------
Operating income.................. 13,335 9,743 9,101 9,968 14,958
Interest expense, net............. 20 193 688 902 2,128
-------- -------- -------- -------- --------
Earnings before income taxes...... 13,315 9,550 8,413 9,066 12,830
Income taxes...................... 4,929 3,606 3,191 3,516 4,925
-------- -------- -------- -------- --------
Net earnings...................... $ 8,386 $ 5,944 $ 5,222 $ 5,550 $ 7,905
======== ======== ======== ======== ========
Net earnings per share............ $ 1.13 $ 0.81 $ 0.74 $ 0.76 $ 1.04
Weighted average common shares
outstanding...................... 7,427 7,355 7,069 7,280 7,634
<CAPTION>
JUNE 30,
--------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................... $ 20,099 $ 25,489 $ 41,355 $ 40,496 $ 79,350
Total assets...................... 56,290 65,572 87,375 131,305 197,329
Total debt(1)..................... 9,258 -- 11,500 10,610 56,000
Stockholders' equity.............. 23,281 29,348 34,633 41,650 48,896
</TABLE>
- --------
(1)Represents solely borrowings under the Company's Credit Agreement.

14
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is
qualified in its entirety by, the Consolidated Financial Statements of the
Company and the Notes thereto and the Selected Consolidated Financial Data
included elsewhere in this Prospectus. Historical operating results are not
necessarily indicative of trends in operating results for any future period.

OVERVIEW

The Company is a leading international distributor of microcomputer
products, including personal computers, printers and other peripherals and
networking products throughout the United States and Latin America. The
Company believes it is the fourth largest microcomputer products distributor
in the United States, where it recently has expanded its vendor lines, sales
force and warehouse locations, and a leading microcomputer products
distributor to Latin America, one of the fastest growing markets in the world
for personal computers. Over the past two years, the Company has transformed
itself from a regional United States distributor into an international
distributor with leading brand name vendor lines, a nationwide presence in the
United States and a leadership position in Latin America. In fiscal 1997, the
Company's net sales to customers in the United States represented
approximately 55.0% of total net sales and net sales for export to Latin
America represented approximately 45.0% of total net sales. Net sales of
microcomputer products generated approximately 91.0% of total net sales and
wireless telephone products represented the remaining 9.0% for fiscal 1997.

While the microcomputer products distribution industry has experienced
significant growth in recent years, the competitive environment has
simultaneously become more intense, leading to accelerating industry
consolidation and declining gross margins. As a result, the Company has placed
greater emphasis on the conservative management of relative selling, general
and administrative expenses to offset potential declines in operating margins.
Over the last four fiscal years, the Company has reduced selling, general and
administrative expenses as a percentage of net sales to 3.7% in fiscal 1997
from 5.2% in fiscal 1993. Although the Company has successfully controlled
these expenses as a percentage of net sales over the last four fiscal years,
there can be no assurance that it will be able to do so in the future. The
Company also anticipates some quarterly fluctuations in these expenses from
the transition period following the closing of future business acquisitions,
both in the United States and in Latin America.

As a result of a transaction with Globelle in June 1997, the Company has
acquired the distribution rights for certain significant vendor lines in the
United States, including Hewlett-Packard and Intel, and subsequently hired 36
experienced salespeople formerly with Globelle to benefit from their pre-
existing customer relationships. In addition, the Company anticipates entering
into additional authorized United States distributor agreements for other
product lines previously sold by Globelle. Because the Globelle transaction
was not an acquisition of a going business concern, management expects a
transition period following the closing of that transaction during which the
newly-hired former salespeople of Globelle and their respective customer base
are acclimated to the Company's policies, procedures and product offerings and
the inventory of new product lines is stocked at the Company's warehouses. The
Globelle transaction affords the Company the opportunity to leverage a
national sales presence with its strategically located national warehouses,
thereby providing timely and efficient product distribution to its customers
located anywhere in the United States. As a result of the Globelle
transaction, the Company expects to incur one-time after tax start-up costs of
approximately $900,000 during its first fiscal quarter ending September 30,
1997. This charge reflects the costs associated with hiring new salespeople,
opening new sales offices and other related items.

Beginning in December 1995, the Company substantially increased its sales to
Latin America with the acquisition of U.S. Computer. As a result of this
acquisition and the Company's increased focus on the region, sales to Latin
America have increased to $290.7 million or 45.0% of total net sales in fiscal
1997 from $14.3 million in fiscal 1994. Gross margins for sales to Latin
America generally are lower than those in the United States primarily due to
lower product prices required to absorb additional costs from a relatively
more

15
<PAGE>

layered distribution channel. Selling, general and administrative expenses as
a percentage of net sales, however, generally are lower primarily due to
larger average customer orders resulting in fewer Company resources required
for customer support. The Company's resulting operating margins for sales to
Latin America generally are similar to those in the United States.

The Company derives all of its operating income and cash flow from SED
International, which is organized in and operates from the United States.
Consequently, all purchases and sales of inventory are in United States
dollars. As the Company expands internationally to establish an in-country
presence throughout Latin America, the Company may begin buying and selling
inventory using locally denominated currencies. The use of foreign currencies
could subject the Company to the risk of currency fluctuations, which the
Company may seek to limit through hedging activities.

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented, the percentage of
net sales represented by certain items in the Company's Consolidated
Statements of Earnings:

<TABLE>
<CAPTION>
YEAR ENDED JUNE
30,
-------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Net sales.................................................. 100.0% 100.0% 100.0%
Cost of sales, including buying and occupancy expenses..... 92.9 93.7 94.0
----- ----- -----
Gross profit............................................... 7.1 6.3 6.0
Selling, general and administrative expenses............... 4.8 4.2 3.7
----- ----- -----
Operating income........................................... 2.3 2.1 2.3
Interest expense, net...................................... 0.2 0.2 0.3
----- ----- -----
Earnings before income taxes............................... 2.1 1.9 2.0
Income taxes............................................... 0.8 0.7 0.8
----- ----- -----
Net earnings............................................... 1.3% 1.2% 1.2%
===== ===== =====
</TABLE>

Fiscal 1997 Compared to Fiscal 1996

Net sales increased 38.0%, or $178.0 million, to $646.3 million in fiscal
1997 compared to $468.3 million in fiscal 1996. This growth resulted from an
increase in both United States net sales and net sales to customers for export
principally into Latin America. Net sales in the United States increased
approximately 19.8%, or $58.8 million, to $355.6 million in fiscal 1997
compared to $296.8 million in fiscal 1996, primarily due to increased sales of
mass storage products. Net sales for export increased 69.5%, or $119.2
million, to $290.7 million in fiscal 1997 compared to $171.5 million in fiscal
1996, primarily due to the December 1995 acquisition of U.S. Computer and the
Company's increased focus on Latin America. Sales of microcomputer products
represented approximately 91.0% of the Company's fiscal 1997 net sales
compared to 91.7% for fiscal 1996. Sales of wireless telephone products
accounted for approximately 9.0% of the Company's fiscal 1997 net sales
compared to 8.3% for fiscal 1996.

Gross profit increased 32.0%, or $9.4 million, to $38.9 million in fiscal
1997 compared to $29.5 million in fiscal 1996. Gross profit as a percentage of
net sales decreased to 6.0% in fiscal 1997 from 6.3% in fiscal 1996. The
dollar increase in gross profit relates directly to the increase in net sales.
The decrease in the gross profit percentage was primarily due to continued
highly competitive pricing and a higher proportion of total net sales for
export.

Selling, general and administrative expenses increased 22.8%, or $4.4
million, to $23.9 million in fiscal 1997, compared to $19.5 million in fiscal
1996. These expenses as a percentage of net sales decreased to 3.7% in fiscal
1997 compared to 4.2% in fiscal 1996. The dollar increase in these expenses
was primarily due to increased salaries and commissions for salespeople and
expanded sales and distribution facilities. The percentage decrease in these
expenses was primarily due to the Company's ability to control variable costs
over a larger sales base and a greater proportion of the Company's business
derived from Latin America, which generally has lower selling, general and
administrative expenses than in the United States.

16
<PAGE>

Net interest expense increased 135.9%, or $1.2 million, to $2.1 million in
fiscal 1997 compared to $902,000 in fiscal 1996. Interest expense as a
percentage of net sales increased to 0.3% in fiscal 1997 compared to 0.2% in
fiscal 1996. The increase in interest expense was primarily due to borrowing
costs associated with funding increased levels of working capital.

Income tax expense was recorded at an effective annual rate of 38.4% in
fiscal 1997 compared to 38.8% in fiscal 1996. The decrease in the effective
rate in fiscal 1997 relates primarily to slightly lower state income taxes net
of federal income tax benefit, offset by slightly higher non-deductible
goodwill amortization expense.

Fiscal 1996 Compared to Fiscal 1995

Net sales increased 17.4%, or $69.5 million, to $468.3 million in fiscal
1996 compared to $398.8 million in fiscal 1995. This growth resulted from an
increase in net sales for export principally into Latin America, offset by a
decrease in United States net sales. United States net sales decreased 5.7%,
or $18.0 million, to $296.8 million in fiscal 1996 compared to $314.8 million
in fiscal 1995, primarily due to a temporary industry shortage of certain disk
drive products. Net sales for export increased 104.2%, or $87.5 million, to
$171.5 million in fiscal 1996 compared to $84.0 million in fiscal 1995,
primarily as a result of the December 1995 acquisition of U.S. Computer. Sales
of microcomputer products represented approximately 91.7% of the Company's
fiscal 1996 net sales compared to 90.9% for fiscal 1995. Sales of wireless
telephone products accounted for approximately 8.3% of the Company's fiscal
1996 net sales compared to 9.1% for fiscal 1995.

Gross profit increased 4.5%, or $1.3 million, to $29.5 million in fiscal
1996, compared to $28.2 million in fiscal 1995. Gross profit as a percentage
of net sales decreased to 6.3% in fiscal 1996 from 7.1% in fiscal 1995. The
dollar increase in gross profit relates directly to the increase in net sales.
The decrease in the gross profit percentage was primarily due to continued
highly competitive pricing and a significantly higher proportion of total net
sales for export.

Selling, general and administrative expenses increased 2.0%, or $389,000 to
$19.5 million in fiscal 1996 compared to $19.1 million in fiscal 1995. These
expenses as a percentage of net sales decreased to 4.2% in fiscal 1996
compared to 4.8% in fiscal 1995. The dollar increase in these expenses was
primarily due to increased salaries and commissions for salespeople. The
percentage decrease in these expenses was primarily due to the Company's
ability to control variable costs over a larger sales base and a greater
proportion of the Company's business derived from Latin America, which
generally has lower selling, general and administrative expenses than in the
United States.

Net interest expense increased 31.1%, or $214,000, to $902,000 in fiscal
1996 compared to $688,000 in fiscal 1995. Net interest expense as a percentage
of net sales was 0.2% for both fiscal 1996 and fiscal 1995. The dollar
increase in interest expense was primarily due to borrowing costs associated
with funding increased levels of working capital.

Income tax expense was recorded at an effective annual rate of 38.8% in
fiscal 1996 compared to 37.9% in fiscal 1995. The increase in the fiscal 1996
effective rate relates primarily to non-deductible goodwill amortization
expense resulting from the Company's December 1995 acquisition of U.S.
Computer.

17
<PAGE>

QUARTERLY DATA; SEASONALITY

The following table sets forth certain unaudited quarterly historical
consolidated financial data for each of the Company's last eight fiscal
quarters ended June 30, 1997. This unaudited quarterly information has been
prepared on the same basis as the annual information presented elsewhere
herein and, in the Company's opinion, includes all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
selected quarterly information. This information should be read in conjunction
with the Consolidated Financial Statements and Notes thereto included
elsewhere in this Prospectus. The operating results for any quarter shown are
not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
------------- ------------ --------- -------- ------------- ------------ --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $109,993 $101,865 $117,261 $139,179 $160,114 $153,286 $165,168 $167,768
Gross profit............ 6,608 6,859 7,440 8,554 9,001 9,840 9,857 10,201
Operating income........ 1,901 2,345 2,619 3,103 3,302 3,581 4,014 4,061
Net earnings............ 1,010 1,354 1,469 1,717 1,818 1,945 2,010 2,132
Earnings per share...... 0.14 0.19 0.20 0.23 0.24 0.25 0.27 0.28
</TABLE>

Although the Company does not presently experience any material quarterly
seasonality for its sales, the Company anticipates some seasonality in net
sales and net income occurring within the second and third fiscal quarters as
a result of increased holiday sales during those periods, especially with
respect to sales to Latin America.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity requirements arise primarily from the funding of
working capital needs, including inventories and trade accounts receivable.
Historically, the Company has financed its liquidity needs largely through
internally generated funds, borrowings under its credit agreement and vendor
lines of credit. The Company derives all of its operating income and cash flow
from its subsidiary and relies on payments from its subsidiary to generate the
funds necessary to meet its obligations. As the Company pursues its growth
strategy and acquisition opportunities both in the United States and in Latin
America, management believes that exchange controls in certain countries may
limit the ability of the Company's present and future subsidiaries in those
countries to make payments to the Company.

