<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, 1999


            [_]    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    [_]

   There were 10,385,538 outstanding shares of Common Stock at May 11, 1999.
<PAGE>
 
                            Creative Computers, Inc.

                               Index to Form 10-Q


PART I - FINANCIAL INFORMATION                                            Page
                                                                          ----
Item 1  Financial Statements                               
                                                           
Consolidated Balance Sheet.............................................    3
                                                           
Consolidated Statement of Operations...................................    4
                                                           
Consolidated Statement of Cash Flows...................................    5
                                                           
Condensed Notes to Consolidated Financial Statements...................    6
                                                           
Item 2 - Management's Discussion and Analysis of Financial 
         Condition and Results of Operations...........................    8
                                                           
                                                           
PART II - OTHER INFORMATION............................................   11
                                                           
Item 6   Exhibit and Reports on Form 8-K...............................   11
                                                           
SIGNATURE..............................................................   11
 

                                       2
<PAGE>
 
ITEM 1   FINANCIAL STATEMENTS

                            Creative Computers, Inc.
                                        
                           CONSOLIDATED BALANCE SHEET
                        (in thousands except share data)
<TABLE>
<CAPTION>
 
                                                             March 31, 1999    
                                                               (unaudited)     December 31, 1998
                                                             ---------------   -----------------
<S>                                                          <C>               <C>
Assets
Current assets:
Cash and cash equivalents                                          $ 27,906             $ 32,495
Accounts receivable, net of allowance for
    doubtful accounts                                                40,605               39,775
Inventories                                                          43,688               47,971
Prepaid expenses and other current assets                             3,207                3,991
Income tax refund receivable                                            187                  190
Deferred income taxes                                                 4,978                5,216
                                                                   --------             --------
     Total current assets                                           120,571              129,638
                                                                   --------             --------
Property, plant and equipment, net                                   15,615               14,910
Goodwill, net                                                        12,198               12,318
Deferred income taxes                                                 1,262                1,262
Other assets                                                            104                  138
                                                                   --------             --------
                                                                   $149,750             $158,266
                                                                   ========             ========
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                                   $ 61,493             $ 71,142
Accrued expenses and other current liabilities                       13,237               15,569
Line of credit                                                        4,500                    -
Capital leases - current portion                                        229                  116
Notes payable - current portion                                           6                    6
                                                                   --------             --------
     Total current liabilities                                       79,465               86,633
                                                                   --------             --------
Capital leases                                                          238                    6
Notes payable                                                           155                  155
                                                                   --------             --------
 
     Total liabilities                                               79,858               86,994
 
Minority Interest                                                     3,041                3,708
 
Stockholders' equity:
Common stock, $.001 par value; 15,000,000 shares
    authorized; 10,375,893 and 10,105,258 shares issued                  11                   10
Preferred stock, $.001 par value; 5,000,000 shares
    authorized; none issued and outstanding                               -                    -
Additional paid-in capital                                           83,944               82,361
Treasury stock, at cost: 15,000 shares                                  (91)                 (91)
Retained earnings (accumulated deficit)                             (17,013)             (14,716)
                                                                   --------             --------
     Total stockholders' equity                                      66,851               67,564
                                                                   --------             --------
                                                                   $149,750             $158,266
                                                                   ========             ========
 </TABLE>

           See condensed notes to consolidated financial statements.

                                       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,
                                                        --------------------------
                                                          1999              1998
                                                          ----              ----
<S>                                                     <C>               <C>
Net sales                                               $210,603          $164,134
 
Cost of goods sold                                       187,588           147,878
                                                                                      
Retail store closure inventory reserves                        -             3,679    
                                                        --------          --------    
 Gross profit                                             23,015            12,577    
                                                                                      
Selling, general and administrative expenses              25,006            26,377    
                                                                                      
Expenses related to retail store closures                      -             6,773    
                                                                                      
uBid stock-based compensation                                885                 -    
                                                        --------          --------    
Income (loss) from operations                             (2,876)          (20,573)   
                                                                                      
Interest income (expense), net                               150               (87)   
                                                        --------          --------    
Income (loss) before income taxes                         (2,726)          (20,660)   
                                                                                      
Income tax provision (benefit)                               238            (7,851)   
                                                        --------          --------    
Income (loss) before minority interest                    (2,964)          (12,809)   
                                                                                      
