**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-Q**

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(Mark One)

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

**For the Quarterly Period Ended March 31, 2000**

**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    000-29184**

**EGGHEAD.COM, INC.**
(Exact name of Registrant as specified in its Charter)



|**Delaware**                                                   | **77-0408319**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**1350 Willow RoadMenlo Park, California     94025**(Address of Principal Executive Offices including Zip Code)

**(650) 470-2400**(Registrant's Telephone Number, Including Area Code)







Indicate 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 reports), and (2) has been subject to such filing
requirements for the past 90 days.    YES [X]    NO [  ]

As of April 30, 2000, there were 40,315,310 shares of the Registrant's common stock outstanding.







**EGGHEAD.COM, INC.
      QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2000
                                TABLE OF CONTENTS**



|**PART I.   FINANCIAL INFORMATION**                                                                                   | **Page No.**
|--------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                      |             
|Item 1.   Financial Statements                                                                                        |             
|                                                                                                                      |             
|Consolidated Balance Sheets at March 31, 2000 (Unaudited) and
     December 31, 1999                                  | 3           
|                                                                                                                      |             
|Consolidated Statements of Operations for the
          
    three months ended March 31, 2000 and 1999 (Unaudited)   | 4           
|                                                                                                                      |             
|Consolidated Statements of Cash Flows for the
          
    three months ended March 31, 2000 and 1999 (Unaudited)   | 5           
|                                                                                                                      |             
|Notes to Consolidated Financial Statements (Unaudited)                                                                | 6           
|                                                                                                                      |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | 7           
|                                                                                                                      |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | 19          
|                                                                                                                      |             
|**PART II.  OTHER INFORMATION**                                                                                       |             
|                                                                                                                      |             
|Item 1.   Legal Proceedings                                                                                           | 20          
|                                                                                                                      |             
|Item 2.   Changes in Securities and Use of Proceeds                                                                   | 20          
|                                                                                                                      |             
|Item 3.   Defaults Upon Senior Securities                                                                             | 20          
|                                                                                                                      |             
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | 20          
|                                                                                                                      |             
|Item 5.   Other Information                                                                                           | 20          
|                                                                                                                      |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | 20          
|                                                                                                                      |             

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**PART I**

**Item 1. Financial Statements**

**Egghead.com, Inc.
                        Consolidated Balance Sheets
             (In thousands, except par value and share data)**

`March 31, December 31,
                                                             2000        1999
                                                          ----------  ----------
                                                          (unaudited)
Assets
Current assets:
 Cash and cash equivalents...............................   $52,529     $68,223
 Short-term investments..................................    12,354      18,000
 Accounts receivable, net of allowances
 of $3,105 and $2,320....................................    18,124      12,782
 Merchandise inventory...................................    14,002      17,900
 Prepaid expenses and other current assets...............     2,404       1,461
                                                          ----------  ----------
   Total current assets..................................    99,413     118,366
Property and equipment, net..............................     9,483       9,513
Investment in joint venture..............................       599         799
Other assets.............................................       530         452
                                                          ----------  ----------
   Total assets..........................................  $110,025    $129,130
                                                          ==========  ==========
Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable........................................   $22,876     $34,512
 Accrued expenses........................................    25,318      29,168
 Deferred revenue........................................     5,756       7,646
 Reserves and liabilities related to restructuring.......     2,112       2,336
                                                          ----------  ----------
   Total current liabilities.............................    56,062      73,662
Long-term liabilities....................................     2,046       2,046


Stockholders' equity:
 Convertible preferred stock, $0.001 par value;
  2,000,000 shares authorized: no shares issued
  and outstanding........................................       --          --
 Common stock, $0.001 par value; 98,000,000 shares
  authorized; 40,293,623 and 37,199,240 shares
  issued and outstanding, respectively...................        40          37
 Additional paid-in capital..............................   345,512     321,961
 Accumulated deficit.....................................  (293,635)   (268,576)
                                                          ----------  ----------
   Total stockholders' equity............................    51,917      53,422
                                                          ----------  ----------
   Total liabilities and stockholders' equity............  $110,025    $129,130
                                                          ==========  ==========`

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

---

**Egghead.com, Inc.
                   Consolidated Statements of Operations
                   (In thousands, except per share data)**
                                  (unaudited)

`Three Months Ended March 31,
                                                   2000               1999
                                            ------------------ ------------------
Revenue:
  Online..............................               $143,109           $107,714
  Commission and other revenue........                  4,674              2,389
                                            ------------------ ------------------
     Total revenue....................                147,783            110,103
                                            ------------------ ------------------

  Cost of online revenue..............                138,937             99,714
                                            ------------------ ------------------

Gross profit:
  Online..............................                  4,172              8,000
  Commission and other revenue........                  4,674              2,389
                                            ------------------ ------------------
     Total gross profit...............                  8,846             10,389
                                            ------------------ ------------------
Operating expenses:
  Sales and marketing.................                 21,907             20,603
  General and administrative..........                  6,702              5,156
  Engineering.........................                  3,906              3,951
  Amortization of goodwill............                   --                  430
  Merger costs........................                  2,488               --
                                            ------------------ ------------------
     Total operating expenses.........                 35,003             30,140
                                            ------------------ ------------------
Loss from operations..................                (26,157)           (19,751)

Equity in net loss of joint venture...                   (200)               (50)
Interest and other income, net........                  1,298              1,466
                                            ------------------ ------------------