Operating activities used $29.0 million, provided $2.2 million, and used
$10.0 million of cash in fiscal 1997, 1996 and 1995, respectively. The use of
cash in fiscal 1997 resulted primarily from increases of $12.5 million in
accounts receivable and $40.3 million in inventory partially offset by net
earnings of $7.9 million and a $12.6 million increase in accounts payable. The
source of cash in fiscal 1996 resulted primarily from net earnings of $5.6
million and a $27.4 million increase in accounts payable, offset by increases
of $15.9 million in accounts receivable and $17.8 million in inventory. The
use of cash in fiscal 1995 resulted primarily from increases of $7.7 million
in accounts receivable and $14.7 million in inventory partially offset by net
earnings of $5.2 million and a $4.5 million increase in accounts payable.

Investing activities used $15.5 million, $1.4 million and $1.5 million of
cash in fiscal 1997, 1996 and 1995, respectively. The significant use of cash
in fiscal 1997 was primarily for the purchase of certain distribution rights
and equipment from Globelle for $13.0 million. The remaining use of cash in
fiscal 1997, as well as the use of cash in fiscal 1996 and 1995 was primarily
due to the upgrade of the Company's computer and telephone systems as well as
the expansion of warehouse and other facilities in each year.

Financing activities provided $44.6 million, used $882,000 and provided
$11.5 million of cash in fiscal 1997, 1996 and 1995, respectively. These
activities related primarily to borrowings and repayments under the Company's
revolving credit facility then in effect. Additionally, in fiscal 1997 the
Company repurchased 200,000 shares of Common Stock for approximately $1.3
million in an open market transaction under a stock buy-back program
previously authorized by the Board of Directors.

18
<PAGE>

The Company and SED International are parties to the Credit Agreement, which
provides for a secured line of credit of $100.0 million. The Company may
borrow at the prime rate offered by Wachovia Bank, N.A. (8.50% at August 31,
1997) or the Company may fix the interest rate for periods of 30 to 180 days
under various interest rate options. The Credit Agreement requires a
commitment fee of 0.25% of the unused commitment. The Credit Agreement is
secured by accounts receivable and inventory and requires maintenance of
certain minimum working capital and other financial ratios and has certain
dividend restrictions. The Credit Agreement expires in August 2000. At August
31, 1997, the Company had principal borrowings of $55.0 million under the
Credit Agreement at a weighted average interest rate of 8.57% per annum.
Average borrowings, maximum borrowings and the weighted average interest rate
for fiscal 1997 were $28.7 million, $56.0 million and 7.60%, respectively. The
Company intends to use the net proceeds of the Offering to repay outstanding
indebtedness under the Credit Agreement. See "Use of Proceeds."

Management believes that the Credit Agreement, as amended, together with
vendor lines of credit and internally generated funds, will be sufficient to
satisfy its working capital needs during fiscal 1998. The Credit Agreement
permits up to $30.0 million to be borrowed for the purpose of financing
acquisitions, subject to a limitation of $15.0 million for any one
acquisition, and further subject to compliance with the other terms of the
Credit Agreement.

INFLATION AND PRICE LEVELS

Inflation has not had a significant impact on the Company's business because
of the typically decreasing costs of products sold by the Company. The Company
also receives vendor price protection for a significant portion of its
inventory. In the event a vendor reduces its prices for goods purchased by the
Company prior to the Company's sale of such goods, the Company generally has
been able either to receive a credit from the vendor for the price
differential or to return the goods to the vendor for a credit against the
purchase price. As the Company pursues its growth strategy to acquire
businesses and assets in foreign countries, the Company may operate in certain
countries that have experienced high rates of inflation and hyperinflation. At
this time, management does not expect that inflation will have a material
impact on the Company's business in the immediate future.

19
<PAGE>

BUSINESS

OVERVIEW

The Company is a leading international distributor of microcomputer
products, including personal computers, printers and other peripherals and
networking products throughout the United States and Latin America. The
Company offers a broad inventory of more than 3,500 products from
approximately 125 vendors, including such market leaders as Seagate, Hewlett-
Packard, Maxtor, Samsung, 3Com, Intel, Creative Labs, Acer, Canon, Epson, IBM
and Novell, to an active base of over 12,000 reseller customers through a
dedicated and highly motivated sales force. The Company believes it is the
fourth largest microcomputer products distributor in the United States, where
it recently has expanded its vendor lines, sales force and warehouse
locations, and a leading microcomputer products distributor to Latin America,
one of the fastest growing markets in the world for personal computers. The
Company distributes products in the United States from its strategically
located warehouses in Atlanta, Georgia, Miami, Florida and City of Industry,
California, while servicing Latin America from its Miami facility. The
Company's net sales increased to $646.3 million in fiscal 1997 from $398.8
million in fiscal 1995, and its net earnings increased to $7.9 million in
fiscal 1997 from $5.2 million in fiscal 1995, representing compound annual
growth rates of 27.3% and 23.0%, respectively.

The Company also distributes wireless telephone products in the United
States and to Latin America. The Company is a direct distributor of wireless
telephone products for OKI Telecom and an indirect distributor for other
leading wireless telephone product vendors such as Motorola, Ericsson, Nokia
and NEC. In fiscal 1997, the Company's net sales of microcomputer products
generated approximately 91.0% of the Company's total net sales and wireless
telephone products represented the remaining 9.0%.

Over the past two years, the Company has transformed itself from a regional
United States distributor into an international distributor with leading brand
name vendor lines, a nationwide presence in the United States and a leadership
position in Latin America. As a result of a transaction with Globelle in June
1997, the Company acquired the distribution rights for certain significant
vendor lines in the United States including Hewlett-Packard and Intel, and
subsequently hired 36 experienced salespeople formerly with Globelle. The
addition of brand name vendor lines and salespeople, coupled with the opening
of a warehouse facility in California in May 1997, provide the Company with
greater sales penetration in the western United States and more efficient
nationwide distribution capabilities. Beginning in December 1995, the Company
substantially increased its sales to Latin America with the acquisition of
U.S. Computer. As a result of this acquisition and the Company's increased
focus on the region, net sales to Latin America have increased to $290.7
million or 45.0% of total net sales in fiscal 1997 from $14.3 million in
fiscal 1994.

INDUSTRY

The worldwide microcomputer products distribution channel consists of
vendors, which sell to distributors, resellers and end-users; distributors,
which sell to resellers; and resellers, which sell to other resellers and to
end-users. Distributors, like the Company, generally purchase a wide range of
products in bulk directly from vendors and, in turn, sell them in small
quantities to a relatively large number of resellers. The microcomputer
products distribution industry has experienced significant growth that has
exceeded that of the overall microcomputer industry as a result of the
worldwide increase in the demand for microcomputer products coupled with
vendors' increasing reliance on the distributor sales channel.

Vendors, faced with declining unit prices and marketing to a large and
varied end-user base, have increasingly turned to distributors to outsource a
portion of their marketing, credit, delivery and technical support. Such
outsourcing enables vendors to maximize their returns on invested capital by
focusing on their core competencies of product development, manufacturing and
marketing. Distributors can typically sell products to their reseller customer
bases less expensively than vendors because they sell across multiple product
lines and have lower cost structures streamlined exclusively for the
distribution process. Additionally, the distributors' reseller customer base
increasingly has relied on the distributor network for their working capital
needs of inventory management and credit to finance their purchases due to the
increasing complexity, shorter life cycle

20
<PAGE>

and larger number of products sold through the distribution channel and to the
general inability of resellers to establish direct cost-effective
relationships with vendors.

In the early 1990s, the United States microcomputer industry moved toward
open sourcing pursuant to which vendors authorized multiple distributors to
sell to resellers on equal terms rather than relying on exclusive
relationships. As a result, the competitive nature of the industry has become
more intense, leading to accelerating industry consolidation and declining
gross margins. To address this trend toward open sourcing, the Company has
placed greater emphasis on the conservative management of relative selling,
general and administrative expenses to offset potential declines in operating
margins. The Company believes that this trend will continue on a worldwide
basis and lead to further consolidation within the industry, and that those
firms best positioned with their vendor and reseller constituencies and which
have access to a broad assortment of leading products, low cost structures and
well-developed internal systems are most likely to prevail.

Dataquest projects that the demand for personal computers at the factory
revenue level in the United States will increase at a compound annual growth
rate of 16.5% over the next five years, increasing to $129.3 billion in 2001
from $60.1 billion in 1996. A significant portion of the Company's net sales
are to the emerging market of Latin America, a region where the Company
believes the market for its products is relatively fragmented, less mature and
more rapidly growing than in the United States. Dataquest projects that the
demand for personal computers at the factory revenue level in Latin America
will increase at a compound annual growth rate of 21.3% over the next five
years, increasing to $16.4 billion in 2001 from $6.3 billion in 1996. Based on
industry data, the personal computer penetration rate in Latin America is
projected to increase to 5.0% in 2000 from 2.0% in 1995 compared to the United
States, which is projected to increase to 55.7% in 2000 from 34.7% in 1995.

In fiscal 1997, 9.0% of the Company's net sales were from wireless telephone
products. The worldwide wireless telephone products industry has experienced
significant growth as a result of increased access to wireless coverage
combined with declining hardware and connection charges. While the wireless
telephone products industry is characterized by substantially fewer vendors
and distributors than the microcomputer products industry, the Company
believes that the distribution process for these products is otherwise similar
to that for microcomputer products. Based on industry data, the number of
wireless subscribers in the United States and Latin America is projected to
increase at compound annual growth rates of 20.0% and 58.1%, respectively, to
90.5 million and 25.0 million in 2000 from 43.6 million and 4.0 million in
1996. Additionally, the wireless telephone penetration rate in the United
States is projected to increase to 33.3% in 2000 from 16.6% in 1996 and in
Latin America is projected to increase to approximately 6.0% in 2000 from less
than 1.0% in 1996.

STRATEGY

The Company's objectives are to strengthen its position as a leading
microcomputer products distributor in the United States and Latin America and
build upon its position as a wireless telephone products distributor in these
regions by capitalizing on (i) its recently expanded scope of operations in
the United States, and (ii) the expected growth in demand for microcomputer
and wireless telephone products in the United States and Latin America. To
achieve these objectives, the Company will employ the following strategies:

21
<PAGE>

. Further Penetrate Latin American Market. The Company will seek to further
penetrate the Latin American market. The Company began distributing
products to Latin America in December 1994 and believes it is well
positioned to capitalize on the expected substantial growth in demand for
personal computers in the region as a result of its existing relationships
with Latin American customers and its ability to distribute core vendor
products. The Company believes that its marketing approach focusing on
customer relationships is well suited to the Latin American market, where
business relationships are especially critical to market penetration.
Recently, the Company opened a sales office in Bogota, Colombia to
facilitate sales in this region and intends to add facilities elsewhere in
Latin America.

. Maintain a Low Cost Operating Structure. The Company will strive to
maintain a low cost operating structure by focusing on a variety of
factors, including electronic commerce, sophisticated management
information systems, centralized management, economies of scale in product
purchasing, financing and working capital management, and stringent cost
controls. Over the last four years, the Company has reduced selling,
general and administrative expenses as a percentage of net sales to 3.7% in
fiscal 1997 from 5.2% in fiscal 1993.

