<PAGE>
 
                                   FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


            [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934.

                 For the quarterly period ended March 31, 1998

                                       OR

            [_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to ______

                        Commission file number 0-25790

                           CREATIVE COMPUTERS, INC.
            (Exact name of registrant as specified in its charter)

              Delaware                                95-4518700
     (State or other jurisdiction                  (I.R.S. Employer
   of incorporation or organization)               Identification No.)


                            2555 West 190th Street
                          Torrance, California 90504
                   (address of principal executive offices)
                                (310) 354-5600
             (Registrant's telephone number, including area code)


Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                            Yes [X]      No [_]
                                
Indicate the number of shares outstanding of each of the issuer's classes of
stock, as of the latest practicable date.

    There were 10,155,239 outstanding shares of COMMON STOCK at May 5, 1998.
<PAGE>
 
                           Creative Computers, Inc.

                              Index to Form 10-Q



PART I - FINANCIAL INFORMATION                                             Page
                                                                           ----
Item 1 - Financial Statements (unaudited)                                     
                                                                              
Consolidated Balance Sheet................................................   3
                                                                             
Consolidated Statement of Operations......................................   4
                                                                             
Consolidated Statement of Cash Flows......................................   5
                                                                             
Condensed Notes to the Consolidated Financial Statements..................   6
                                                                             
Item 2 - Management's Discussion and Analysis of Financial Condition and
         Results of Operations............................................   7
                                                                             
                                                                             
PART II - OTHER INFORMATION...............................................   9
                                                                             
SIGNATURE.................................................................  10 

                                       2
<PAGE>
 
                           Creative Computers, Inc.
                                        
                          CONSOLIDATED BALANCE SHEET
                       (in thousands except share data)

<TABLE>
<CAPTION>
                                              March 31, 1998   
                                               (unaudited)    December 31, 1997*
                                              --------------  ------------------
<S>                                           <C>             <C>
Assets                                                       
Current assets:                                              
Cash and cash equivalents                        $ 10,858          $  8,018   
Accounts receivable, net of allowance for                                     
  doubtful accounts                                41,142            42,455   
Inventories                                        34,074            42,643   
Prepaid expenses and other current assets           5,126             2,894   
Income tax refund receivable                          715               469   
Deferred income taxes                               5,569             2,484   
                                                 --------          --------   
     Total current assets                          97,484            98,963   
                                                               
Property, plant and equipment, net                 15,493            16,868   
Goodwill, net                                      12,595            15,141   
Deferred income taxes                               2,282                 -   
Other assets                                          117               182   
                                                 --------          --------   
                                                 $127,971          $131,154   
                                                 ========          ========   
                                                                              
Liabilities and Stockholders' Equity                                          
Current liabilities:                                                          
Accounts payable                                 $ 57,561          $ 45,958   
Accrued expenses and other current
  liabilities                                      13,898            13,275   
Capital leases - current portion                      207               207   
Notes payable - current portion                     7,358             9,979   
                                                 --------          --------   
     Total current liabilities                     79,024            69,419   
                                                               
Capital leases                                        105               148   
Notes payable                                         164               348   
Deferred income taxes                               1,468             1,469   
                                                 --------          --------   
     Total liabilities                             80,761            71,384   
                                                                              
Stockholders' equity:                                                         
Common stock, $.001 par value;
  15,000,000 shares authorized;
  10,140,239 and 10,105,258 shares issued              10                10   
Preferred stock, $.001 par value;
  5,000,000 shares authorized; none
  issued and outstanding                                                  
Additional paid-in capital                         57,021            56,772   
Treasury stock, at cost: 15,000 shares                (91)              (91)   
Retained earnings (accumulated deficit)            (9,730)            3,079   
                                                 --------          --------   
     Total stockholders' equity                    47,210            59,770   
                                                 --------          --------   
                                                 $127,971          $131,154   
                                                 ========          ========    
</TABLE>

         See condensed notes to the consolidated financial statements.

*Reclassified to reflect changes in presentation of certain inventory and
property, plant and equipment.