Minority interest                                            667                 -    
                                                        --------          --------    
Net income (loss)                                       $ (2,297)         $(12,809)   
                                                        ========          ========    
Basic earnings (loss) per share                           $(0.22)           $(1.27)   
                                                        ========          ========    
Diluted earnings (loss) per share                         $(0.22)           $(1.27)   
                                                        ========          ========    
Basic weighted average number of                                                      
  shares outstanding                                      10,340            10,121    
                                                        --------          --------    
Diluted weighted average number of                                                    
  shares outstanding                                      10,340            10,121    
                                                        ========          ========    
 
</TABLE>
           See condensed notes to 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,
                                                                    --------------------------
                                                                       1999             1998
                                                                       ----             ----    
<S>                                                                 <C>               <C>  
Cash flows from operating activities:
 Net income (loss)                                                   $(2,297)         $(12,809)
 Adjustments to reconcile net income (loss) to
   net cash (used in) provided by operating activities:
 Depreciation and amortization                                         1,239               965
 Provision (benefit) for deferred income taxes                           238            (5,368)
 Loss on disposal of property, plant and equipment                         -             2,052
 Loss on impairment of goodwill                                            -             3,095
 uBid non-cash stock-based compensation charge                           885                 -
 Minority interest                                                      (667)                -
 Changes in assets and liabilities, net of acquisition:                           
  Accounts receivable                                                   (830)            1,313
  Inventories                                                          4,283             8,569
  Prepaid expenses and other current assets                              772            (2,232)
  Other assets                                                            34              (637)
  Accounts payable                                                    (9,649)           11,603
  Accrued expenses and other current liabilities                      (2,332)              623
  Income taxes refund receivable                                           3              (246)
                                                                     -------          --------
  Total adjustments                                                   (6,024)           19,737
                                                                     -------          --------
Net cash (used in) provided by operating activities                   (8,321)            6,928
                                                                     -------          --------
Cash flows from investing activities:                                             
 Purchase of property, plant and equipment                            (1,812)           (1,489)
                                                                     -------          --------
Net cash used in investing activities                                 (1,812)           (1,489)
                                                                     -------          --------
Cash flows from financing activities:                                             
 Net payments under notes payable                                          -              (184)
 Net borrowings (payments) under Line of Credit                        4,500            (2,621)
 Principal borrowings (payments) of obligations under capital lease      345               (43)
 Proceeds from stock issued under stock option plans                     699               249
                                                                     -------          --------
Net cash provided by (used in) financing activities                    5,544            (2,599)
                                                                     -------          --------
Net (decrease) increase in cash and cash equivalents                  (4,589)            2,840
Cash and cash equivalents:                                                        
 Beginning of the period                                              32,495             8,018
                                                                     -------          --------
 End of the period                                                   $27,906          $ 10,858
                                                                     =======          ========
</TABLE>
               See condensed notes to consolidated financial statements.
 

                                       5
<PAGE>
 
                            Creative Computers, Inc.

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

     The consolidated interim financial statements include the accounts of
     Creative Computers, Inc. (a Delaware corporation) and its wholly and
     majority 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.  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 for the year ended December 31, 1998.

     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, 1999 and the results of operations and cash flows for
     the three months ended March 31, 1999 and 1998.  The results of operations
     for the interim periods are not necessarily indicative of the results of
     operations for the full year.

     Certain reclassifications have been made to the 1998 financial statements
     to conform to the 1999 presentation.

2. Net Income (Loss) Per Share

     Basic Earnings Per Share (EPS) excludes dilution and is computed by
     dividing net income (loss) by the weighted average number of common shares
     outstanding during the reported periods.  Diluted EPS reflects the
     potential dilution that could occur under the treasury stock method if
     stock options and other commitments to issue common stock were exercised.
     The computation of Basic and Diluted EPS is as follows:
<TABLE>
<CAPTION>
 
                                                             Three Months Ended
                                                                  March 31,
                                                         ----------------------------
                                                          1999                 1998
                                                         -------             --------
                                                      (in thousands except per share data)
<S>                                                      <C>                 <C>
 
     Net income (loss)                                   $(2,297)            $(12,809)
                                                         =======             ========
     Weighted average shares - Basic                      10,340               10,121
     Effect of dilutive stock options
       and warrants                                            -                    -
                                                         -------             --------
     Weighted average shares-Diluted                      10,340               10,121
                                                         =======             ========
     Net earnings/(loss) per share-Basic                 $ (0.22)            $  (1.27)
                                                         =======             ========
     Net earnings/(loss) per share-Diluted               $ (0.22)            $  (1.27)
                                                         =======             ========
</TABLE>

3. Initial Public Offering of uBid, Inc.

     On December 9, 1998, uBid, Inc., a subsidiary of the Company, completed an
     initial public offering (the Offering) of 1,817,000 shares of common stock
     at an offering price of $15.00 per share.  Net proceeds to uBid were $23.8
     million, and are being used for advertising and brand development of uBid's
     infrastructure to support growth, and for uBid's general corporate
     purposes.  The shares sold to the public in the offering represent
     approximately 19.9% of uBid's outstanding common stock.  The Company will
     continue to own the remaining 80.1% of uBid but intends to distribute,
     subject to the satisfaction of certain conditions, its ownership in uBid by
     means of a tax-free stock dividend to the Company's stockholders in 1999,
     but in no event prior to June 7, 1999.