. Grow Through Strategic Acquisitions. The Company will seek to grow through
strategic acquisitions in order to (i) obtain new vendor lines, (ii) expand
its geographic presence, and (iii) increase its sales force. The
microcomputer products distribution industry continues to consolidate on a
global basis driven by efficiency gains derived primarily through economies
of scale. This trend has made growth through internal sources or by
acquisitions imperative to maintaining competitiveness. In both the United
States and Latin America, the Company generally seeks acquisition
candidates that have strong, entrepreneurial management teams experienced
in their local market who desire to continue operating their businesses,
and that have core vendor lines and experienced salespeople. In order to
reduce financial risk and enhance operational performance, the Company will
seek to structure acquisitions with an earnout component based on the
performance of the acquired company over a specified period, generally
payable in shares of Common Stock or, at the election of the Company, in
cash or a combination of cash and Common Stock. The Company offers its
acquisition candidates the opportunity for financial liquidity, economies
of scale and access to a broader product line with volume pricing.

PRODUCTS AND VENDORS

The Company offers its customers a broad inventory of more than 3,500
products from approximately 125 vendors, including such market leaders as
Seagate, Hewlett-Packard, Maxtor, Samsung, 3Com, Intel, Creative Labs, Acer,
Canon, Epson, IBM and Novell. The Company is a direct distributor of wireless
telephone products for OKI Telecom and an indirect distributor for other
leading wireless telephone product vendors such as Motorola, Ericsson, Nokia
and NEC. Microcomputer related products accounted for $588.4 million or 91.0%
of the Company's net sales for fiscal 1997, which included sales of mass
storage products, printers and other imaging products, microprocessing and
memory chips, monitors, modems, networking products, notebook and personal
computers and accessories. Approximately $58.0 million or 9.0% of the
Company's net sales for fiscal 1997 consisted of wireless telephone products
such as handheld cellular telephones and accessories. The Company continually
evaluates its product mix and inventory levels and maintains flexibility by
adjusting its product offerings based on demand. The Company's vendors
generally warrant the products distributed by the Company and allow the return
of defective products.

Generally, the Company's authorized distributor agreements with its
microcomputer and wireless telephone products vendors permit the Company to
sell these vendors' products in the United States and in designated countries
in Latin America. The Company will continue to seek to expand the geographical
scope of its distributor arrangements, which may include acquiring or
partnering with companies that already have the distribution rights of a
particular vendor in a specified country.

As a distributor, the Company incurs the risk that the value of its
inventory will be affected by industry-wide forces. Rapid technological change
is commonplace in the microcomputer and wireless industries and can quickly
diminish the marketability of certain items, whose functionality and demand
decline with the appearance of new products. These changes, coupled with price
reductions by vendors, may cause rapid obsolescence of

22
<PAGE>

inventory and corresponding valuation reductions in that inventory.
Accordingly, the Company seeks provisions in its vendor agreements common to
industry practice which provide price protections or credits for declines in
inventory value and the right to return unsold inventory. No assurance can be
given, however, that the Company can negotiate such provisions in each of its
contracts or that such industry practice will continue.

The Company purchases goods from approximately 125 vendors and has
negotiated favorable terms from certain vendors by purchasing a substantial
volume of those vendors' products. In fiscal 1997, products purchased from
Seagate, Hewlett-Packard and Maxtor accounted for 19.7%, 11.5% and 11.5%,
respectively, of the Company's total purchases and the loss of any one of
these three vendors could materially adversely affect the financial condition
of the Company. The Company expects that the percentage of goods purchased
from Hewlett-Packard will increase for fiscal 1998 as a result of the
acquisition of distribution rights for certain Hewlett-Packard products in the
United States in June 1997. There can be no assurance that the Company will be
able to maintain its existing vendor relationships or secure additional
vendors as needed. The Company's vendor relationships typically are non-
exclusive and subject to annual renewal, terminable by either party on short
notice, and contain territorial restrictions that limit the countries in which
the Company is permitted to distribute the products. The loss of a major
vendor, the deterioration of the Company's relationship with a major vendor,
the loss or deterioration of vendor support for certain Company-provided
services, the decline in demand for a particular vendor's product, or the
failure of the Company to establish good relationships with major new vendors
could have a material adverse effect on the Company's business, financial
condition or results of operations.

Product orders typically are processed and shipped from the Company's
distribution facilities on the same day an order is received or, in the case
of orders received after 6:00 p.m., on the next business day. The Company
relies almost entirely on arrangements with independent shipping companies for
the delivery of its products to United States customers. Products distributed
to the Latin American markets are delivered to the foreign purchasers or their
agents or representatives at the Company's Miami, Florida warehouse.
Generally, the Company's inventory level of products has been adequate to
permit the Company to be responsive to its customers' purchase requirements.
From time to time, however, the Company experiences temporary shortages of
certain products as its vendors experience increased demand or manufacturing
difficulties with respect to their products, resulting in smaller allocations
of such products to the Company.

SALES AND MARKETING

The Company's sales are generated by a national telemarketing sales force,
which consisted of approximately 144 persons on June 30, 1997 in seven sales
offices located in Atlanta, Georgia, Miami, Florida, Minneapolis, Minnesota,
Carlsbad, California, St. Louis, Missouri, Boca Raton, Florida and Chicago,
Illinois. Since June 30, 1997, the Company has hired an additional 39
salespersons, primarily as a result of the Globelle transaction. Of the total
number of salespersons at August 31, 1997, 38 persons focused on sales to
customers for export to Latin America, substantially all of whom are fluent in
Spanish or Portuguese. The Company's Atlanta sales office maintains a separate
telemarketing sales force for the sale of wireless telephone products to
retailers and wireless telephone carriers and their authorized agents located
throughout the United States and Latin America.

Members of the sales staff are trained through intensive in-house sales
training programs, along with vendor-sponsored product seminars. This training
allows sales personnel to provide customers with product information and to
use their marketing expertise to answer customers' questions about important
new product considerations, such as compatibility and capability, while
offering advice on which products meet specific performance and price
criteria. The Company's salespeople are able to analyze quickly the Company's
extensive inventory through a sophisticated management information system and
recommend the most appropriate cost-effective systems and hardware for each
customer--whether a full-line retailer or an industry-specific reseller.

The sales force is organized in teams generally consisting of four people.
The Company believes that teams provide superior customer service because
customers can contact one of several people. Moreover, the long-term nature of
the Company's customer relationships is better served by teams that increase
the depth of the

23
<PAGE>

relationship and improve the consistency of service. It has been the Company's
experience that the team approach results in superior customer service and
better employee morale.

Compensation incentives are provided to the Company's salespeople, thus
encouraging them to increase their product knowledge and to establish long-
term relationships with existing and new customers. Customers can telephone
their salespersons using a toll-free number provided by the Company.
Salespeople initiate calls to introduce the Company's existing customers to
new products and to solicit orders. In addition, salespeople seek to develop
new customer relationships by using targeted mailing lists, vendor leads and
telephone directories of various cities.

The telemarketing salespersons are supported by a variety of marketing
programs. For example, the Company regularly sponsors shows for its resellers
where it demonstrates new product offerings and discusses industry
developments. Also, the Company's in-house marketing staff prepares catalogs
that list available microcomputer and wireless telephone products and
routinely produces marketing materials and advertisements. In addition, the
in-house marketing staff publishes other direct mail pieces promoting specials
and new products, which can be ordered directly through salespeople or through
the Company's recently installed Internet web page providing 24-hour access to
on-line order entry. The Company's web page provides customers secured access
to place orders and review product specifications at times that are convenient
to them. Customers also can determine inventory availability and pricing on a
real-time basis and in the near future verify the status of previously placed
orders through hyperlinks to certain independent shipping companies.

The Company prides itself on being service oriented and has a number of on-
going value-added services intended to benefit both the Company's vendors and
its resellers. For example, the Company is committed to training its
salespeople to be technically knowledgeable about the products they sell. This
core competency supplements the sophisticated technical support and
configuration services also provided by the Company. Salespeople who are
knowledgeable about the products they sell often can assist in the
configuration of microcomputer systems according to specifications given by
the resellers. The Company believes that its salesperson's ability to listen
to a reseller's needs and recommend a cost-efficient solution strengthens the
relationship between the salesperson and his or her reseller and promotes
customer loyalty to a vendor's products. In addition, the Company provides
such other value-added services as new product demonstrations and technical
education programs for resellers, order fulfillment and electronic ordering,
and informational assistance through the Company's web page.

Management continually evaluates the Company's product mix and the needs of
its customers in order to minimize inventory obsolescence and carrying costs.
The Company's rapid delivery terms are available to all of its customers, and
the Company seeks to pass through its shipping and handling costs to its
customers. The Company offers various payment terms including open account,
prepay, credit card and COD to qualifying customers. The Company closely
monitors customers' creditworthiness through its on-line computer system which
contains detailed information on each customer's payment history and other
relevant information. In addition, the Company participates in national and
international credit associations that exchange credit rating information on
customers of association members. In most markets, the Company utilizes
various levels of credit insurance to control credit risks and enable the
Company to extend higher levels of credit. The Company establishes reserves
for estimated credit losses in the normal course of business.

CUSTOMERS

The Company serves an active, nonexclusive customer base of over 12,000
resellers of microcomputer and wireless telephone products. Resellers includes
value-added resellers, corporate resellers and retailers. The Company believes
the multi-billion dollar microcomputer and wireless telephone wholesale
distribution industries serve customers primarily on a nonexclusive basis,
which provides the Company with significant growth opportunities. During
fiscal 1997, no single customer accounted for more than 3.0% of the net sales
of the Company. The Company believes that most of its customers rely on
distributors as their principal source of microcomputer and wireless telephone
products.

24
<PAGE>

COMPETITION

The microcomputer and wireless telephone distribution industries are highly
competitive, both in the United States and in Latin America. Competition in
these industries is typically characterized by pricing pressures, product
availability and potential obsolescence, speed and accuracy of delivery,
effectiveness of sales and marketing programs, credit availability, ability to
tailor specific solutions to customer needs, quality of product lines and
services, and availability of technical support and product information.
Additionally, the Company's ability to compete favorably is principally
dependent upon its ability to control inventory and other operating costs,
react timely and appropriately to short- and long-term trends, price
competitively its products, increase its net sales and maintain economies of
scale. In the early 1990s, the United States microcomputer industry moved
toward open sourcing pursuant to which vendors authorized multiple
distributors to sell to resellers on equal terms rather than relying on
exclusive relationships. As a result, the competitive environment has become
more intense, leading to accelerating industry consolidation and declining
gross margins.

The Company's competitors include regional, national and international
microcomputer and wireless distributors, many of which have substantially
greater technical, financial and other resources than the Company, as well as
vendors that sell directly to resellers and large resellers that sell to other
resellers. Major competitors include Ingram Micro, Inc., Merisel, Inc. and
Tech Data Corporation in the United States, and CHS Electronics, Inc. in Latin
America.

EMPLOYEES

As of June 30, 1997, the Company had 363 full-time employees, 144 of whom
were engaged in telemarketing, 127 in administration and 92 in shipping. The
Company also utilizes 26 part-time employees. Since June 30, 1997, the Company
has hired an additional 39 salespersons, primarily as a result of the Globelle
transaction. Management believes the Company's relations with its employees
are good and the Company has never experienced a strike or work stoppage.
There is no collective bargaining agreement covering any of the Company's
employees.

LEGAL PROCEEDINGS

The Company is involved in litigation relating to claims arising out of its
operations in the normal course of business. The Company is not currently
engaged in any legal proceedings that are expected, individually or in the
aggregate, to have a material adverse effect on the Company.

25
<PAGE>

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth certain information regarding the directors,
executive officers and certain key employees of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Gerald Diamond........................ 59 Chairman of the Board, Chief
Executive Officer and Director
52 President, Chief Operating Officer
Ray D. Risner......................... and Director
Larry G. Ayers........................ 51 Vice President--Finance, Chief
Financial Officer, Secretary and
Treasurer
Mark Diamond.......................... 32 Executive Vice President and
Director
Jean Diamond.......................... 55 Vice President--Credit
Brian D. Paterson..................... 28 Senior Vice President--
Purchasing/Marketing
Ronell Rivera......................... 34 Vice President--SED Latin America
Barry Diamond......................... 55 Vice President--Wireless
Stewart I. Aaron...................... 57 Director
Cary Rosenthal........................ 57 Director
G. William Speer...................... 56 Director
</TABLE>

Gerald Diamond. Mr. Diamond has been a director of the Company since 1980
and currently serves as Chairman of the Board and Chief Executive Officer of
the Company and SED International. He was elected President and Chairman of
the Board and Director of the Company and SED International in June 1986 and
served in two or more capacities as Chairman of the Board, Chief Executive
Officer and President of the Company and SED International from that time
until May 1995. Mr. Diamond founded the predecessor to the Company and served
as its President and Treasurer from July 1980 through July 1986. Mr. Diamond
has been in the electronics-related business for over 35 years.