Loss before income taxes..............                (25,059)           (18,335)
Provision for income taxes............                   --                 --
                                            ------------------ ------------------
Net loss..............................               ($25,059)          ($18,335)
                                            ================== ==================

Net loss per share:
  Basic and diluted...................                 ($0.67)            ($0.54)
                                            ================== ==================

Weighted average common shares:
  Basic and diluted...................                 37,496             34,020
                                            ================== ==================`

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

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**Egghead.com, Inc.
                   Consolidated Statements of Cash Flows
                             (in thousands)**
                               (unaudited)

`Three Months Ended
                                                                 March 31,
                                                            2000         1999
                                                        ------------ ------------
Cash flows from operating activities:
  Net loss.......................................          ($25,059)    ($18,335)

  Adjustments to reconcile net loss to
    net cash used in operating activities:
      Equity in net loss of joint venture........               200           50
      Interest on long-term liabilities..........            --                8
      Depreciation and amortization..............               924        2,133
      Changes in assets and liabilities:
        Accounts receivable, net.................            (5,342)      (1,751)
        Merchandise inventory....................             3,898        2,366
        Prepaid expenses and other assets........            (1,021)         (48)
        Accounts payable.........................           (11,636)         873
        Accrued expenses.........................            (3,850)       1,373
        Deferred revenue.........................            (1,890)        (100)
        Reserves and liabilities related
         to restructuring........................              (224)      (1,386)
                                                        ------------ ------------
         Net cash used in operating activities...           (44,000)     (14,817)
                                                        ------------ ------------
Cash flows from investing activities:
  Purchases of short-term available-for-sale
    investments..................................            --           (2,495)
  Proceeds from sales of short-term
    available-for-sale investments...............             5,646        8,014
  Purchase of property and equipment.............              (894)      (4,349)
                                                        ------------ ------------
Net cash used in investing activities............             4,752        1,170
                                                        ------------ ------------
Cash flows from financing activities:
  Proceeds from issuance of common stock and
   exercise of warrants, net.....................            23,554       76,926
                                                        ------------ ------------
Net cash provided by financing activities........            23,554       76,926
                                                        ------------ ------------
Net increase (decrease) in cash and cash
 equivalents.....................................           (15,694)      63,279
Cash and cash equivalents at beginning of
 period..........................................            68,223       85,025
                                                        ------------ ------------
Cash and cash equivalents at end of period.......           $52,529     $148,304
                                                        ============ ============`

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

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**Egghead.com, Inc
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(unaudited)**

**1. - BASIS OF PRESENTATION**

The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles and, in the
opinion of management, reflect all adjustments (consisting only of
normal recurring adjustments) considered necessary to fairly present
financial position, results of operations and cash flows of Egghead.com,
Inc. ("Egghead" or the "Company") for the periods presented.  These
financial statements should be read in conjunction with the Company's
audited financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.  The
results of operations for the three-month period ended March 31, 2000
are not necessarily indicative of the results to be expected for any
subsequent period.

On November 19, 1999 Onsale, Inc. ("Old Onsale") acquired Egghead.com, Inc.
("Old Egghead") and changed its name to Egghead.com, Inc.  The acquisition was accounted
for as a pooling of interests.  The consolidated statements of operations and cash flows
for the three months ended March 31, 1999 have been restated to include the results
of operations and cash flows as if Old Egghead was a wholly-owned subsidiary
of the Company for the period presented.  Old Egghead used a 52/53 week fiscal
year ending on the Saturday closest to March 31; for convenience, Old Egghead's
fiscal quarter ended April 3, 1999 is referred to as ending March 31, 1999.  The
consolidated statement of operations and cash flows for the quarter ended
March 31, 1999 includes the results of operations and cash flows for Old Egghead
for the three months ended March 31, 1999.

**2. - CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS**

Cash and cash equivalents consist of cash on deposit with banks and
highly liquid investments with an original maturity of three months or
less from the date of purchase.  The Company's short-term investments
consist of certificates of deposit, commercial paper and debt securities
with remaining maturities between 90 and 365 days.  The Company
classifies all short-term investments as available-for-sale in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", which
requires the Company to account for its investments at fair market value
as of the balance sheet date and record unrealized gains and losses in
stockholders' equity.  Realized gains and losses and permanent declines
in value, if any, on available-for-sale securities are reported in other
income or expense as incurred.  As of March 31, 2000 and December 31,
1999 the Company had restricted cash of approximately $1.6 million and
$1.8 million, respectively, primarily represented by  security deposits
for the Company's Vancouver, Washington office.

**3. - STOCKHOLDERS' EQUITY**

On February 17, 2000 the Company entered into an equity financing
agreement with Acqua Wellington North American Equities Fund, Ltd.
("Acqua Wellington") under which the Company may sell up to 5 million
shares of its common stock over a nine-month period beginning February
18, 2000.  The agreement provides that the minimum price at which the
Company will sell its common stock is $10.00 per share, before discount,
unless a lower minimum is mutually agreed to by both parties.  On March
6, 2000, we issued approximately 700,000 shares of common stock at an
average price of $10.67, reflecting a 5.6% discount from market prices,
resulting in net proceeds of approximately $7.4 million.  On March 29,
2000, we amended this agreement to provide for the sale of an additional
2.3 million shares of common stock for $6.75 per share, reflecting a
2.7% discount from the closing market price on that date, which resulted
in net proceeds of approximately $15.5 million.