                                       3
<PAGE>
 
                            Creative Computers, Inc.
                                        
                      CONSOLIDATED STATEMENT OF OPERATIONS
                (unaudited, in thousands except per share data)
                                        
<TABLE> 
<CAPTION> 
                                                           For the three months
                                                              ended March 31,  
                                                           --------------------
                                                             1998        1997  
                                                           --------    --------
                                                                               
<S>                                                        <C>         <C>     
Net sales                                                  $164,134    $120,140
                                                                               
Cost of goods sold                                          147,878     104,692
                                                                               
Retail store closure inventory reserves                       3,679          --
                                                           --------    --------
                                                                               
  Gross profit                                               12,577      15,448
                                                                               
Selling, general and administrative expenses                 26,377      14,286
                                                                               
Expenses related to retail store closures                     6,773          --
                                                           --------    --------
                                                                               
Income (loss) from operations                               (20,573)      1,162
                                                                               
Interest income/(expense), net                                  (87)         79
                                                           --------    --------
                                                                               
Income (loss) before income taxes                           (20,660)      1,241
                                                                               
Income tax provision (benefit)                               (7,851)        471
                                                           --------    --------
                                                                               
Net income (loss)                                          $(12,809)   $    770
                                                           ========    ========
                                                                               
Basic earnings (loss) per share                            $  (1.27)   $   0.08
                                                           ========    ========
                                                                               
Diluted earnings (loss) per share                          $  (1.27)   $   0.08
                                                           ========    ========
                                                                               
Basic weighted average number of shares outstanding          10,121       9,793
                                                           ========    ========
                                                                               
Diluted weighted average number of shares outstanding        10,121       9,832
                                                           ========    ========
</TABLE>


         See condensed notes to the consolidated financial statements.

                                       4
<PAGE>
 
                            Creative Computers, Inc.
                                        
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                           (unaudited, in thousands)
<TABLE>
<CAPTION>
 
                                                          For the three months
                                                             ended March 31,        
                                                          --------------------
                                                            1998       1997*  
                                                          --------    --------
<S>                                                       <C>         <C> 
Cash flows from operating activities:                                         
 Net income (loss)                                        $(12,809)   $    770
 Adjustments to reconcile net income (loss) to                                
  net cash provided by (used in) operating activities:                       
 Depreciation and amortization                                 965         514
 Deferred income taxes                                      (5,368)         --
 Loss on write-off of assets                                 2,052          --
 Loss on impairment of goodwill                              3,095          --
 Changes in operating assets and liabilities:                                 
  Accounts receivable                                        1,313        (442)
  Inventories                                                8,569      14,930
  Prepaid expenses and other current assets                 (2,232)        493
  Other assets                                                (637)        (69)
  Accounts payable                                          11,603     (14,688)
  Accrued expenses and other current liabilities               623        (788)
  Income taxes receivable                                     (246)        984
                                                          --------    --------
                                                                              
  Total adjustments                                         19,737         934
                                                                              
Net cash provided by operating activities                    6,928       1,704
                                                          --------    --------
                                                                              
Cash flows from investing activities:                                         
 Redemption of securities available for sale                    --         496
 Purchases of securities available for sale                     --        (502)
 Acquisition of property, plant and equipment               (1,489)       (523)
                                                          --------    --------
                                                                              
Net cash used by investing activities                       (1,489)       (529)
                                                                              
Cash flows from financing activities:                                         
 (Payments) borrowings under notes payable                  (2,805)        (16)
 Payments under capital leases                                 (43)        (61)
 Proceeds from stock issued under stock option plans           249           1
                                                          --------    --------
                                                                              
Net cash used by financing activities                       (2,599)        (76)
                                                                              
Net increase in cash and cash equivalents                    2,840       1,099
Cash and cash equivalents:                                                    
 Beginning of the period                                     8,018      17,329
                                                          --------    --------
 End of the period                                        $ 10,858    $ 18,428
                                                          ========    ========
</TABLE>
               See condensed notes to the consolidated financial statements.
 
*Reclassified to reflect changes in presentation of certain inventory and
property, plant and equipment.

                                       5
<PAGE>
 
                           Creative Computers, Inc.
                                        
           CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.  Financial Statements

     The consolidated interim financial statements include the accounts of
     Creative Computers, Inc. (a Delaware corporation) and its wholly owned
     subsidiaries (the Company) and have been prepared, without audit, pursuant
     to the rules and regulations of the Securities and Exchange Commission
     (SEC).  Certain information and footnote disclosures normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted pursuant to such
     regulations.  Although the Company believes that the disclosures herein are
     adequate to make the information not misleading, these financial statements
     should be read in conjunction with the audited financial statements and the
     notes thereto included in the Company's Annual Report on Form 10-K at
     December 31, 1997.

     In the opinion of management, the accompanying financial statements contain
     all adjustments necessary to present fairly the financial position of the
     Company at March 31, 1998 and the results of operations and cash flows for
     the three months ended March 31, 1998 and 1997.  The results of operations
     for the interim periods are not necessarily indicative of the results of
     operations for the full year.