Ray D. Risner. Mr. Risner has been a director of the Company since November
1994 and has served as President and Chief Operating Officer of the Company
since May 1995. Mr. Risner served as Executive Vice President-Administration
of the Company from February 1995 to May 1995. He has served as President and
Chief Operating Officer of SED International since August 1995. Mr. Risner
served as Vice Chairman of RJM Group, Inc., a private investment advisory
firm, from 1989 to 1994. From 1987 to 1989, he served as Vice President,
Financial Administration of RJR Nabisco, Inc. He is also a trustee and Vice
Chairman of The National Faculty and a member of the Board of American Red
Cross Chapter, Atlanta, Georgia.

Larry G. Ayers. Mr. Ayers was elected Vice President-Finance, Secretary and
Treasurer of the Company in August 1986 and Chief Financial Officer in
November 1989. Mr. Ayers was elected Vice President-Finance and Treasurer of
SED International in June 1986, Secretary in August 1996 and Chief Financial
Officer in November 1989. Mr. Ayers served as Vice President-Finance of the
predecessor to the Company from May 1986 through July 1986 and as an
independent financial consultant from September 1985 through May 1986. Mr.
Ayers served as the Treasurer of Aaron Rents, Inc., a furniture rental and
sales company, from 1982 through September 1985 and as a certified public
accountant with Touche Ross & Co., a national accounting firm, from 1970
through 1982.

Mark Diamond. Mr. Diamond has been a director of the Company since September
1996. He has been employed by the Company in various capacities since January
1987. In July 1995, Mr. Diamond was elected Executive Vice President of the
Company and in August 1995 was elected Executive Vice President of SED
International.

26
<PAGE>

Jean Diamond. Ms. Diamond was elected Vice President--Credit of SED
International in August 1994. From 1981 to August 1994, Ms. Diamond served as
Director of Credit of SED International.

Brian D. Paterson. Mr. Paterson has served as Senior Vice President--
Purchasing/Marketing of the Company and SED International since August 1997.
Mr. Paterson has been employed by SED International since July 1992 and served
in various capacities, most recently as Vice President--Purchasing, from
October 1995 to August 1997.

Ronell Rivera. Mr. Rivera has served as Vice President--SED Latin America of
SED International since March 1997 and as Vice President--Sales for Latin
America since December 1995 when the Company acquired U.S. Computer. From May
1991 to December 1995, Mr. Rivera served in various capacities with U.S.
Computer, most recently as Vice President--Sales.

Barry Diamond. Mr. Diamond has served as Vice President--Cellular of SED
International since November 1994. He has been employed by SED International
since September 1987 in various officer capacities in charge of cellular
purchasing, sales and distribution, most recently as Vice President--
Distribution from May 1993 to October 1994.

Stewart I. Aaron. Mr. Aaron has been a director of the Company since
November 1994. He has served as President of LABS, Inc., a silk plant
manufacturer based in Atlanta, Georgia, for the past 20 years.

Cary Rosenthal. Mr. Rosenthal has been a director of the Company since 1992.
He has been President of Phoenix Communications, Inc., a commercial printing
firm, since 1977.

G. William Speer. Mr. Speer has been a director of the Company since 1986.
He has practiced law with Powell, Goldstein, Frazer & Murphy in Atlanta,
Georgia since 1965 and has been a partner of that firm since 1970.

The Board of Directors currently consists of six members. The Company's
Certificate of Incorporation classifies the Board of Directors into three
classes, with each class holding office for a three year period. The terms of
Gerald Diamond and G. William Speer expire in 1997 (the Board has recommended
Gerald Diamond and a new nominee for election as directors of the Company at
the Annual Meeting of Stockholders to be held November 11, 1997 for terms
expiring in 2000); the terms of Stewart I. Aaron and Mark Diamond expire in
1998; and the terms of Ray D. Risner and Cary Rosenthal expire in 1999.
Officers are elected annually by and serve at the discretion of the Board of
Directors.

Directors who are not officers of the Company are each paid an aggregate of
$5,000 annually for attendance at board meetings (other than Mr. Speer who has
waived his cash compensation). The Company pays ordinary and necessary travel
expenses for non-management directors to attend board and committee meetings.
As compensation for serving as directors to the Company, non-management
directors also receive annually a non-qualified stock option to purchase up to
10,000 shares of the Company's Common Stock, vesting immediately upon grant.

Messrs. Aaron, Rosenthal and Speer constitute the members of the Company's
Audit Committee. The responsibilities of the Audit Committee include, in
addition to other duties as the Board may specify: (i) making recommendations
to the Board with respect to the selection of independent auditors and their
fees and duties; (ii) conferring with and receiving reports from the Company's
independent auditors; (iii) authorizing any special or supplemental activities
of the Company's independent auditors and considering the effect of such
activities on their independence; and (iv) reviewing internal auditing
procedures and the adequacy of internal controls and monitoring compliance
with such controls. The Board of Directors has no standing Nominating or
Compensation Committee.

Gerald Diamond and Jean Diamond are husband and wife and are the parents of
Mark Diamond. Brian D. Paterson is the son-in-law of Gerald Diamond and Jean
Diamond and brother-in-law of Mark Diamond. Barry Diamond is the brother of
Gerald Diamond and brother-in-law of Jean Diamond.

27
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information concerning the beneficial
ownership of the Common Stock as of August 31, 1997 and as adjusted to reflect
the sale of 3,000,000 shares by the Company, for (i) each director and
executive officer of the Company, (ii) each person known by the Company to be
the beneficial owner of more than 5.0% of the outstanding Common Stock, and
(iii) all executive officers and directors of the Company as a group. Except
as otherwise indicated, the Company believes that all beneficial owners named
below have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.

<TABLE>
<CAPTION>
PERCENTAGE BENEFICIALLY OWNED
NUMBER OF SHARES ------------------------------
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
------------------------ ------------------ --------------- --------------
<S> <C> <C> <C>
SED Associates(1)............ 500,416(2) 6.9% 4.9%
Gerald Diamond(1)............ 520,578(3) 6.7 4.8
Stewart I. Aaron............. 30,000(4) * *
Mark Diamond................. 99,847(5) 1.4 1.0
Ray D. Risner................ 47,333(6) * *
Cary Rosenthal............... 51,500(4) * *
G. William Speer............. 61,500(4) * *
Larry G. Ayers............... 72,271(7) 1.0 *
Jean Diamond................. 46,000(8) * *
Brian D. Paterson............ 24,520(9) * *
FMR Corp.(10)................ 716,600(10) 9.9 7.0
Paradigm Capital Management,
Inc.(11).................... 437,500(11) 6.1 4.3
All current directors and
executive officers as a
group
(9 persons)................. 1,453,965(12) 17.9 13.1
</TABLE>
- --------
*Represents less than one percent of the outstanding shares of Common Stock.

(1) 4916 North Royal Atlanta Drive, Atlanta, Georgia 30085.
(2) SED Associates is a general partnership of which Gerald Diamond is the
managing partner. As managing partner, Mr. Diamond has sole voting and
investment power with respect to the Common Stock owned by SED Associates.
Therefore, Mr. Diamond is deemed the indirect beneficial owner of the
shares of Common Stock owned of record by SED Associates.
(3) The shares indicated include 516,666 shares subject to options exercisable
within 60 days and 3,912 shares held of record by Gerald Diamond as
Trustee for the benefit of his grandchildren. The shares indicated do not
include 46,000 shares subject to options exercisable within 60 days by
Jean Diamond, the wife of Mr. Diamond, as to which he disclaims beneficial
ownership. The shares indicated also do not include the shares owned of
record by SED Associates of which Mr. Diamond is deemed the indirect
beneficial owner as described in footnote (2) above.
(4) All of the shares indicated are subject to options exercisable within 60
days.
(5) The shares indicated include 10,000 shares of restricted stock that will
vest on October 14, 1999, 89,583 shares subject to options exercisable
within 60 days, and 132 shares held of record by Mr. Diamond as trustee of
a trust for the benefit of his sister, Julie Diamond Paterson.
(6) The shares indicated include 30,000 shares of restricted stock that will
vest on May 23, 1998, and 17,333 shares subject to options exercisable
within 60 days.
(7) The shares indicated include 10,000 shares of restricted stock that will
vest on October 14, 1999, 62,000 shares subject to options exercisable
within 60 days, and 19 shares held by Mr. Ayers' immediate family members.
(8) All of the shares indicated are subject to options exercisable within 60
days. The shares indicated do not include 516,666 shares subject to
options exercisable within 60 days by Gerald Diamond, the husband of Ms.
Diamond, and 3,912 shares held of record by Mr. Diamond as trustee for the
benefit of their grandchildren, as to which Ms. Diamond disclaims
beneficial ownership. The shares indicated also do not include the shares
owned of record by SED Associates of which Mr. Diamond is deemed the
indirect beneficial owner as described in footnote (2).

28
<PAGE>

(9) All of the shares indicated are subject to options exercisable within 60
days. The shares indicated do not include 132 shares held of record by
Mark Diamond as trustee of a trust for the benefit of his sister, Julie
Diamond Paterson.
(10) All of the shares indicated are deemed beneficially owned by Fidelity
Management & Research Company, a wholly-owned subsidiary of FMR Corp., as
a result of its serving as investment advisor to Fidelity Low-Priced
Stock Fund, the owner of the 716,600 shares. FMR Corp.'s address is 82
Devonshire Street, Boston, Massachusetts 02109.
(11) All of the shares indicated are deemed beneficially owned by Paradigm
Capital Management, Inc. as a result of its serving as an investment
advisor to certain individual investors, each of whom retain(s) sole
voting power over the shares attributable to them, and having sole
investment power with respect to these shares. Paradigm Capital
Management, Inc.'s address is 9 Elk Street, Albany, New York 12207.
Paradigm Capital Management, Inc. is a wholly-owned subsidiary of C.L.
King & Associates, Inc.
(12) Includes 899,102 shares subject to options exercisable within 60 days.
The shares indicated also include the shares owned of record by SED
Associates of which Gerald Diamond is deemed the beneficial owner as
described in footnote (2).

DESCRIPTION OF CAPITAL STOCK

Set forth below is a description of the material terms and provisions of the
capital stock of the Company. The following description does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Certificate of Incorporation, to the By-Laws, and the Stockholders
Rights Plan, which are exhibits to the Registration Statement of which this
Prospectus forms a part.

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The Certificate of Incorporation provides for authorized capital stock of
25,129,500 shares, consisting of 129,500 shares of preferred stock, par value
$1.00 per share ("Preferred Stock"), and 25,000,000 shares of Common Stock,
par value $.01 per share. On August 6, 1996, the Company repurchased 200,000
shares of its Common Stock for approximately $1.3 million in an open market
transaction under a stock buy-back program. At August 31, 1997, 7,229,640
shares of Common Stock were issued and outstanding, 325,590 shares of Common
Stock were held in the Company's treasury, and no shares of Preferred Stock
were outstanding. Upon the consummation of this offering, 10,229,640 shares of
Common Stock (10,679,640 shares if the Underwriters' over-allotment option is
exercised in full) and no shares of Preferred Stock will be outstanding.