                                       6
<PAGE>
 
4. Retail Store Closures

     In February 1998, the Company closed one retail store acquired from Elek-
     Tek and on March 20, 1998, the Company announced the closure of six retail
     stores to focus its efforts on its catalog, corporate and Internet channels
     of distribution. The closed retail stores generated 9% of the Company's
     first-quarter 1998 sales, but had operating losses approaching $2.0 million
     for that 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 in write-offs of goodwill, $1.9 million in write-
     offs of fixed assets, $1.5 million reserve for lease exit costs, and $0.3
     million in employee-related severance costs.  Recorded as cost of sales
     were $3.7 million of reserves for store inventory.  No reserves remain at
     March 31, 1999 related to the retail showroom closures.  In addition,
     during the first quarter of 1998, $7.0 million of pretax write-offs were
     taken primarily relating to a more rapid decline in Mac sales during the
     quarter and the effects on inventory and receivables of rapid price erosion
     and other changes in the industry during the quarter.

5. Reporting of Comprehensive Income (Loss)

     During the first quarter of 1998, the Company adopted Statement of
     Financial Accounting Standards 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, 1999 and 1998
     was equivalent to net income (loss) reported in the consolidated statement
     of operations.  The Company does not expect SFAS 130 to have a material
     effect on future financial statements.

6. Segment Information

     The Company has two reportable segments:  mail order/catalog and Internet
     auction.  The mail order/catalog segment sells personal computer hardware,
     software, and peripheral products through means of catalog distribution,
     Internet websites, and outbound telemarketing.  Prices are set based on
     available inventory and market conditions.

     The Internet auction segment offers consumers and small- to medium-sized
     businesses excess, refurbished, closeout and limited edition merchandise
     through live-action bidding.  The segment's Internet auctions feature a
     rotating selection of brand name computer, consumer electronics,
     home/leisure and sports/fitness products.  Prices are determined by the
     highest bidders.

     Summarized segment information for the three months ended March 31, 1999
     and 1998 is as follows:

<TABLE>
<CAPTION>
                                             March 31, 1999
                                             (in thousands)
                             ----------------------------------------------------
                                           Gross      Operating           Total
                                 Sales     Profit    Profit (Loss)        Assets
                             ----------------------------------------------------
<S>                             <C>        <C>       <C>                 <C>        
        Mail Order/Catalog      $176,289   $20,038       $    677        $114,043
        Internet Auction          34,314     2,977         (3,553)         35,707
        Consolidated             210,603    23,015         (2,876)        149,750

<CAPTION> 
                                                                    
                                       March 31, 1998                  December 31, 1998
                                       (in thousands)                   (in thousands)
                           ---------------------------------------  ------------------------
                                           Gross      Operating            Total
                                 Sales     Profit    Profit (Loss)         Assets
                             -------------------------------------  ------------------------
      Mail Order/Catalog        $ 62,059   $10,686       $(19,709)        $123,641
      Internet Auction             2,075     1,891           (864)          34,625
      Consolidated               164,134    12,577        (20,573)         158,266
</TABLE>

                                       7
<PAGE>
 
ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Overview and Recent Developments

Net sales of the Company are primarily derived from the sale of personal
computer hardware, software, peripherals and accessories to large corporations,
small businesses, home offices and individual consumers through the Internet,
dedicated inbound and outbound telemarketing sales executives, a direct sales
force, retail showrooms and direct response catalogs.  

During the first quarter of 1998, the Company closed seven out of eight retail
stores to focus its efforts on its  corporate, Internet sales channels and
catalog.  In December 1998, uBid completed an initial public offering of
1,817,000 shares of its common stock.  The Company intends to distribute to
shareholders, subject to the satisfaction of certain conditions, its remaining
80.1% ownership in uBid by means of a tax-free stock dividend in 1999, but in no
event prior to June 7, 1999.  There can be no assurances, however, as to when or
if the proposed spin-off will take place.