2.  Net Income (Loss) Per Share

     During December 1997, the Company adopted Financial Accounting Standards
     Board Statement No. 128, "Earnings per Share" (SFAS 128).  SFAS 128
     replaced the presentation of earnings per share reflected on the statement
     of income with a dual presentation of Basic Earnings per Share (Basic EPS)
     and Diluted Earnings per Share (Diluted EPS).  Basic EPS excludes dilution
     and is computed by dividing net income (loss) by the weighted average
     number of shares outstanding during the reported periods.  Diluted EPS
     reflects the potential dilution that could occur if stock options and other
     commitments to issue common stock were exercised under the treasury stock
     method.  Earnings (loss) per share have been restated for all periods
     presented to reflect the adoption of SFAS 128.  The Composition of Basic
     and Diluted EPS is as follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended
                                            ----------------------------------
                                            March 31, 1998      March 31, 1997
                                            --------------      --------------
                                           (in thousands except per share data)
     <S>                                   <C>                  <C>         
     Net income (loss)                          $(12,809)            $ 770
                                                ========             =====   
     Weighted average shares-Basic                10,121             9,793   
      Effect of dilutive stock options                                        
       and warrants                                   --                39   
                                                --------             -----   
     Weighted average shares-Diluted              10,121             9,832   
                                                ========             =====   
     Net earnings/(loss) per share-Basic        $  (1.27)            $0.08   
                                                ========             =====   
     Net earnings/(loss) per share-Diluted      $  (1.27)            $0.08   
                                                ========             =====    
</TABLE>

3.  Retail Store Closures

     In February 1998, the Company closed one retail store acquired from Elek-
     Tek and on March 23, 1998, the Company announced the closure of six of its
     seven remaining retail stores to allow the Company to focus on its core
     competencies going forward. The closed retail stores generated 9% of the
     Company's first-quarter sales, but had operating losses approaching $2.0
     million for the quarter. The Company recorded a one-time pretax
     restructuring charge of $10.5 million relating to exit costs associated
     with the closing of retail operations. Recorded in selling, general and
     administrative costs were $3.1 million write-off of goodwill, $1.9 million
     write-off for fixed assets, $1.5 million reserve for lease exit costs, and
     $0.3 million employee related severance costs. Recorded as cost of sales
     were $3.7 million of reserves for store inventory. As of March 31, 1998,
     $100,000 of

                                       6
<PAGE>
 
     severance and lease exit costs were paid. In addition, $7.0 million of
     pretax write-offs were taken primarily relating to a more rapid decline in
     Mac sales during the first quarter and the effects on inventory and
     receivables of rapid price erosion and other changes in the industry during
     the first quarter. Creative's workforce was also reduced by 250 employees.
 
4.  Reporting of Comprehensive Income (Loss)

     During the first quarter of 1998, the Company adopted Financial Accounting
     Standards Board Statement No. 130, "Reporting Comprehensive Income" (SFAS
     130). SFAS 130 establishes standards for reporting and displaying of
     comprehensive income and its components (revenues, expenses, gains and
     losses) in a full set of general purpose financial statements.
     Comprehensive income (loss) for the quarter ended March 31, 1998 and 1997
     was equivalent to net income (loss) reported in the consolidated statement
     of operations.  The Company does not expect SFAS 130 to have a material
     impact on future financial statement presentations.


ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Overview

The Company began operations in May 1987 as a mail-order company and then opened
its first retail store in August 1987. The Company opened an additional store in
1991 and two additional stores in 1993. During the fourth quarter of 1993, the
Company shifted its principal distribution and marketing focus from retail
showrooms to direct mail distribution and marketing. In March 1994, the Company
received authorization from Apple to offer a full retail line of Apple products
via direct mail. The Company distributed the first edition of its Mac Mall
catalog in April 1994, followed by PC Mall catalog in May 1995 and Data Com Mall
catalog in January 1996. The Company also moved its distribution center during
1995 from Torrance, CA to a new 325,000 square foot facility in Memphis, TN,
near Federal Express' major hub, to enhance customer service.

During the third and fourth quarters of 1997, the Company acquired and
assimilated two marketers of personal computer hardware and software products,
Elek-Tek, Inc. and ComputAbility, Inc., to expand its presence in the PC/WINTEL
market and corporate sales channels. The Company formed a wholly-owned
subsidiary, uBid, during November 1997, to sell computer-related products and
consumer electronics through an auction format on the Internet. The Company also
consolidated its headquarters and telemarketing operations into a 160,000 square
foot facility in a nearby location in Torrance, CA. The Company occupies 
approximately half of the facility and will occupy the remaining space in phases
over time.