The Company's Board has approved an increase in the authorized Common Stock
from 25,000,000 to 100,000,000 shares. The Company's stockholders will vote on
the proposed increase in authorized Common Stock at the Annual Meeting of
Stockholders to be held on November 11, 1997.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share for the
election of directors and other corporate matters. Holders of Common Stock are
not entitled to cumulative voting rights. Therefore, the holders of a
plurality of the shares voting for the election of directors can elect all the
directors if they choose to do so. The holders of Common Stock are entitled to
dividends in such amounts and at such times as may be declared by the Board of
Directors of the Company out of funds legally available therefore. See
"Dividend Policy." Upon liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all net assets
available for distribution to stockholders after payment of any liquidation
preferences to holders of Preferred Stock. The Common Stock is not subject to
any preemptive rights. All outstanding shares of Common Stock are, and the
shares of Common Stock to be sold by the Company in this Offering when issued
will be, duly authorized, validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors of the Company is empowered, without approval of the
stockholders, to authorize the issuance of Preferred Stock in one or more
series and to establish the number of shares to be included in each such
series and the rights, powers, preferences and limitations of each series. As
a result, the Board of Directors has the power to afford the holders of any
series of Preferred Stock preferences, powers and rights,

29
<PAGE>

voting or otherwise, senior to the rights of holders of Common Stock. The
ability of the Board of Directors to establish such rights, powers and
preferences and to issue the Preferred Stock could have the effect of delaying
or preventing a change in control of the Company. The Board of Directors has
no present plans to reissue any of the Preferred Stock.

SPECIAL PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND DELAWARE LAW

The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law (the "DGCL"). In general, Section 203
prevents an "interested stockholder" (defined generally as a person owning
15.0% of more of a corporation's outstanding voting stock) from engaging in a
"business combination" (as defined under the DGCL) with a Delaware corporation
for three years following the date such person became an interested
stockholder unless: (i) before such person became an interested stockholder,
the board of directors of the corporation approved the transaction in which
the interested stockholder became an interested stockholder or approved the
business combination; (ii) upon consummation of the transaction that resulted
in the interested stockholder becoming an interested stockholder, the
interested stockholder owned at least 85.0% of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding for
purposes of determining the number of shares outstanding stock held by
directors who are also officers of the corporation and by employee stock plans
that do not provide employees with the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer); or (iii) on or following the transaction in which such person
became an interested stockholder, the business combination is approved by the
board of directors of the corporation and authorized at an annual or special
meeting of stockholders, and not by written consent, by the affirmative vote
of the holders of at least 66.67% of the outstanding voting stock of the
corporation not owned by the interested stockholder. Under Section 203, the
restrictions described above also do not apply to certain business
combinations proposed by an interested stockholder following the earlier of
the announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not by written consent, been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors then in office (but not less than one) who were
directors prior to any person becoming an interested stockholder during the
previous three years or were recommended for election or elected to succeed
such directors by a majority of such directors.

Section 102(b)(7) of the DGCL authorizes corporations to limit or eliminate
the personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care; provided,
however, Section 102(b)(7) does not allow a corporation to limit or eliminate
the personal liability of a director to a corporation and its stockholders for
monetary damages for (i) a director's breach of duty of loyalty to a
corporation or its stockholders, (ii) acts or omissions of a director not done
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) unlawful payment of dividends or unlawful stock purchase or
redemption, or (iv) any transaction from which a director derived an improper
benefit. The duty of care requires that, when acting on behalf of the
corporation, directors must exercise an informed business judgment based on
all material information reasonably available to them. Although Section
102(b)(7) does not change directors' duty of care, it enables corporations to
limit available relief to equitable remedies such as injunction or rescission.
The Certificate provides that, to the fullest extent permitted by the DGCL, a
director of the Company shall not be liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director.

The Certificate of Incorporation provides for classification of the
Company's Board of Directors into three classes with one being elected each
year and the members of each class serving three-year terms. The Board
classification discourages and makes more difficult a change in control of the
Company or the removal of incumbent management, even if favorable to the
Company's stockholders.

STOCKHOLDER RIGHTS PLAN

The Company has implemented the Stockholder Rights Plan pursuant to which
each stockholder of record of the Company will be entitled to purchase a
specified number of shares of Common Stock of the Company

30
<PAGE>

upon the earlier of (i) ten days following a public announcement that a person
or group of affiliated or associated persons has acquired beneficial ownership
of twelve percent or more of the outstanding shares of Common Stock (such
person or persons is referred to as an "Acquiror") or (ii) ten days following
the commencement of a tender offer or an exchange offer that would result in a
person or group of affiliated or associated persons beneficially owning twelve
percent or more of such outstanding shares of Common Stock (such person or
persons is referred to as a "Potential Acquiror" and an event described in (i)
and (ii) as a "Triggering Event"). If a Triggering Event were to occur, each
Right would entitle the holder thereof to purchase from the Company a number
of shares of Common Stock of the Company equal to eight multiplied by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding on the date of the Triggering Event, and the denominator of which
is the number of Rights outstanding on the date of the Triggering Event that
are not beneficially owned by an Acquiror or a Potential Acquiror or their
affiliates or associates. Each holder of a Right would be entitled to purchase
such shares at a price per share of 20.0% of the current market value of a
share of the Company's Common Stock, measured as of the date of the Triggering
Event.

The foregoing provisions, together with the ability of the Board to issue
Preferred Stock without further stockholder action and the beneficial
ownership of the Company's Common Stock following this Offering by the
officers and directors of the Company, could delay or frustrate the removal of
incumbent directors or a change in control of the Company. See "Principal
Stockholders." The provisions also could discourage or make more difficult a
merger, tender offer or proxy contest, even if such event would be favorable
to the interests of the stockholders.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is National City Bank,
Cleveland, Ohio.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market after this
Offering, including sales pursuant to Rule 144 promulgated under the
Securities Act, or otherwise, or the perception that such sales could occur,
may adversely affect the market price of the Company's Common Stock. Upon
completion of this Offering, the Company will have 10,229,640 shares of Common
Stock outstanding (10,679,640 shares if the Underwriters' over-allotment
option is exercised). Of these shares, all of the 3,000,000 shares sold in
this Offering (plus an additional 450,000 shares if the Underwriters' over-
allotment option is exercised in full) will be freely tradable without
restriction or further registration under the Securities Act. Of the remaining
7,229,640 shares, 1,159 shares are deemed restricted shares under Rule 144
because they were originally issued and sold by the Company in private
transactions in reliance upon exemptions under the Securities Act and have not
been registered for resale under the Securities Act. Of those shares, 283
shares are held by persons deemed affiliates of the Company as such term is
defined in Rule 144 and 876 shares are held by persons who are not affiliates
of the Company. The restricted shares may not be sold except in compliance
with the registration requirements of the Securities Act or pursuant to an
exemption from registration such as the exemption provided by Rule 144 under
the Securities Act. Of the restricted shares, all of the shares held by non-
affiliates are eligible for immediate resale under the provisions of Rule
144(k) under the Securities Act. An aggregate of 992,344 shares (inclusive of
504,328 shares registered for resale under the Securities Act) held by
executive officers, directors and certain stockholders are subject to lock-up
agreements that prohibit their resale prior to 90 days from the date of this
Prospectus without the prior consent of A.G. Edwards & Sons, Inc. and
thereafter may be sold subject to the provisions of Rule 144 or the resale
registration statement, as the case may be. Accordingly, the 9,237,296 shares
of Common Stock (9,687,296 shares if the Underwriters' over-allotment option
is exercised in full) not held by affiliates, not subject to the lock-up
agreements and otherwise registered are freely tradeable. See "Description of
Capital Stock" and "Underwriting."

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned, for at
least one year, shares of Common Stock that have not been registered under the
Securities Act or that were acquired from an affiliate of the Company is
entitled to sell within any three-month period the number of shares of Common
Stock which does not exceed the greater of 1.0% of the number of then
outstanding shares or the average weekly reported trading volume during the
four calendar

31
<PAGE>

weeks preceding the sale. Sales under Rule 144 are also subject to certain
notice requirements and to the availability of current public information
about the Company and must be made in unsolicited brokers' transactions or to
a market maker. A person (or persons whose shares are aggregated) who is not
an affiliate of the Company under the Securities Act during the three months
preceding a sale and who has beneficially owned such shares for at least two
years is entitled to sell such shares under Rule 144 without regard to the
requirements discussed above.

1997 STOCK OPTION PLAN

The Board of Directors of the Company has approved the 1997 Stock Option
Plan for the benefit of its employees, directors and consultants, subject to
stockholder approval at its Annual Meeting of Stockholders to be held November
11, 1997. This plan authorizes the issuance of options and restricted stock
for up to an aggregate of 350,000 shares of Common Stock.

UNDERWRITING

The Underwriters named below have severally agreed with the Company, subject
to the terms and conditions of the Underwriting Agreement, to purchase the
respective number of shares of Common Stock set forth opposite their names
below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
A.G. Edwards & Sons, Inc. ...............................
Cleary Gull Reiland & McDevitt Inc. .....................
Interstate/Johnson Lane Corporation......................
C.L. King & Associates, Inc. ............................
---------
Total................................................... 3,000,000
=========
</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the shares of
Common Stock offered hereby, if any of such shares are purchased.

The Company has been advised by the Underwriters that the Underwriters
propose to offer the shares of Common Stock to the public at the offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $ per share. The
Underwriters and such dealers may reallow a discount of not in excess of $0.10
per share to certain other dealers. The public offering price and the
concession and discount to dealers may be changed by the Underwriters after
the Offering.

The Offering of the shares of Common Stock is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.

The Company has granted the Underwriters an option, expiring at the close of
business on the 30th day subsequent to the date of the Underwriting Agreement,
to purchase up to 450,000 additional shares of Common Stock at the public
offering price, less the underwriting discount set forth on the cover page of
this Prospectus. The Underwriters may exercise such option solely to cover
over-allotments, if any, in the sale of the shares. To the extent the
Underwriters exercise such option, each of them will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage
of the option shares as the number of shares set forth opposite each
Underwriter's name in the preceding table bears to 3,000,000, and the Company
will be obligated to sell such shares to the Underwriters.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or will contribute to payments that the Underwriters may be
required to make in respect thereof.

32
<PAGE>

The Company, all Directors and Executive Officers of the Company and all
holders of more than 5.0% of the Common Stock prior to the Offering other than
FMR Corp. and Paradigm Capital Management, Inc. have agreed that they will
not, directly or indirectly, offer, sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for, or any rights to purchase or acquire, Common Stock for a period of 90
days after the date of this Prospectus without the prior written consent of
A.G. Edwards & Sons, Inc. other than the exercise of options previously
granted under the Company's director and employee benefit plans and
agreements. See "Shares Eligible for Future Sale."

The Underwriters have advised the Company that they do not intend to confirm
sales to any account over which they exercise discretionary authority.

In connection with this Offering, certain Underwriters and selling group
members (if any) who in the past have acted as market makers in the Common
Stock may engage in passive market making activities in the Common Stock on
the Nasdaq National Market in accordance with Rule 103 of Regulation M under
the Exchange Act. Underwriters and other participants in the distribution of
the Common Stock generally are prohibited during a specified time period (the
"qualifying period"), determined in light of the timing of the Offering, from
bidding for or purchasing the Common Stock or a related security except to the
extent permitted under the applicable rules of Regulation M. Rule 103 allows,
among other things, an Underwriter or member of the selling group (if any) for
the Common Stock to effect "passive market making" transactions on the Nasdaq
National Market in the Common Stock during the qualifying period at a price
that does not exceed the highest independent bid for that security at the time
of the transaction. Such a passive market maker must not display a bid for the
subject security at a price in excess of the highest independent bid, and
generally must lower its bid if all independent bids are lowered. Moreover,
the passive market maker's net purchases of such security on each day of the
qualifying period shall not exceed 30.0% of its average daily trading volume
during a reference period preceding the distribution.

In connection with the Offering, the Underwriters and other persons
participating in the Offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the Common Stock. Specifically, the
Underwriters may over-allot in connection with the Offering, creating a short
position in the Common Stock for their own account. To cover over-allotments
or to stabilize the price of the Common Stock, the Underwriters may bid for,
and purchase, shares of the Common Stock in the open market. The Underwriters
may also impose a penalty bid whereby they may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the Common Stock in the
Offering, if the Underwriters repurchase previously distributed Common Stock
in transactions to cover their short position, in stabilization transactions
or otherwise. Finally, the Underwriters may bid for, and purchase, shares of
the Common Stock in market making transactions. These activities may stabilize
or maintain the market price of the Common Stock above market levels that may
otherwise prevail. The Underwriters are not required to engage in these
activities and may end any of these activities at any time. Paradigm Capital
Management, Inc., the beneficial owner of more than five percent of the
Company's Common Stock, is a wholly-owned subsidiary of C.L. King &
Associates, Inc. See "Principal Stockholders."