In March 1999, the Company launched eCOST.com as a wholly-owned subsidiary.
eCOST.com offers a broad selection of name-brand computer products, most of
which are sold at wholesale cost plus itemized fees for processing and shipping
the order.

Results of Operations

Three Months Ended March 31, 1999 Compared to the Three Months Ended March 31,
1998

Unless otherwise stated, all comparisons are results which exclude the closed
retail stores.

Net sales for the quarter ended March 31, 1999 were $211 million, a 43% increase
over last year's first quarter.  Including net sales from the closed retail
stores, net sales from all operations grew 28% from $164 million for the first
quarter last year.  Net sales for the quarter from uBid accounted for $34.3
million.  PC/WINTEL sales increased 7% from $99.0 million in last year's
comparable quarter to $106.0 million for the three months ended March 31, 1999.
Apple/Macintosh- related product sales increased 36% to $89.7 million for the
three months ended March 31, 1999 as compared with $66.0 million for the
comparable period in the prior year.  PC/WINTEL sales comprised over 50% of
total net sales for the first quarter in 1999 versus 60% for the same quarter
last year.  The mix change reflects a recovery of Mac sales from last year's
depressed levels.

Gross profit from all operations increased $2.7 million due to increased sales,
partially offset by a decline in profit margin. Excluding uBid, gross profit as
a percentage of net sales was 11.4%. This represents a decrease from last year's
first quarter gross profit of 12.3%. Including the impact of uBid, gross profit
as a percentage of net sales was 10.9%. The Company's gross profit percentage
may vary from quarter to quarter, depending on the continuation of key vendor
support programs, including price protections, rebates and return policies and
based on product mix, pricing strategies and other factors.

Selling, general and administrative expenses for the first quarter of 1999
increased $1.9 million from the prior year, excluding uBid and special charges
incurred in 1998.  Selling, general and administrative expenses as a percent of
net sales declined from 12.0% in last year's first quarter to 11.0% in the first
quarter of this year without the investment in uBid, as a result of the
restructuring that took place in the first quarter last year, partially offset
by increased spending on outbound sales.

Net interest income for the three months ended March 31, 1999 was $150,000
compared to net interest expense of $87,000 for the comparable quarter in 1998.
Net interest income for 1999 resulted from the investment of excess cash
received by uBid in connection with its IPO, partially offset by expenses of
borrowings under the Company's floorplan line of credit.  The net interest
expense for 1998 resulted from debt incurred and cash invested to acquire Elek-
Tek, Inc. and ComputAbility, Inc.

                                       8
<PAGE>
 
Also included in the operating results in the quarter ended March 31, 1999 was
an expected uBid stock-based compensation charge of $0.9 million, while there
was no such charge in the comparable period in the prior year.

The Company recorded a $0.2 million income tax provision for the three months
ended March 31, 1999, compared to a benefit of $7.9 million in the prior year.
The benefit in 1998 primarily resulted from a non-recurring restructuring charge
in the first quarter of 1998 related to the closure of the retail stores.

Net loss was $2.3 million for the three months ended March 31, 1999 compared to
a net loss of $12.8 million for the same period last year inclusive of closed
stores. Excluding the Company's investment in uBid, net income would have been
$0.4 million, or $0.04 per diluted share, in the first quarter of 1999.

Liquidity and Capital Resources

The Company's primary capital need has been the funding of 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, 1999, the Company had cash, cash equivalents and short-term
investments of $27.9 million and working capital of $41.1 million.  Inventories
decreased to $43.7 million at March 31, 1999 from $48.0 million at December 31,
1998.  Accounts receivable increased to $40.6 million at March 31, 1999 from
$39.8 million at December 31, 1998.  During the three months ended March 31,
1999, the Company's capital expenditures were $1.8 million, versus $1.5 million
for the comparable period last year.

As of March 31, 1999, the Company had an existing credit facility consisting of
separate credit lines totaling $60.0 million.  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, and is limited to, a percentage of eligible inventory and
accounts receivable, and bears interest at the prime rate.  As of March 31,
1999, the Company had $13.2 million in total 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, 1999, the Company is in compliance with all such covenants.

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 1999.  However, if the Company
requires additional funds, such as for acquisitions or expansion or to fund a
significant downturn in sales that causes losses, there are no assurances that
adequate financing will be available at acceptable terms, if at all.

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, 1999, 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.  The Company currently has no definitive agreements with respect to
any acquisitions.

                                       9
<PAGE>
 
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.
 
Year 2000

Computer systems, software packages, and microprocessor dependent equipment may
cease to function or generate erroneous data when the year 2000 arrives.  The
problem affects those systems or products that are programmed to accept a two-
digit code in date code fields.  To correctly identify the year 2000, a four-
digit date code field will be required to be what is commonly termed "year 2000
compliant."