**4. - BASIC AND DILUTED NET LOSS PER SHARE**

Net loss per share is calculated in accordance with the provisions
of SFAS 128, "Earnings Per Share" ("SFAS 128").  SFAS 128 requires the
Company to report both basic earnings per share and diluted earnings per
share.  Basic earnings per share is computed using the weighted average
number of common shares outstanding during the period.  Diluted earnings
per share is computed using the weighted average number of common and
potentially dilutive common equivalent shares outstanding during the
period.  Common equivalent shares are excluded from the computation if
their effect is antidilutive.

During the quarters ended March 31, 2000 and 1999, options to
purchase approximately 5.4 million and 3.5 million shares, respectively,
were outstanding but were not included in the computation because they
are antidilutive

---

**Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.**

The following discussion of our financial condition and results
of operations should be read in conjunction with the consolidated
financial statements and the related notes included elsewhere in this
report.  This discussion contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act.  These statements typically refer to future events or
financial results, including statements in the future tense and
statements indicating that "we believe," "we expect," "we anticipate" or
"we intend" certain events may occur or certain trends may continue,
that involve risks and uncertainties.  Although these statements reflect
the current judgment of our management, we can only base such statements
on facts and factors that we currently know.  Our actual results could
differ materially from those anticipated in these forward-looking
statements.  Factors that might cause those differences include those
set forth under "Risk Factors."

**Company Overview**

We were incorporated in July 1994 as Onsale, Inc. and began
auctioning products on the Internet in May 1995.  In November 1999 we
acquired Egghead.com, Inc. ("Old Egghead") and changed our name to
Egghead.com, Inc. ("Egghead").  Old Egghead's operations were integrated
with our operations in November 1999, following shareholder approval of
the merger.

The acquisition of Old Egghead was accounted for as a pooling of
interests.  Accordingly, our financial statements have been restated to
reflect our results of operations and cash flows
for the three months ended March 31, 1999 as if Old Egghead
was our wholly-owned subsidiary.  Old Egghead used a 52/53 week fiscal
year that ended on the Saturday nearest March 31; for convenience the
Old Egghead fiscal quarter ended April 3, 1999 is referred to as ending
"March 31" 1999.  The following discussion relates to the consolidated
financial statements of the combined company.

**Business Overview**

We are an Internet retailer selling retail and wholesale goods to
businesses, resellers and consumers.  We sell merchandise online through
our "superstore" and "auction and smart deals" pages on our web site.

Superstores.  Through the superstores, we offer businesses,
resellers and consumers a broad selection of new, current-version
computers and related products.  Old Egghead operated its superstores
starting in the first quarter of 1998, selling the products at a low
margin. In January 1999 we introduced our superstore, Onsale atCost,
where we sold products at prices equal to the amount invoiced by our
vendors, plus charges for payment processing, shipping and handling and
sales tax where appropriate.   Effective with the merger, we sell
products at competitive prices through our superstores.

Auctions and Smart Deals.  Through auctions and smart deals,
we sell excess merchandise and services, including refurbished and
close-out products.  Merchandise and services that we offer on these web
pages include computers and related products, sports and fitness
equipment, consumer electronics, and vacation and travel packages.  We
also derive revenues from commissions on goods sold through our online
auctions.

**Results of Operations**

The following table summarizes selected results for the quarters
ended March 31, 2000 and 1999. The operating results in any periods are
not necessarily indicative of the results to be expected for any future
period.

**Egghead.com, Inc.**

`Quarter Ended March 31,
                                                      (Dollars in thousands)
                                                    2000                   1999
                                          ---------------------  ---------------------
                                              Amount       %         Amount       %
                                          ------------  -------  ------------  -------
Revenue:
  Online..............................       $143,109     96.8      $107,714     97.8
  Commission and other revenue........          4,674      3.2         2,389      2.2
                                          ------------  -------  ------------  -------
     Total revenue....................        147,783    100.0       110,103    100.0
                                          ============  =======  ============  =======
Gross profit:
  Online..............................          4,172      2.9         8,000      7.4
  Commission and other revenue........          4,674    100.0         2,389    100.0
                                          ------------  -------  ------------  -------
     Total gross profit...............          8,846      6.0        10,389      9.4
                                          ------------  -------  ------------  -------
Operating expenses:
  Sales and marketing.................         21,907     14.8        20,603     18.7
  General and administrative..........          6,702      4.5         5,156      4.7
  Engineering.........................          3,906      2.6         3,951      3.6
  Amortization of goodwill............            --       --            430      0.4
  Merger related costs................          2,488      1.7           --        --
                                          ------------  -------  ------------  -------
     Total expenses...................         35,003     23.7        30,140     27.4
                                          ------------  -------  ------------  -------
Loss from operations..................        (26,157)   (17.7)      (19,751)   (17.9)

Equity in net loss of joint venture...           (200)    (0.1)          (50)      --
Interest and other income, net........          1,298      0.9         1,466      1.3
                                          ------------  -------  ------------  -------
Loss from continuing operations before
  taxes...............................        (25,059)   (17.0)      (18,335)   (16.7)
Provision for income taxes............          --         --            --        --
                                          ------------  -------  ------------  -------

Net loss from continuing operations...       ($25,059)   (17.0)     ($18,335)   (16.7)
                                          ============  =======  ============  =======`

**Revenue**

Our revenue consists of online revenue and commission and other
revenue.  Online revenue consists of sales of merchandise and services,
net of returns.  Online revenue represents sales of merchandise acquired
on a purchase or consignment basis where; we charge the customer's
credit card and either we or the vendor ships the merchandise to the
customer; and we assume the credit and return risk.   Commission and
other revenue consists of 1) commissions on auction sales of suppliers'
products, where the supplier charges the customers credit card,
maintains title to the inventory and ships the product and 2)
advertising revenue from vendors and other businesses.