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Long Aldridge & Norman LLP, Atlanta, Georgia. Counsel
for the Underwriters is Nelson Mullins Riley & Scarborough, L.L.P., Atlanta,
Georgia.

EXPERTS

The Company's consolidated financial statements included in this Prospectus
and also incorporated by reference herein from the Company's Annual Report on
Form 10-K for the year ended June 30, 1997 and the related financial statement
schedule incorporated by reference in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing and incorporated by reference herein, and have been so included and
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

33
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at prescribed rates at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, DC 20549 and at the regional offices of the Commission
at Seven World Trade Center, Suite 1300, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, such reports, proxy statements and other
information can be obtained from the Commission's web page at
http://www.sec.gov. Quotations relating to the Common Stock appear on the
Nasdaq National Market. Such reports, proxy statements and other information
concerning the Company also can be inspected at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, DC 20006.

The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to
the shares of Common Stock offered hereby. This Prospectus, which is a part of
the Registration Statement, does not contain all of the information set forth
in, or annexed as exhibits to, such Registration Statement, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the shares
of Common Stock offered hereby, reference is hereby made to such Registration
Statement, including the exhibits thereto. Copies of such Registration
Statement, including exhibits, may be obtained from the aforementioned public
reference facilities of the Commission upon payment of the prescribed fees, or
may be examined without charge at such facility. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and,
in each instance, reference is made to the copy of such documents filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission under the
Exchange Act are incorporated by reference in and made a part of this
Prospectus:

(a)The Company's Annual Report on Form 10-K for the year ended June 30,
1997;

(b)The Company's Proxy Statement relating to its 1996 Annual Meeting of
Stockholders; and

(c)The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated October 26, 1987 (Commission File
No. 0-16345).

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of this Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or any other
subsequently filed document, which also is incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. The Company hereby undertakes to provide,
without charge, to each person, including any beneficial owner, to whom a copy
of this Prospectus is delivered, on the written or oral request of such
person, a copy of any or all of the information incorporated herein by
reference. Exhibits to any of such documents, however, will not be provided
unless such exhibits are specifically incorporated by reference into such
documents. The request should be addressed to the Company's principal
executive offices, attention: Secretary, 4916 North Royal Atlanta Drive,
Atlanta, Georgia 30085, telephone number (770) 491-8962.

34
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheets as of June 30, 1996 and 1997.................. F-3
Consolidated Statements of Earnings for the years ended June 30, 1995,
1996 and 1997............................................................ F-4
Consolidated Statements of Stockholders' Equity for the years ended June
30, 1995, 1996 and 1997.................................................. F-5
Consolidated Statements of Cash Flow for the years ended June 30, 1995,
1996 and 1997............................................................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors
Southern Electronics Corporation

We have audited the accompanying consolidated balance sheets of Southern
Electronics Corporation and subsidiary as of June 30, 1996 and 1997, and the
related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three years in the period ended June 30, 1997. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Southern Electronics
Corporation and subsidiary as of June 30, 1996 and 1997 and the results of
their operations and their cash flows for each of the three years in the
period ended June 30, 1997 in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE LLP

Atlanta, Georgia
August 13, 1997

F-2
<PAGE>

SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
--------------------------
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................... $ 662,000 $ 783,000
Trade accounts receivable, less allowance for
doubtful accounts of $1,141,000 (1996) and
$1,102,000 (1997)................................ 44,621,000 55,745,000
Inventories....................................... 72,501,000 112,813,000
Deferred income taxes............................. 1,230,000 1,223,000
Other current assets.............................. 527,000 1,219,000
------------ ------------
Total current assets........................... 119,541,000 171,783,000
PROPERTY AND EQUIPMENT--Net........................ 4,341,000 6,469,000
INTANGIBLES--Net................................... 7,423,000 19,077,000
------------ ------------
$131,305,000 $197,329,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable............................ $ 75,508,000 $ 88,070,000
Income taxes payable.............................. 695,000 --
Accrued and other current liabilities............. 2,842,000 4,363,000
------------ ------------
Total current liabilities...................... 79,045,000 92,433,000
REVOLVING BANK DEBT................................ 10,610,000 56,000,000
COMMITMENTS (Note 6)
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 129,500 shares
authorized, none issued..........................
Common stock, $.01 par value; 25,000,000 shares
authorized, 7,444,712 (1996) and 7,522,786 (1997)
shares issued.................................... 74,000 75,000
Additional paid-in capital........................ 12,204,000 12,719,000
Retained earnings................................. 31,190,000 39,095,000
Treasury stock at cost, 125,590 (1996) and 325,590
(1997) shares.................................... (1,390,000) (2,715,000)
Prepaid compensation--stock awards................ (428,000) (278,000)
------------ ------------
Total stockholders' equity..................... 41,650,000 48,896,000
------------ ------------
$131,305,000 $197,329,000
============ ============
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES............................... $398,753,000 $468,298,000 $646,336,000
COST OF SALES, including buying and
occupancy expenses..................... 370,548,000 438,837,000 607,437,000
------------ ------------ ------------
GROSS PROFIT............................ 28,205,000 29,461,000 38,899,000
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES............................... 19,104,000 19,493,000 23,941,000
------------ ------------ ------------
OPERATING INCOME........................ 9,101,000 9,968,000 14,958,000
INTEREST EXPENSE--Net................... 688,000 902,000 2,128,000
------------ ------------ ------------
EARNINGS BEFORE INCOME TAXES............ 8,413,000 9,066,000 12,830,000
INCOME TAXES............................ 3,191,000 3,516,000 4,925,000
------------ ------------ ------------
NET EARNINGS............................ $ 5,222,000 $ 5,550,000 $ 7,905,000
============ ============ ============
NET EARNINGS PER COMMON SHARE........... $ 0.74 $ 0.76 $ 1.04
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING... 7,069,000 7,280,000 7,634,000
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TREASURY STOCK
------------------ ADDITIONAL ------------------- PREPAID
PAR PAID-IN RETAINED COMPENSATION
SHARES VALUE CAPITAL EARNINGS SHARES COST STOCK AWARDS
--------- ------- ----------- ----------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE--June 30, 1994.. 7,063,947 $71,000 $10,127,000 $20,418,000 105,304 $(1,268,000) $ --
Stock awards issued to
employees............. 54,500 294,000 (294,000)
Amortization of stock
awards................ 23,000
Stock options exer-
cised................. 4,045
Tax benefit of stock
awards and options.... 162,000
Stock awards canceled.. (1,000) (4,000) 4,000
Treasury stock pur-
chased................ 20,286 (122,000)
Net earnings........... 5,222,000
--------- ------- ----------- ----------- ------- ----------- ---------
BALANCE--June 30, 1995.. 7,121,492 71,000 10,579,000 25,640,000 125,590 (1,390,000) (267,000)
Stock awards issued to
employees............. 47,500 261,000 (261,000)
Amortization of stock
awards................ 95,000
Stock awards canceled.. (3,500) (18,000) 5,000
Stock options exer-
cised................. 4,220 2,000
Tax benefit of stock
awards and options.... 8,000
Stock issued in acqui-
sition................ 275,000 3,000 1,372,000
Net earnings........... 5,550,000
--------- ------- ----------- ----------- ------- ----------- ---------
BALANCE--June 30, 1996.. 7,444,712 74,000 12,204,000 31,190,000 125,590 (1,390,000) (428,000)
Amortization of stock
awards................ 122,000
Stock awards canceled.. (5,000) (28,000) 28,000
Stock options exer-
cised................. 83,074 1,000 396,000
Tax benefit of stock
awards and options.... 147,000
Treasury stock pur-
chased................ 200,000 (1,325,000)
Net earnings........... 7,905,000
--------- ------- ----------- ----------- ------- ----------- ---------
BALANCE--June 30, 1997.. 7,522,786 $75,000 $12,719,000 $39,095,000 325,590 $(2,715,000) $(278,000)
========= ======= =========== =========== ======= =========== =========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings........................ $ 5,222,000 $ 5,550,000 $ 7,905,000
Adjustments to reconcile net
earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization...... 569,000 1,168,000 1,731,000
Compensation-stock awards.......... 23,000 95,000 122,000
Provision for losses on accounts
receivable........................ 1,143,000 1,642,000 1,391,000
Changes in assets and liabilities,
net of effects of acquired
business in fiscal 1996:
Trade accounts receivable......... (7,709,000) (15,923,000) (12,515,000)
Inventories....................... (14,716,000) (17,840,000) (40,312,000)
Deferred income taxes............. 492,000 (86,000) 7,000
Other current assets.............. (108,000) 16,000 (692,000)
Trade accounts payable............ 4,482,000 27,389,000 12,562,000
Income taxes payable.............. 63,000 1,174,000 (695,000)
Accrued and other current liabili-
ties............................. 536,000 (1,012,000) 1,521,000
------------ ------------ ------------
Net cash provided by (used in)
operating activities............ (10,003,000) 2,173,000 (28,975,000)
INVESTING ACTIVITIES:
Purchase of equipment............... (1,488,000) (1,398,000) (3,521,000)
Purchase of business, net of cash
acquired........................... (21,000)
Purchase of distribution rights..... (11,992,000)
------------ ------------ ------------
Net cash used in investing activ-
ities........................... (1,488,000) (1,419,000) (15,513,000)
FINANCING ACTIVITIES:
Revolving bank debt net proceeds
(payments)......................... 11,500,000 (892,000) 45,390,000
Proceeds from issuance of common
stock.............................. 2,000 397,000
Tax benefit from stock awards and
options............................ 162,000 8,000 147,000
Purchase of treasury stock.......... (122,000) (1,325,000)
------------ ------------ ------------
Net cash provided by (used in)
financing activities............ 11,540,000 (882,000) 44,609,000
------------ ------------ ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................... 49,000 (128,000) 121,000
CASH AND CASH EQUIVALENTS:
Beginning of year................... 741,000 790,000 662,000
------------ ------------ ------------
End of year......................... $ 790,000 $ 662,000 $ 783,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the year for:
Interest........................... $ 688,000 $ 881,000 $ 2,167,000
Income taxes....................... 2,473,000 2,770,000 5,257,000
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

SOUTHERN ELECTRONICS CORPORATION
AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED JUNE 30, 1995, 1996 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation--The consolidated financial statements include the
accounts of Southern Electronics Corporation and its wholly owned subsidiary,
SED International, Inc. (formerly Southern Electronics Distributors, Inc.)
(collectively the "Company"). All intercompany accounts and transactions have
been eliminated.

Description of Business--The Company is an international wholesale distributor
of microcomputers, computer peripheral products and wireless telephone
products, serving value-added resellers and dealers.

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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash Equivalents--Cash equivalents are short-term investments purchased with a
maturity of three months or less.

Inventories--Inventories are stated at the lower of cost (first-in, first-out
method) or market and include in-transit inventory of $34,500,000 at June 30,
1996 and $36,200,000 at June 30, 1997.

Property and Equipment--Property and equipment are recorded at cost.
Depreciation is computed principally by the straight-line method over the
estimated useful lives, five to seven years, of the related assets or the
lease term, whichever is shorter.

Intangible Assets--Intangible assets consist primarily of goodwill,
distribution rights, and noncompete agreements. Goodwill represents the excess
of the cost of an acquired business over the fair value of net identifiable
assets acquired and is amortized using the straight-line method principally
over 30 years. Distribution rights are amortized using the straight-line
method over 25 years. Noncompete agreements are amortized using the straight-
line method over five years.

Impairment--The Company periodically reviews property and equipment and
intangible assets for impairment based on judgments as to the future
undiscounted cash flows from related operations.

Earnings Per Common Share--Earnings per common share have been calculated
based on the weighted average number of common shares and common share
equivalents (principally for stock options) outstanding during each period in
accordance with Accounting Principles Board Opinion Number ("APB") 15.

Newly Issued Accounting Standards--In October 1995, Statement of Financial
Accounting Standards Number ("SFAS") 123, "Accounting for Stock-Based
Compensation," was issued. The adoption of the new recognition provisions for
stock-based compensation expense included in SFAS 123 is optional; however,
the pro forma effects on net income had the new recognition provisions been
elected is required in financial statements. The Company will continue to
follow the requirements of APB 25, "Accounting for Stock Issued to Employees,"
in its accounting for employee stock options; therefore, the adoption of SFAS
123 had no impact on the Company's results of operations. The Company adopted
the new disclosure requirements of SFAS 123 in fiscal 1997.