During the first quarter of 1998, the Company closed seven out of eight retail
stores to focus its efforts on its catalog and corporate sales channels.  The
Company's subsidiary, uBid, also commenced operations during the first quarter
of 1998.

Net sales of the Company are primarily derived from the sale of personal
computer hardware, software, peripherals and accessories to individual
consumers, home offices, small businesses and large corporations through direct
response catalogs, dedicated inbound and outbound telemarketing sales
executives, retail showrooms and advertising on the Internet.  The Company is
dependent on sales of Apple computers and software and peripheral products used
with Apple computers.  Products manufactured by Apple represented approximately
16% of the Company's net sales for the quarter ended March 31, 1998 as compared
to 21% for the comparable quarter of 1997.
 
Results of Operations

Three Months Ended March 31, 1998 Compared to the Three Months Ended March 31,
1997

Net sales for the quarter ended March 31, 1998 were $164.1 million, a 37%
increase over net sales of $120.1 million for the comparable quarter in 1997.
PC/WINTEL sales increased 173% from $36.1 million in last year's comparable
quarter to $99.0 million for the three months ended March 31, 1998.
Apple/Macintosh related product sales declined 22% to $66.0 million for the
three months ended March 31, 1998 as compared with $84.0 million for the
comparable period in the prior year.  PC/WINTEL sales comprised over 60% of
total net sales for the first quarter in 1998 versus 30% for the same quarter
last year.  

                                       7
<PAGE>
 
Mail order/catalog net sales reflected an increase of 33%, from $107.7 million
in the first quarter of last year to $143.0 million for the quarter ended March
31, 1998. The Company reported a net loss for the quarter of $12.8 million, or
$1.27 per share, versus net income of $0.8 million, or $0.08 per share, for the
first quarter last year. The loss for the first quarter of 1998 includes a one-
time restructuring charge of $10.5 million associated with the closing of seven
retail stores and approximately $7.0 million in write-offs as described in Note
3. The seven retail stores closed incurred a loss approaching $2.0 million for
the first quarter.

Gross profit declined $2.9 million.  Excluding the impact from the retail store
closures and the write-offs mentioned above, gross profit as a percent of net
sales declined approximately one percentage point from 12.9% last year to 11.9%
this year due in part to a decline in Mac as a percentage of total sales.

Selling, general and administrative expenses for the first quarter of 1998,
excluding the one-time restructuring charge relating to the retail store
closures, increased $12.1 million compared with the same period last year.
Approximately $4.7 million of the increase were associated with the write-offs
mentioned in Note 3, $5.5 million was the result of increased sales, and the
remainder was due to support costs for higher levels of expected Mac sales that
were not realized during the quarter and support costs for uBid.

Net interest expense for the three months ended March 31, 1998 was $87,000
compared to interest income of $79,000 for the comparable quarter in 1997.  The
net interest expense for 1998 resulted from debt incurred and cash invested to
acquire Elek-Tek, Inc. and ComputAbility, Inc.

As a result of the foregoing, the Company incurred a net loss of $12.8 million
for the three months ended March 31, 1998 compared to net income of $770,000 for
the same period last year. The Company expects that the competitive pressures 
that impacted the results of the first quarter will continue at least in the 
near-term.

Liquidity and Capital Resources

The Company's primary capital need has been funding the working capital
requirements created by its rapid growth in sales.  Historically, the Company's
primary sources of financing have been from public offerings and borrowings from
its stockholders, private investors and financial institutions.  As of March 31,
1998, the Company had cash, cash equivalents and short-term investments of
$10.9 million.
 
Inventories declined to $34.1 million at March 31, 1998 from $44.7 million at
December 31, 1997 as a result of continued efforts to improve inventory turns
and one-time charges and write-downs.  Accounts receivable decreased to $41.1
million at March 31, 1998 from $42.5 million at December 31, 1997.

During the three months ended March 31, 1998, the Company's capital expenditures
were $1,489,000, versus $523,000 for the comparable quarter last year.  The
Company's primary capital need will continue to be the funding of its working
capital requirements for anticipated sales growth and possible acquisitions.