Sources of Revenue Growth.   Online revenue increased $35.4 million,
or 32.9%, for the quarter ended March 31, 2000 compared with the quarter
ended March 31, 1999.  The increase in online revenue was attributable
primarily to the following factors: (1) growth of our online customer
base due primarily to investments in marketing programs designed to
promote and maintain awareness of our brand; (2) the opening of our
Onsale atCost web site in January 1999 and; (3) increases in the amounts
and types of merchandise obtained from vendors for sale over our
superstore and auction web pages.  Commission and other revenue
increased $2.3 million or 95.6% for the three months ended March 31,
2000 compared to the same three month period in 1999, primarily due to
increased advertising revenue.

Constraints on Revenue Growth.   Our ability to increase revenue
may be constrained by our inability to obtain products from vendors who
supply products for our auction and smart deals web pages, the
unavailability of high demand product sold through our superstores, and
our desire to increase product margins.  Superstore sales during the first quarter
of 2000 were constrained due to our efforts to increase product margin which rose
0.9% overall from the fourth quarter of 1999 and the unavailability of high demand product.
  These types of revenue growth constraints may continue during future quarters.

Superstores vs. Auctions and Smart Deals.   For the quarter ended
March 31, 2000, revenue from our online superstores and revenue from our
auction and smart deal web pages constituted 44% and 53% respectively,
of our total revenue.  For the comparable period in 1999, revenue from
our superstores and auction and smart deal web pages were 13% and 85%,
respectively, of our total revenue.  The increase in superstore revenue
as a percentage of total revenue was due to the opening of our Onsale
atCost web site in January 1999 and an increase in sales in the Old
Egghead superstore.

**Gross Profit**

Gross profit is total revenue minus cost of revenue.  Cost of
online revenue consists of the cost of the merchandise sold to
customers, inventory reserve adjustments and net shipping (shipping and
handling revenue minus shipping costs).  There is no significant cost of
commission and other revenue.  Gross margin is gross profit as a
percentage of total revenue.  Gross margins for online revenue and commission
and other revenue for each quarter in 1999 and the quarter ended March 31, 2000 were:

`3/31/00  12/31/99   9/30/99   6/30/99   3/31/99
                              --------- --------- --------- --------- ---------
                                    %         %         %         %         %
                                   ---       ---       ---       ---       ---
Gross Margin:
  Online                           2.9       2.0       2.4       1.6       7.4
  Commission and other revenue   100.0     100.0     100.0     100.0     100.0
                              --------- --------- --------- --------- ---------
Total Gross Margin                 6.0       4.1       4.3       4.3       9.4
                              ========= ========= ========= ========= =========`

Gross margin for online revenue was 2.9% and 7.4%, respectively,
for the quarters ended March 31, 2000 and March 31, 1999.  The decline
in online margin from 7.4% to 1.6% in the quarter ended June 30, 1999
resulted from intense competition, a general decrease in selling prices
of computers and related merchandise, and lower margins associated with
auction and smart deals merchandise. A decrease in margins associated
with our auction and smart deals merchandise sales resulted from our
efforts to increase auction sales and market share by increasing the
quantities of products available for bid at any one time, which tends to
lower final sales prices on these sales.  Gross margin for online sales
throughout the rest of 1999 remained fairly stable, fluctuating between
2% and 2.4%.  We raised margins in the first quarter of 2000 over the
fourth quarter of 1999 by raising prices and limiting the availability
of auction merchandise, resulting in a reversal of the downward trend
experienced through much of 1999.

We will continue our efforts to
improve margin balanced with the competing goal of revenue growth.
Increasing margins may be difficult due to
intense ongoing industry-wide competitive price
pressures and our continuing efforts to maintain or increase our market
share. Some competitors are selling current-version goods that are in
high demand at or below the cost of the products.  We have responded to
these competitive pressures by reducing the selling prices on some of
our products.
We have re-instituted a flat-fee shipping charge on Superstores' orders,
however in the future, we may waive all or part of the shipping and
handling fee for limited periods of time.

**Operating Expenses**

Our operating expenses as a percentage of revenue, excluding
merger costs, were 22.0% and 27.4% for the quarters ended March 31, 2000
and March 31, 1999 respectively. Operating expenses in the quarter ended
March 31, 1999 reflected the cost of operating two separate businesses
prior to the merger with Old Egghead. Although we believe our operating
expenses will be lower than operating two separate companies, we expect
to maintain a high level of spending to expand our operations and
promote our brand name.

Sales and Marketing.   Sales and marketing expenses consist
primarily of advertising expenditures, payroll and related expenses for
sales, customer service, marketing and merchandise acquisition
personnel, distribution and credit card processing costs.  Sales and
marketing expenses as a percentage of revenue were 14.8% and 18.7% for
the quarters ended March 31, 2000 and March 31, 1999 respectively. The
decrease from 1999 to 2000 was primarily attributable to elimination of
duplicate costs and efficiencies resulting from our merger with Old
Egghead.