F-7
<PAGE>

SFAS 128, "Earnings Per Share," is effective for both interim and annual
periods ending after December 15, 1997. This Statement simplifies the
standards for computing earnings per share ("EPS") previously found in APB 15.
Presentation of basic and diluted EPS on the income statement will be
required. Basic EPS is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for
the period. Diluted EPS is computed similarly to fully diluted EPS under
APB 15. The Company will adopt this Statement in the second quarter of fiscal
1998. Basic EPS on a pro forma basis for the years ended June 30, 1995, 1996,
and 1997 would be $.75, $.77, and $1.10 respectively. Diluted EPS on a pro
forma basis for each of the three years ended June 30, 1997 would be
approximately equal to EPS as reflected in the accompanying consolidated
statements of earnings.
SFAS 130, "Reporting Comprehensive Income," and 131 "Disclosures about
Segments of an Enterprise and Related Information," are effective for fiscal
periods beginning after December 15, 1997 with early adoption permitted. The
Company is evaluating the effects these statements will have on its financial
reporting and disclosures. The statements will have no effect on the Company's
consolidated results of operations or financial position.

Reclassifications--Certain prior year amounts have been reclassified for
comparative purposes.

2. ACQUISITIONS

Distribution Rights--On June 30, 1997, as a result of a transaction with
Globelle, Inc., a wholesale distributor of microcomputers and related
products, the Company acquired certain domestic distribution rights
(principally for certain Hewlett-Packard products) and equipment for
$12,992,000 in cash. The Company is obligated to pay Globelle up to an
additional $1,350,000 if the Company receives certain other domestic
distribution rights by June 1998.

Business--In December 1995, the Company acquired substantially all of the
assets and assumed certain liabilities of U.S. Computer of North America,
Inc., a distributor of Hewlett-Packard computer products in Latin America, for
approximately $2,640,000, consisting of 275,000 shares of common stock valued
at $1,375,000 and cash of $1,265,000. Liabilities assumed in this acquisition
aggregated $11,250,000. This acquisition has been accounted for using the
purchase method of accounting. Goodwill arising from this acquisition is being
amortized using the straight-line method over 30 years. The operating results
of the acquired business are included in the Company's consolidated statements
of earnings from the date of acquisition.

The following unaudited pro forma consolidated financial information gives
effect to this acquisition as if the transaction had occurred as of July 1,
1994. The pro forma consolidated information is not necessarily indicative of
the results that would have been reported had the acquisition occurred on such
date, nor is it indicative of the Company's future operations.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1995 1996
------------ ------------
<S> <C> <C>
Net sales............................................ $449,972,000 $494,227,000
Net earnings......................................... 3,036,000 5,864,000
Net earnings per common share........................ 0.41 0.79
</TABLE>

Special Charge--During the year ended June 30, 1995, the Company incurred
$452,000 of expenses in connection with an attempted merger. These expenses
were recorded as a special charge in that year when the related merger
discussions were terminated.

F-8
<PAGE>

3. LONG-TERM ASSETS

Long-term assets are comprised of the following:

<TABLE>
<CAPTION>
JUNE 30,
----------------------
1996 1997
---------- -----------
<S> <C> <C>
PROPERTY AND EQUIPMENT
Furniture and equipment................................ $5,587,000 $ 8,389,000
Leasehold improvements................................. 1,154,000 1,387,000
Other.................................................. 216,000 279,000
---------- -----------
6,957,000 10,055,000
Less accumulated depreciation.......................... 2,616,000 3,586,000
---------- -----------
$4,341,000 $ 6,469,000
========== ===========
INTANGIBLES
Distribution rights.................................... $ -- $11,992,000
Goodwill............................................... 7,243,000 7,243,000
Non-compete agreements................................. 500,000 500,000
---------- -----------
7,743,000 19,735,000
Less accumulated amortization.......................... 320,000 658,000
---------- -----------
$7,423,000 $19,077,000
========== ===========
</TABLE>

Amortization expense of intangibles was $12,000, $188,000, and $338,000, in
the years ended June 30, 1995, 1996, and 1997, respectively.

4. REVOLVING BANK DEBT

The Company and SED International have an agreement with two banks, amended
and restated in August 1997, for a $100 million revolving credit facility. At
June 30, 1997, the Company had borrowings of $56,000,000 under the line and
standby letters of credit of $1,350,000 leaving $42,650,000 available under
the borrowing commitment. The Company may borrow at the prime rate offered by
Wachovia Bank, N.A., 8.50% at June 30, 1997, or the Company may fix the
interest rate for periods of 30 to 180 days under various interest rate
options. The Company pays a commitment fee of 1/4% of the unused loan
commitment. The credit facility is secured by accounts receivable and
inventories, requires maintenance of certain minimum working capital and other
financial ratios, and has certain dividend restrictions. This agreement
expires in August 2000.

The carrying value of revolving bank debt at June 30, 1997 approximates its
fair value based on interest rates that are believed to be available to the
Company for debt with similar provisions.

5. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The tax effects of
significant items comprising the Company's current deferred tax assets are as
follows:

<TABLE>
<CAPTION>
JUNE 30,
---------------------
1996 1997
---------- ----------
<S> <C> <C>
Reserves not currently deductible........................ $ 573,000 $ 789,000
Inventory valuation...................................... 438,000 468,000
Other.................................................... 219,000 (34,000)
---------- ----------
$1,230,000 $1,223,000
========== ==========
</TABLE>

F-9
<PAGE>

Components of income tax expense are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal..................................... $3,280,000 $3,416,000 $4,380,000
State....................................... 403,000 420,000 538,000
---------- ---------- ----------
3,683,000 3,836,000 4,918,000
Deferred (Benefit):
Federal..................................... (426,000) (280,000) 6,000
State....................................... (66,000) (40,000) 1,000
---------- ---------- ----------
(492,000) (320,000) 7,000
---------- ---------- ----------
$3,191,000 $3,516,000 $4,925,000
========== ========== ==========
</TABLE>

Income tax benefits relating to the exercise of employee stock awards and
options reduce taxes currently payable and are credited to additional paid-in
capital. Such amounts approximated $162,000, $8,000, and $147,000 for fiscal
1995, 1996, and 1997, respectively.

The Company's effective tax rates differ from statutory rates as follows:

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
----------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory federal rate........................................ 34.0% 34.0% 34.2%
State income taxes net of federal income tax benefit.......... 3.6 3.7 3.3
Non-deductible goodwill amortization.......................... 0.1 1.5 1.9
Other......................................................... 0.2 (0.4) (1.0)
---- ---- ----
37.9% 38.8% 38.4%
==== ==== ====
</TABLE>

6. LEASE OBLIGATIONS

SED International leases its main office facility under an operating lease
with an entity owned by certain minority stockholders of the Company. The
lease currently provides for an annual rent of $176,000 through October 1999,
subject to escalation based upon periodic increases in the Consumer Price
Index.

The Company leases additional distribution center and sales office space
under operating leases. Rent expense under all operating leases for the years
ended June 30, 1995, 1996, and 1997 was $565,000, $663,000, and $949,000,
respectively.

As of June 30, 1997, the future minimum rental commitments under
noncancelable operating leases are:

7. STOCKHOLDERS' EQUITY

Stock Options--The Company maintains stock option plans under which
1,548,552 shares of common stock have been reserved at June 30, 1997 for
outstanding and future incentive and non-qualified stock option grants to
officers and key employees. Incentive stock options must be granted at not
less than the fair market value of the common stock at the date of grant and
expire 10 years from the date of grant. Non-qualified stock options may be
granted at a price of not less than 85% of the fair market value of the common
stock at the date of grant and expire 10 years from the date of grant. Options
granted under the plans are exercisable in installments ranging from 20% to
33.3% per year. Upon the occurrence of a "change of control" (as defined), all
outstanding options become immediately exercisable.

F-10
<PAGE>

Stock option activity and related information under these plans is as
follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Shares under options June 30, 1994.......................... 835,765 $5.04
Granted.................................................... 127,450 5.45
Exercised.................................................. (4,045) 0.55
Canceled................................................... (79,575) 5.42
---------
Shares under options June 30, 1995.......................... 879,595 5.09
Granted.................................................... 369,950 5.62
Exercised.................................................. (4,220) 0.54
Canceled................................................... (49,725) 5.63
---------
Shares under options June 30, 1996.......................... 1,195,600 5.24
Granted.................................................... 401,200 8.21
Exercised.................................................. (83,074) 4.77
Canceled................................................... (85,940) 6.67
---------
Shares under options June 30, 1997.......................... 1,427,786 6.02
=========
</TABLE>

Additionally, since 1992, the Board of Directors has granted non-qualified
options to purchase 113,000 shares of common stock to certain directors of the
Company at exercise prices ranging from $5.88 to $7.50 (their fair market
value at date of grant). All options granted to directors of the Company are
currently exercisable and expire ten years from the date of grant. No options
have been exercised under such grants.

The following table summarizes information pertaining to all options
outstanding and exercisable at June 30, 1997:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS EXERCISABLE OPTIONS
--------------------------------- --------------------
WEIGHTED
AVERAGE WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
-------- ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$4.89-$ 6.00 1,139,586 4.3 $5.33 873,396 $5.22
7.50- 10.75 401,200 7.7 8.07 30,000 7.50
</TABLE>

Fair Value--The weighted average fair value of options granted in fiscal
1996 and 1997 was $1,049,000 and $1,787,000, respectively, using the Black-
Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Dividend yield................................................... 0.0% 0.0%
Expected volatility.............................................. 49.3% 49.2%
Risk free interest rate.......................................... 6.0% 6.3%
Expected life, in years.......................................... 6.8 7.6
</TABLE>

Had compensation cost for grants under the Company's stock option plans in
fiscal 1996 and 1997 been determined based on the fair value at grant
consistent with the methods of SFAS 123, the Company's pro forma net earnings
and net earnings per share would have been as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------
1996 1997
---------- ----------
<S> <C> <C>
Pro forma net earnings................................... $5,208,000 $7,128,000
Pro forma net earnings per share......................... 0.72 0.93
</TABLE>

F-11
<PAGE>

Restricted Stock--In 1988, the Company's Board of Directors established a
restricted stock plan which permits the granting of restricted stock awards to
officers, key employees, and directors. At June 30, 1997, 5,491 shares of
common stock are reserved for future issuance under this plan. The individual
awards vest generally after three to five years. Restricted stock activity is
as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------
1995 1996 1997
------- ------ ------
<S> <C> <C> <C>
Shares of restricted stock beginning of year........... 69,634 53,500 97,500
Issued................................................ 54,500 47,500 --
Vested................................................ (69,634) -- --
Canceled.............................................. (1,000) (3,500) (5,000)
------- ------ ------
Shares of restricted stock end of year................. 53,500 97,500 92,500
======= ====== ======
</TABLE>

The value of restricted stock awards is determined using the market price of
the Company's common stock on the grant date and is amortized over the vesting
period. The unamortized portion of such awards is deducted from stockholders'
equity.

Stockholder Rights Agreement--In October 1996, the Company adopted a
stockholder rights agreement under which one common stock purchase right is
presently attached to and trades with each outstanding share of the Company's
common stock. The rights become exercisable and transferable apart from the
common stock ten days after a person or group, without the Company's consent,
acquires beneficial ownership of 12% or more of the Company's common stock or
announces or commences a tender or exchange offer that could result in 12%
ownership ("the Change Date"). Once exercisable, each right entitles the
holder to purchase shares of common stock in number equal to eight multiplied
by the product of the number of shares outstanding on the Change Date divided
by the number of rights outstanding on the Change Date not owned by the person
or group and at a price of 20% of the per share market value as of the Change
Date. The rights have no voting power and, until exercisable, no dilutive
effect on net earnings per common share. The rights expire in October 2006 and
are redeemable at the discretion of the Company's Board of Directors at $.01
per right.