As of March 31, 1998, the Company had an existing credit facility consisting of
separate credit lines for Creative Computers, a California subsidiary, and the
Elek-Tek subsidiary, totaling $80 million. In May 1998, the credit facility was
modified to a $60 million single credit line covering the entire corporation and
covenants were modified accordingly. Part of the credit facility functions in
lieu of a vendor trade payable for inventory purchases, is included in accounts
payable, and does not bear interest if paid within terms specific to each
vendor. Part of the credit facility functions as a working capital line of
credit secured by inventory and accounts receivable, and bears interest at
prime. During the first quarter of 1998, the Company repaid $2.5 million
borrowed under this facility. As of March 31, 1998, the Company had $7.4 million
in borrowings under the credit facility. The overall credit facility is secured
by substantially all of the Company's assets and contains certain covenants that
require the Company to maintain a minimum level of tangible net worth and income
and a maximum leverage ratio.

At March 31, 1998, the Company had cash and short-term investments of $10.9
million and working capital of $18.5 million.  The Company believes that current
working capital, together with cash flows from operations and available lines of
credit, will be adequate to support the Company's current operating plans
through 1998. However, if the Company requires additional funds, such as for
acquisitions or expansion or to fund a significant downturn in sales

                                       8
<PAGE>
 
that causes continued losses, there are no assurances that adequate financing
will be available at acceptable terms.

In July 1996, the Company announced its plan to repurchase up to 1,000,000
shares of its Common Stock.  The shares will be repurchased from time to time at
prevailing market prices, through open market or negotiated transactions,
depending upon market conditions.  No limit was placed on the duration of the
repurchase program.  There is no guarantee as to the exact number of shares that
the Company will repurchase.  Subject to applicable securities laws, repurchases
may be made at such times and in such amounts as the Company's management deems
appropriate.  The program can also be discontinued at any time management feels
additional purchases are not warranted.  The Company will finance the repurchase
plan with existing working capital.  As of March 31, 1998, the Company has
repurchased 15,000 shares under the program.
 
As part of its growth strategy, the Company may, in the future, acquire other
companies in the same or complementary lines of business.  Any such acquisition
and the ensuing integration of the operations of the acquired company would
place additional demands on the Company's management and operating and financial
resources.

Inflation

Inflation has not had a material impact upon operating results, and the Company
does not expect it to have such an impact in the near future.  There can be no
assurances, however, that the Company's business will not be so affected by
inflation.

Business Factors

Except for historical information, all of the statements, expectations and
assumptions contained in this report are forward-looking statements. The
realization of any or all of these expectations is subject to a number of risks
and uncertainties, and it is possible that the assumptions made by management
may not materialize. There can be no assurances that the Company's closing of
seven retail stores, taking restructuring charges and reducing its workforce
will better position the Company going forward or favorably impact the Company's
balance sheet; the Company's uBid subsidiary will continue to ramp up sales; the
investment in the Company's uBid subsidiary will favorable impact sales; the
Company's promotions will favorably impact uBid sales; the Company's uBid
subsidiary will be profitable; the Company's Internet websites will continue
sales increases; the Company will be able to receive the expected benefits from
the acquisitions of ComputAbility and Elek-Tek; the Company will not experience
difficulties integrating the acquired operations of the two companies; or the
developments at Apple will have a favorable impact on the Company's sales and
earnings in the future. In addition to the factors set forth above, other
important factors that could cause actual results to differ materially from
expectations include competition from other catalog and retail store resellers
and price pressures related thereto; uncertainties surrounding the supply of and
demand for products manufactured by and compatible with Apple Computer and
clones thereof; reliance on Apple Computer, IBM, Hewlett Packard, Compaq and
other vendors; and risks due to shifts in market demand and/or price erosion of
owned inventory. This list of risk factors is not intended to be exhaustive.
Reference should also be made to the risk factors set forth from time to time in
the Company's SEC reports, including but not limited to those set forth in the
section entitled "Certain Factors Affecting Future Results" in its Annual Report
on Form 10-K for 1997.


                          Part II - OTHER INFORMATION

Item 2.  Changes in Securities
         ---------------------

         None.

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

         None.

Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

         a.    Exhibits - Exhibit 27 - Financial Data Schedule
         b.    Reports on Form 8-K

         None.

                                       9
<PAGE>
 
                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                     CREATIVE COMPUTERS, INC.
 



Date:  May 15, 1998                  By /s/  Richard Finkbeiner
       ------------                  Richard Finkbeiner
                                     Chief Financial Officer

                                     (Duly Authorized Officer of the Registrant
                                     and Principal Financial Officer)

 

                                       10