General and Administrative.   General and administrative expenses
consist primarily of payroll and related expenses for executive,
accounting and administrative personnel, bad debt expense, facilities
expenses, recruiting and other general corporate expenses.
General and administrative expenses as a percentage of revenue
were 4.5% and 4.7%, respectively, for the quarters ended March 31, 2000
and March 31, 1999. The decrease from 1999 to 2000 was due primarily to
the higher volume of sales, experienced during that same period offset
in part by continuing duplicative costs and the establishment of reserve
provisions.  We expect the dollar amount of general and administrative
expenses to decrease in 2000 due to the elimination of duplicate
operations in the combined company.

Engineering.   Engineering expenses consist primarily of payroll
and related expenses for engineering personnel and consultants who
develop, enhance, manage, operate and monitor our web site and related
systems, as well as related equipment costs, other than those that are
capitalized.  Engineering expenses as a percentage of total revenue were
2.6% in the quarter ended March 31, 2000 compared with 3.6% in the
quarter ended March 31, 1999.  The decrease in the quarter ended March
31, 2000 was due to leveraging partially fixed expenses with higher
sales.  We expect the dollar amount of engineering expenses to remain
relatively constant in 2000 and to increase thereafter as we add staff
to maintain, enhance and modify our web site and other systems.

Prior to 1998, all engineering costs were expensed as incurred.
In 1998, we adopted the American Institute of Certified Public
Accountants' ("AICPA") Statement of Position 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use" ("SOP
98-1") and, accordingly, capitalized some engineering costs related to
internally-developed software.  We did not capitalize any software in
the three months ended March 31, 2000.  However, in the three months
ended March 31, 1999 we capitalized approximately $565,000 of software
of which $265,000 was related to engineering costs for internally-
developed software.

Merger-Related Costs.   In connection with the acquisition of Old
Egghead, we recorded merger-related expenses of approximately $2.5
million during the quarter ended March 31, 2000.  These expenses
primarily consist of costs related to the abandonment of some Old
Egghead advertising agreements, severance benefits and additional merger
costs.

**Equity in Net Loss of Joint Venture**

On May 15, 1998, we entered into a joint venture agreement with
Softbank Corporation to perform on-line auctions for the Japanese
market, resulting in the formation of Onsale Japan K.K., which commenced
operations in the third quarter of 1998. We own a 40% interest in the
joint venture and account for our interest using the equity method of
accounting.  Accordingly, we recognize our share of net profits or
losses of the joint venture as an adjustment to our initial investment
amount.  Our share of the net loss of the joint venture was $200,000 and
$50,000 for the three months ended March 31, 2000 and 1999,
respectively.

**Interest and Other Income, Net**

Our interest and other income, net, was $1.3 million and $1.4
million for the three months ended March 31, 2000 and 1999, respectively.

**Income Taxes**

We had net losses of $25.1 million and $18.3 million for the three
months ended March 31, 2000 and 1999 respectively, therefore we did not
record any provision for income taxes for these periods.

**Liquidity and Capital Resources**

**Cash Inflows and Outflows**

Financing Activities.   Net cash provided by financing activities of
approximately $23.6 million for the three months ended March 31, 2000
resulted primarily from the issuance of common stock under an equity
financing agreement with Acqua Wellington, which resulted in net
proceeds of approximately $23 million and from the issuance of common
stock under our stock option and employee stock purchase plans, which
resulted in net proceeds of approximately $600,000.

Net cash provided by financing activities of $76.9 million for the
three months ended March 31, 1999 consists of the issuance of Old
Egghead common stock in a secondary public offering, which resulted in
net proceeds of approximately $72.9 million and the issuance of common
stock under our stock option and employee stock purchase plans, which
resulted in net proceeds of approximately $4 million.

Operating Activities.   Net cash used in operating activities for
the three months ended March 31, 2000 was approximately $44.0 million,
primarily consisting of our net loss of $25.1 million, an increase of
$5.3 million in accounts receivable and decreases in accounts payable
and accrued expenses of $11.6 million and $3.9 million, respectively.
These uses of cash were partially offset by a $3.9 million reduction in
inventory.  The reductions in accounts payable and accrued expenses reflect the
payment of approximately $6.0 million in merger-related costs and approximately $8.0
million of non-recurring pay downs of accounts payable.

Net cash used in operating activities for the three months ended
March 31, 1999 was approximately $14.8 million, primarily attributable
to our net loss of $18.3 million, increases of $1.8 million in accounts
receivable and a $1.4 million reduction in reserves and liabilities
related to restructuring.  These uses of cash were partially offset by
depreciation and amortization expense of $2.1 million, a decrease in
merchandise inventory of $2.4 million and increases in accounts payable
and accrued expenses of $2.2 million.

Investing Activities.   Net cash provided by investing activities of
$4.8 million for the three months ended March 31, 2000 results from
proceeds from short term marketable securities of approximately $5.7
million offset by an investment of $894,000 in property and equipment.
Net cash provided by investing activities of $1.2 million for the three
months ended March 31, 1999 primarily reflects our net proceeds from
short-term marketable securities of $5.5 million offset by investments
of $4.3 million in property and equipment, principally related to the
upgrading of the Website software platforms and related hardware.