The Company may realize exposure and risk if the systems for which it is
dependent upon to conduct day-to-day operations are not year 2000 compliant.
The potential areas of exposure include electronic data exchange systems
operated by third parties with whom the Company transacts business, certain
products purchased from third parties for resale, and computers, software,
telephone systems, and other equipment used internally.  To minimize the
potential adverse affects of the year 2000 problem, the Company has established
an internal project team comprised of all functional disciplines.  This project
team has begun a three-phase process of identifying internal systems (both
information technology and non-information technology systems) not year 2000
compliant, determining their significance in the effective operation of the
Company, and developing plans to resolve the issues where necessary.  The
Company has been communicating with the suppliers and others to coordinate year
2000 readiness.  The responses received by the Company to date have indicated
that steps are currently being undertaken to address this concern.  However, if
such third parties are not able to make all systems and products year 2000
compliant, there could be a material adverse impact on the Company.

Initial review of the Company's principal application software through which
nearly all of the Company's business is transacted, has determined it to be year
2000 compliant and, as such, the Company does not anticipate any material
adverse operational issues to arise.  The Company has completed 85% of the year
2000 compliance assessment for critical systems and will complete its assessment
by the end of the second quarter of 1999.  The Company plans to implement
corrective solutions before the end of the third quarter of 1999.  To date, the
costs incurred by the Company with respect to this project are $0.2 million.
Based on current estimates, management expects that the Company's total costs in
connection with its year 2000 compliance project will be approximately $0.8
million and will be financed from general corporate funds; however, future
anticipated costs are difficult to estimate with any certainty and may differ
materially from those currently projected based on the results of the assessment
phase of the Company's year 2000 project.  The anticipated costs associated with
the Company's year 2000 compliance program do not include time and costs that
may be incurred as a result of any potential failure of third parties to become
year 2000 compliant or costs to implement the Company's future contingency
plans.  Management estimates that approximately one half of the expected costs
will be attributed to the redeployment of internal resources and the other half
will be comprised principally of external consulting fees and software upgrades.
No hardware expenditures for year 2000 are contemplated.  The redeployment of
internal data processing resources is not expected to materially delay any
significant projects.  Year 2000 spending is expected to be 10% of total
budgeted data processing expenditures.  The Company has not yet developed a
contingency plan in the event that any non-compliant critical systems are not
remedied by January 1, 2000, nor has it formulated a timetable to create such
contingency plan.  Upon completion of this project, if systems material to the
Company's operations have not been made year 2000 compliant, or if third parties
fail to make their systems year 2000 compliant in a timely manner, the year 2000
issue could have a material adverse effect on the Company's business, financial
condition and results of operations.

Business Factors

Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing 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 will continue to
be able to receive the expected benefits from the first quarter 1998
restructuring, or that the uBid spin-off will be consummated.  In addition,
there can be no assurances that the 

                                       10
<PAGE>
 
momentum in PC/Wintel sales will be sustained, that the first quarter trends for
Apple, Mac and out-bound sales will continue in future periods, or that the
Company's Internet sales will continue to grow. In addition, there can be no
assurance that the Company's new eCOST.com subsidiary will be developed
successfully, achieve market acceptance or be profitable. In addition to the
factors set forth above, other important factors that could cause actual results
to differ materially from our expectations include the ability of uBid to
achieve a leadership position in its industry either near term or beyond;
competition from companies either currently in the market or entering the
market; 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; 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 the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.

                          Part II - OTHER INFORMATION


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

         a.    Exhibits. The exhibit index attached hereto is incorporated
               herein by reference.
         b.    Reports on Form 8-K

               None.

                                   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 17, 1999               By   /s/ Ted Sanders
                                      Ted Sanders
                                      Chief Financial Officer

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

 

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<PAGE>
 
                                 EXHIBIT INDEX


Exhibit Number                Description
--------------                -----------

    10.37           Tax Indemnification and Allocation Agreement by and between
                    the Company and uBid, Inc., dated as of December 7, 1998, as
                    amended (1)
    10.41*          Employment Agreement dated January 21, 1999 between the
                    Company and S. Keating Rhoads (2)
     27             Financial Data Schedule


_____________
*The referenced exhibit is  a compensatory contract, plan or arrangement.

(1)  Incorporated by reference to uBid's Annual Report on Form 10-K for the year
     ended December 31, 1998.
(2)  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the year ended December 31, 1998.

                                       12