8. EMPLOYEE BENEFIT PLAN

SED International maintains a voluntary retirement benefit program, the
Southern Electronics Distributors, Inc. 401(k) Plan. All employees of SED
International who have attained the age of 21 are eligible to participate
after completing one year of service. SED International matches a portion of
employee contributions to the plan. Employees are immediately vested in their
own contributions. Vesting in SED International's matching contributions are
based on years of continuous service. SED International's matching
contribution expense for the years ended June 30, 1995, 1996, and 1997 was
$79,000, $76,000, and $90,000, respectively.

9. SIGNIFICANT VENDORS AND EXPORT SALES

During the year ended June 30, 1995, the Company purchased approximately 15%
of its inventory from one vendor. During the year ended June 30, 1996, the
Company purchased approximately 32% of its inventory from two vendors. During
the year ended June 30, 1997, the Company purchased approximately 43% of its
inventory from three vendors.

For the years ended June 30, 1995, 1996, and 1997 approximately 21%, 37%,
and 45%, respectively, of the Company's net sales were to customers for export
principally into Latin America.

F-12
<PAGE>

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY
SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 11
Dividend Policy........................................................... 12
Price Range of Common Stock............................................... 12
Capitalization............................................................ 13
Selected Consolidated Financial Data...................................... 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 15
Business.................................................................. 20
Management................................................................ 26
Principal Stockholders.................................................... 28
Description of Capital Stock.............................................. 29
Shares Eligible for Future Sale........................................... 31
Underwriting.............................................................. 32
Legal Matters............................................................. 33
Experts................................................................... 33
Available Information..................................................... 34
Incorporation of Certain Documents by Reference........................... 34
Index to Financial Statements............................................. F-1
</TABLE>

3,000,000 SHARES

SOUTHERN ELECTRONICS
CORPORATION

COMMON STOCK

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

PROSPECTUS

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

A.G. EDWARDS & SONS, INC.

CLEARY GULL REILAND &
MCDEVITT INC.

INTERSTATE/JOHNSON LANE
CORPORATION

C.L. KING & ASSOCIATES, INC.

, 1997

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<CAPTION>
TOTAL
EXPENSES*
---------
<S> <C>
Securities and Exchange Commission registration fee................... $ 16,858
NASD filing fee....................................................... 6,063
Nasdaq National Market listing fee.................................... 17,500
Printing expenses..................................................... 125,000
Accounting fees and expenses.......................................... 120,000
Legal fees and expenses............................................... 175,000
Blue Sky fees and expenses (including legal fees)..................... 5,000
Registrar and Transfer Agent's fees and expenses...................... 7,500
Miscellaneous......................................................... 77,079
--------
Total............................................................. $550,000
========
</TABLE>
- --------
* The foregoing amounts, except for the SEC registration fee, the NASD filing
fee and the Nasdaq National Market listing fee are estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Delaware General Corporation Law. The Registrant has statutory authority to
indemnify its officers and directors. The applicable provisions of the
Delaware General Corporation Law (the "DGCL") state that, to the extent such
person is successful on the merits or otherwise, a corporation must indemnify
any person who was or is a party or who 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, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(collectively, "such Person"), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such Person. In addition, the DGCL provides that a corporation may
indemnify any such Person (other than in an action by or in the right of the
corporation) against expenses (including attorneys' 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, had no reasonable cause to believe his conduct was unlawful.

Additionally, the corporation may indemnify any such 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 or
officer of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' 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, and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such Person
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine 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
which the Court of Chancery or such other court shall deem proper. The

II-1
<PAGE>

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 itself, create a presumption that such Person did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceedings, had reasonable cause to believe that his conduct was unlawful.

Under the applicable provisions of the DGCL, any indemnification, unless
ordered by a court, shall be made by a corporation only as authorized in the
specific case upon a determination that the indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct. Such determination shall be made:

(1) By a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum; or

(2) If there are no such disinterested directors, or if such
disinterested directors so direct, by independent legal counsel in a
written opinion; or

(3) By the affirmative vote of a majority of the shares entitled to vote
thereon.

Indemnification of expenses incurred by an officer or director in defending
any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such officer or director to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized by the DGCL.

Bylaws. Article XI of the Bylaws of the Registrant sets forth the extent to
which the Registrant's directors and officers may be indemnified by the
Registrant against liabilities which they may have incurred while serving in
such capacities. Such indemnification is authorized by Section 145 of the
DGCL. The Bylaws provide that the Registrant shall indemnify, to the full
extent and under the circumstances permitted by the DGCL in effect from time
to time, any past, present or future director or officer of the Registrant or
a designated officer of an operating division of the Registrant, made or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director or officer of the
Registrant or a designated officer of an operating division of the Registrant,
or is or was an employee or agent of the Registrant, or is or was serving at
the specific request of the Registrant as a director, officer, employee or
agent of another company or other enterprise in which the Registrant should
own, directly or indirectly, an equity interest or of which it may be a
creditor. This right of indemnification shall not be deemed exclusive of any
other rights to which such a Person would be entitled by law, agreement, vote
of stockholders or disinterested directors or otherwise, and shall continue as
to such a Person who has ceased to be a director, officer, designated officer,
employee or agent and shall inure to the benefit of the heirs, executors,
administrators and other legal representatives of such Person. The Board of
Directors of the Registrant may also grant, on behalf of the Registrant,
indemnification to any individual other than such a Person to such extent and
in such a manner as the Board in its sole discretion may from time to time and
at any time determine.

Charter. Article VIII of the Registrant's Certificate of Incorporation also
provides that, to the fullest extent permitted by DGCL, a director of the
Registrant shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director.

The Registrant maintains insurance, at its expense, to protect any director
or officer of the Registrant or its subsidiary against certain expenses,
liabilities or losses.

Reference is made to Section 7 of the Underwriting Agreement filed as
Exhibit 1.1 hereto.

II-2
<PAGE>

ITEM 16. EXHIBITS

(A) EXHIBITS. The following exhibits are filed as part of this Registration
Statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
Certificate of Incorporation, as amended, of Southern Electronics
4.1 Corporation (the "Registrant").(1)
4.2 Amended and Restated By-Laws of the Registrant.(2)
Form of Rights Agreement, dated as of October 31, 1996 between the
4.3 Registrant and National City Bank.(3)
Opinion of Long Aldridge & Norman LLP as to the validity of the Common
5.1 Stock being registered.
23.1 Independent Auditors' Consent.
Consent of Long Aldridge & Norman LLP (included in its Opinion filed
23.2 as Exhibit 5.1).
Powers of Attorney (see signature page to this Registration
24.1 Statement).
</TABLE>
- --------
* To be filed by amendment.
(1) Incorporated herein by reference to Exhibit 3.1 to Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30, 1995 (SEC File No.
016345).
(2) Incorporated herein by reference to exhibit of same number to Registrant's
Registration Statement on Form S-1, filed September 5, 1986 (Reg. No.
338494).
(3) Incorporated herein by reference to Exhibit 7 to the Registrant's Current
Report on Form 8-K dated October 30, 1996.

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.

(b) Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities
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.

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A 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 the
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Act"), the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tucker, State of
Georgia, on September 5, 1997.

SOUTHERN ELECTRONICS CORPORATION

By: /s/ Gerald Diamond
------------------------------------
Gerald Diamond
Chairman of the Board and Chief
Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gerald Diamond, Ray D. Risner and Larry
G. Ayers, and any of them, his true and lawful attorneys-in-fact, each acting
alone, with full powers of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement, and any registration statement filed pursuant to Rule 462(b) of the
Act prepared in connection therewith, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said attorneys-
in-fact (or any of them) or their substitutes, each acting alone, may lawfully
do or cause to be done by virtue hereof.

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 date indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ Gerald Diamond Chairman of the Board, Chief September 5, 1997
- ---------------------------------- Executive Officer and
GERALD DIAMOND Director (principal
executive officer)

/s/ Larry G. Ayers Vice President-Finance, September 5, 1997
- ---------------------------------- Chief Financial Officer and
LARRY G. AYERS Treasurer (principal
financial officer and
principal accounting
officer)

/s/ Stewart I. Aaron Director September 5, 1997
- ----------------------------------
STEWART I. AARON

/s/ Mark Diamond Director September 5, 1997
- ----------------------------------
MARK DIAMOND

/s/ Ray D. Risner Director September 5, 1997
- ----------------------------------
RAY D. RISNER

/s/ Cary Rosenthal Director September 5, 1997
- ----------------------------------
CARY ROSENTHAL

Director
- ----------------------------------
G. WILLIAM SPEER
</TABLE>

II-4

<PAGE>
EXHIBIT 5.1

Long Aldridge Norman, LLP
Suite 5300
303 Peachtree Street
Atlanta, GA 30308

September 5, 1997

Board of Directors
Southern Electronics Corporation
4916 North Royal Atlanta Drive
Tucker, Georgia 30085

Re: Southern Electronics Corporation
Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to Southern Electronics Corporation, a Delaware
corporation (the "Company"), in connection with the proposed offering by the
Company of up to 3,450,000 shares (inclusive of up to 450,000 shares subject to
a 30-day over-allotment option granted to A. G. Edwards & Sons, Inc., Cleary
Gull Reiland & McDevitt Inc., Interstate/Johnson Lane Corporation and C. L. King
& Associates, Inc., as underwriters (the "Underwriters")) (the "Shares") of
common stock, par value $.01 per share (the "Common Stock"), of the Company,
including the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") and the filing thereof with the Securities and
Exchange Commission (the "Commission").

The opinion hereinafter set forth is given to the Company pursuant to Item
16 of Form S-3 and Item 601(b)(5) of Regulation S-K. The only opinion rendered
by this firm consists of the matter set forth in numbered paragraph (1) below
(our "Opinion"), and no other opinion is implied or to be inferred beyond such
matter. Additionally, our Opinion is based upon and subject to the
qualifications, limitations and exceptions set forth in this letter.

Our Opinion is furnished for the benefit of the Company solely with regard
to the Registration Statement, may be relied upon by the Company only in
connection with the Registration Statement and may not otherwise be relied upon,
used, quoted or referred to by or filed with any other person or entity without
our prior written permission.

In rendering our Opinion, we have examined such agreements, documents,
instruments and records as we deemed necessary or appropriate under the
circumstances for us to express our Opinion, including without limitation, the
Certificate of Incorporation of the Company; the Amended and Restated Bylaws of
the Company; the underwriting agreement between the Company and the Underwriters
(the "Underwriting Agreement"); and resolutions duly adopted by the Board of
Directors of the Company on August 26, 1997, authorizing and approving the
<PAGE>

Southern Electronics Corporation
September 5, 1997
Page 2

preparation and filing of the Registration Statement and the sale of the Shares.
In making all of our examinations, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the original documents of all documents submitted to us as copies,
and the due execution and delivery of all documents by any persons or entities
where due execution and delivery by such persons or entities is a prerequisite
to the effectiveness of such documents.

As to various factual matters that are material to our Opinion, we have
relied upon the factual statements set forth in a certificate of officers of the
Company and certificates of public officials. We have not independently
verified or investigated, nor do we assume any responsibility for, the factual
accuracy or completeness of such factual statements.

Because the Company is organized under, and the subject of our Opinion
therefore is governed by, the General Corporation Law of the State of Delaware
(the "Delaware GCL"), we do not herein express any opinion concerning any matter
respecting or affected by any laws other than the laws set forth in the Delaware
GCL that are now in effect and that, in the exercise of reasonable professional
judgment, are normally considered in transactions such as those described in the
Registration Statement. The Opinion hereinafter set forth is based upon
pertinent laws and facts in existence as of the date hereof, and we expressly
disclaim any obligation to advise you of changes to such pertinent laws or facts
that hereafter may come to our attention.

Based upon and subject to the foregoing, we are of the Opinion that:

(1) the Shares, when issued and sold in accordance with the Underwriting
Agreement, against payment in full of the purchase price therefor,
will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this Opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration Statement.

Very truly yours,

/s/ Long Aldridge & Norman LLP
---------------------------------
LONG ALDRIDGE & NORMAN LLP

By: Leonard A. Silverstein

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of Southern Electronics
Corporation on Form S-3 of (i) our report dated August 13, 1997 included in
the Annual Report on Form 10-K of Southern Electronics Corporation for the
year ended June 30, 1997 and (ii) our report dated August 13, 1997 appearing
in the Prospectus, which is part of this Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Prospectus.

DELOITTE & TOUCHE LLP

Atlanta, Georgia
September 4, 1997