**Cash, Cash Equivalents and Commitments**

Cash and Cash Equivalents.   As of March 31, 2000 we had
approximately $52.5 million of cash and cash equivalents and $12.4
million of short-term available-for-sale investments.  We have credit
lines totaling $10.0 million available for the financing of inventory.
As of March 31, 2000, we had no borrowings outstanding under these lines
of credit.

Commitments.  As of March 31, 2000:



- Our principal commitments consisted of an obligation of
approximately $8.1 million under operating leases for our corporate
offices and warehouses and obligations of approximately $800,000
under additional operating leases.  These amounts do not include
obligations of approximately $2.0 million related to retail store
leases which were closed by Old Egghead, and have been fully
provided for.
- We have no material commitments for capital expenditures, but we
anticipate purchasing approximately $3.0 million of property and
equipment during 2000, primarily for computer and office equipment.
- We have agreements for online advertising which allow us to appear
on specific web sites with links to our web site.  These agreements require future
payments of up to approximately $4.2 million and incremental fees
under certain circumstances based on the volume of traffic to our
web site. These agreements expire at various times through December
2000.  In addition, we have commitments for other advertising and
promotional arrangements of approximately  $2.1 million payable
over the next 45 days.
- We had $1.6 million of restricted cash, which primarily represented
collateral for the lease of our Vancouver, Washington office.
- During 1998, we funded our initial investment of $2.0 million in
our joint venture with Softbank Corporation through an unsecured
note payable to Softbank Corporation.  The principal and accrued
interest thereon is due upon the earlier of the closing date of an
initial public offering of the joint venture or December 2002, with
interest accruing at a fluctuating rate equal to the short-term
prime rate of the Dai-ichi Kangyo Bank in Tokyo, Japan (1.375% as
of March 31, 2000).  This note has no right of offset against our
investment in the joint venture.

Old Egghead offered credit to some of its business customers and
we began offering credit to business customers on our site in the fourth
quarter of 1999 and may require additional cash to support the
anticipated growth in accounts receivable.  We expect our operating
expenses to remain high as we continue our marketing efforts, software
development efforts, and continue to support the infrastructure required
to grow our business.  As a result, we expect to experience quarterly
net losses through at least the year 2001, and thus we will need to
finance our increased inventory, accounts receivable, capital
expenditures and some portion of our operating expenses from our current
cash and cash equivalents balance.

We believe that our current cash and cash equivalent balance will
meet our anticipated cash needs for working capital expenditures for at
least the next 12 months. In February 2000, we entered into an equity
financing agreement under which we may sell up to 5 million shares of
our common stock over a nine month period beginning February 18, 2000.
This agreement provides that the minimum price at which we will sell the
common stock is $10.00 per share before discount, unless a lower minimum
is mutually agreed to by both parties.  On March 6, 2000, we sold
approximately 700,000 shares of common stock at an average price of
$10.67 per share, reflecting a 5.6% discount on market prices, which
resulted in net proceeds to us of approximately $7.4 million.  On March
29, 2000, we amended this agreement to provide for the sale of an
additional 2.3 million shares of common stock for $6.75 per share,
reflecting a discount of 2.7% to the closing market price of our common
stock on that date, which resulted in net proceeds to us of an
additional $15.5 million.  The sale of additional equity or convertible
debt securities will result in dilution in our stockholders' ownership
interest.  Recent declines in the trading price of our common stock could
make it more difficult for us to obtain financing through the
issuance of equity or convertible securities.  Therefore, financing
described above or additional financing may not be available to us in
amounts or on terms acceptable to us.

**New Accounting Pronouncements**

In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities.
The new standard requires companies to record derivatives on the balance
sheet as assets or liabilities, measured at fair value. Gains or losses
resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. Because we do not use derivatives, the
new standard is expected to have no material impact on our financial
position or results of operations. SFAS No. 133 will be effective for
fiscal 2001.

In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition," which provides
guidance on the recognition, presentation, and disclosure of revenue in
financial statements filed with the SEC.  SAB 101 outlines the basic
criteria that must be met to recognize revenue and provides guidance for
disclosures related to revenue recognition policies.   Our revenue
recognition policies comply with the requirements of SAB 101.

In April 2000, the Financial Accounting Standards Board issued
FASB Interpretation No. 44, Accounting for Certain Transactions
Involving Stock Compensation, an interpretation of APB Opinion No. 25
("FIN 44").  Among other issues, FIN 44 clarifies (a) the definition of
employee for purposes of applying Opinion No. 25, (b) the criteria for
determining whether a plan qualifies as a noncompensatory plan, (c) the
accounting consequence of various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an
exchange of stock compensation awards in a business combination.  FIN 44
is effective July 1, 2000, but certain conclusions in the interpretation
cover specific events that occur after either December 15, 1998 or
January 12, 2000. To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12,
2000, but be for the effective date of July 1, 2000, the effects of
applying this interpretation are recognized on a prospective basis from
July 1, 2000.  The Company is currently reviewing stock grants to
determine the impact, if any, that may arise from implementation of FIN
44, although management does not expect the impact, if any, to be
material to the financial statements.

**Factors That May Affect Future Operating Results**

An investment in our common stock involves a high degree of risk.  You
should consider the risks described below and the other information in
this report carefully.  The risks described below are not the only ones
we face.  Additional risks that we are aware of or that we currently
believe are immaterial may become important factors that affect our
business.  If any of the following risks occur, or if others occur, our
business, operating results and financial condition could be seriously
harmed.  The trading price of our common stock could decline due to any
of these risks.

**We expect to incur net losses for the foreseeable future.**

Based on historical financial statements adjusted to reflect the
pooling of our results with those of Old Egghead, we incurred net losses
since 1995.   As of March 31, 2000, we had a combined net accumulated
deficit of approximately $294 million. We expect to experience
substantial quarterly net losses into 2001, due primarily to the
following factors:



- competitive pricing pressures, which we expect to continue to
negatively affect gross margins;
- continued spending on operating expenses, particularly marketing
expenses; and
- spending on our infrastructure.

**We may seek additional financing and may not be able to secure it.**

We expect to raise additional funds within the next 12 months.
Recent declines in the trading price of our common stock will likely
make it more difficult for us to obtain financing through the issuance
of equity or convertible securities. Under an agreement with Acqua
Wellington, we raised approximately 23 million by issuing shares
representing approximately 7.4% of our outstanding shares of common
stock as of March 31, 2000.  Additional financing may not be available
on terms favorable to us, or may not be available to us at all.
Additional financing arrangements will result in further dilution of
your ownership interest.  Additionally, we could issue securities that
have rights senior to the rights of common stockholders.

**Due to competitive pressures and our efforts to expand and maintain
market share, our profit margins may remain low for the foreseeable
future.**

Some of our competitors sell products that are commonly available
from major distributors at or near their purchase price. This may cause
us to reduce our selling prices on the same or similar goods, which
would reduce profit margins.

We plan to make aggressive efforts to expand and maintain our market
share, and our profit margins may continue to be negatively affected as
a result. We may attempt to expand our market share for auctioned goods
by increasing the quantity of products available for bid at any one
time, which tends to decrease revenues per unit. We may also use
promotional pricing and enhanced customer service to increase our market
share for current version sales. One of the effects of these strategies
may be low margins, and we may not be successful in increasing or
maintaining our market share in either or both lines of business.  Even
if we are successful in increasing our market share, continued
competition and customer expectations may make it difficult to improve
profit margins in the future. Accordingly, our profits and stock price
may be harmed.

**Our operating results may fluctuate significantly and may be difficult
to predict.**

Prior to the merger the operating results of Onsale and Old Egghead
fluctuated, and we expect our operating results to continue to fluctuate
in the future, due to a number of factors, many of which are outside our
control. These factors include:



- pricing competition;
- the availability and pricing of merchandise from our vendors;
- our ability to manage our inventory mix and the mix of products
offered for auction, and take other actions to maintain customer
satisfaction;
- the degree to which our sales of new, current-version merchandise
at attractive prices reduces sales of similar products on our
auction site;
- seasonal fluctuations in buying patterns of new and reconditioned
merchandise and in the availability of reconditioned merchandise;
- the level of traffic at our web site, and our ability to attract
new customers and to retain existing customers;
- the announcement or introduction of new types of merchandise,
service offerings or customer services by us or our competitors;
- the timing, cost and availability of web advertising;
- the amount and timing of costs relating to expansion of our
operations;
- interruptions to or increases in the costs associated with the
normal flow of our business operations, including the occurrence
of technical or communications failures or stoppages by common
carriers such as United Parcel Service; and
- governmental regulation and taxation policies.

Due to these factors, factors discussed elsewhere in this document,
or unforeseen factors, in some future quarter our operating results may
not meet the expectations of securities analysts and investors, in which
event the trading price of our common stock may decline.

**If we are unable to manage our growth, our business could be harmed.**

We expect to continue to expand our operations, and in order to
manage our growth, we face many challenges, including:



- maintaining and improving existing operational, financial and
inventory systems, procedures and controls, and implementing new
systems, procedures and controls;
- integrating new key managerial and technical employees into our
existing management team;
- training, motivating and managing our employee base;
- managing relationships with third parties;
- managing risks associated with accounts receivable expansion and
collection

**We depend on key employees.**

Our future performance depends upon contributions from members of our
senior management and other key personnel. Most of our key personnel do
not have long-term employment agreements, and we do not maintain any key
person life insurance. Competition for attracting and retaining
personnel in our industry is intense, especially in the San Francisco
Bay area where our headquarters and one of our operating sites are
located, and we may fail to attract and retain the personnel we will
need to succeed in the future.  If one or more of our key personnel
leaves us or joins a competitor, our business could be harmed.

**The expected benefits of our merger with Old Egghead might not be
realized.**

The potential benefits that we expect to achieve as a result of our
merger with Old Egghead may be more difficult to achieve than expected,
or may not be achievable at all. For example:



- We may be unable to derive or  maintain an amount of revenue per
website visitor to our web sites that is similar to the amount we
derived from website visitors to our web site before the merger;
- Our efforts to build a single, widely-recognized online brand may
be more expensive than anticipated, or may be of limited utility
in product areas outside of computer-related products;
- Anticipated cost reductions may not be achieved, or may be offset
by unanticipated cost increases.

**We operate in an extremely competitive market and we could lose revenue
and customers to our competitors.**

Existing competitors.  The electronic commerce market, particularly
over the Internet, is new, rapidly evolving and competitive, and we
expect competition to intensify in the future. We compete with many
other companies which either offer the same types of merchandise or
provide the same or a similar type of sales format to customers. Refer
to the section titled "Business - Competition" in our annual report on
Form 10-K for a list of our competitors.

New competitors.  It is not difficult to enter the online commerce
market, and current and new competitors can launch new online commerce
web sites at relatively low cost. Competition in online commerce will
increase further if retailers, suppliers, manufacturers and direct
marketers who have not traditionally sold computer products and consumer
goods directly to consumers through the Internet enter this market
segment. Increased competition may result in price reductions, fewer
customer orders, reduced gross margins, increased marketing costs or
loss of market share, or any combination of these problems.

New competitors may emerge and rapidly acquire market share in
several ways, including through mergers or by alliances among
competitors and vendors. Through such alliances, competitors may also
obtain exclusive or semi-exclusive sources of merchandise. In addition,
manufacturers may elect to liquidate their products directly over the
Internet. Companies that primarily conduct online person-to-person
auctions, such as eBay Inc., may develop into direct competitors in the
future.

We may not be successful in competing against competitors. Many of
these competitors have greater financial, marketing, customer support,
technical and other resources than we do. As a result, they may be able
to secure merchandise from suppliers on more favorable terms than us,
and they may be able to respond more quickly to changes in customer
preference or to devote greater resources to the development, promotion
and sale of their merchandise than we can. If competition increases and
our branding efforts are not successful, we may not be able to command
higher margins on the products we sell, or we may lose revenue and
customers to our competitors.

**If we cannot continue to build strong brand loyalty, our business will
be harmed.**

We believe that development and awareness of the Egghead.com brand is
critical to our success in attracting customers. Furthermore, we believe
that brand loyalty will become increasingly important as low barriers to
entry encourage the proliferation of web sites. If we are unsuccessful
in continuing to build strong brand loyalty, our business will be
harmed.

In order to attract and retain consumers and advertisers, and to
promote and maintain the Egghead.com brand in response to competitive
pressures, we intend to increase our online and offline marketing and
advertising. We believe that advertising rates generally, and the cost
of online advertising campaigns in particular, could increase
substantially in the future. Despite our efforts, consumers or
advertisers may not perceive our web site or the Egghead.com brand as
superior to the web sites or brands of our competitors.

**We have a limited operating history as an online commerce company,
which makes our business difficult to evaluate.**

We have a limited operating history as an online commerce company. We
were incorporated in 1994 and did not generate any revenues until July
1995. Old Egghead was incorporated in 1984 but changed its business
model from a chain of retail stores to an online commerce web site
beginning in February 1998. Our prospects will therefore be subject to
the risks, expenses and uncertainties frequently encountered by young
companies that operate in the new and rapidly evolving markets for
Internet products and services. These risks include:



- rapid and unpredictable shifts in our business model or those of
our competitors;
- intense competition;
- difficulties managing growth; and
- rapid evolution of technology in electronic commerce.

**We face risks associated with purchasing and carrying our own inventory.**

We purchase inventory from vendors. Risks of carrying inventory
include:



- potential declines in the market value of the goods that we
purchase;
- difficulties managing customer returns and credits associated with
merchandise to be returned to vendors;
- shrinkage resulting from theft, loss or inaccurate inventory
recording; and
- unpredictable sale prices due to the nature of our auction
process.

If we manage our inventory poorly, we may be forced to sell our
inventory at a discount or loss.

**We rely on merchandise vendors for supply, shipping and quality of
products.**

Supply. We rely on vendors to supply us with merchandise. For the
three months ended March 31, 2000, purchases from Tech Data, a
distributor of computers and related products, accounted for
approximately 43% of our aggregate merchandise purchases. We have no
long-term contracts or arrangements with our vendors that guarantee the
availability of merchandise. We may not be able to obtain sufficient
quality and quantities of merchandise at competitive prices. Also, the
quality of service provided by such parties may fall below the standard
needed to enable us to conduct our business effectively. We cannot
assure you that our current vendors will continue to supply merchandise
or that we will be able to establish new vendor relationships that will
ensure that merchandise will be available.

Customer service--shipping and quality of products (returns). We rely
on some of our vendors to ship merchandise directly to customers.
Consequently, we have limited control over the goods shipped by these
vendors, and shipments of goods may be subject to delays and shipment
errors. In addition, we may accept returns from customers for which we
will not receive reimbursements from manufacturers or vendors. If the
quality of service provided by such vendors falls below a satisfactory
standard or if our level of returns exceeds expectations, this could
harm our business.

**We rely on other third parties in conducting our operations.**



In conducting our operations, we depend on several other third parties,
including the following:



- Fulfillment. Third parties fulfill a significant portion of our
sales.  Any service interruptions experienced by these
distribution centers as a result of labor problems or otherwise
could disrupt or prevent fulfillment of customer orders;
- Operating software. Our internally-developed auction software
depends on operating systems, database and server software that
have been developed, produced by and licensed from third parties;
- Payment processing. We rely on one or two processors of credit
card transactions. If computer systems failures or other problems
were to prevent them from processing our credit card transactions,
we would experience delays and business disruptions; and
- Shipping. We use one or two primary delivery services to ship our
products. Our business would suffer if labor problems or other
causes prevented these or any other major carriers from delivering
our products for significant time periods.

We may not be able to maintain satisfactory relationships with any of
the above parties on acceptable commercial terms, and the quality of
services that they provide may not remain at the levels needed to enable
us to conduct our business effectively.

**Our online commerce systems are vulnerable to interruption.**

Customer access to our web site will directly affect the volume of
orders and thus affect our revenues. System interruptions may make our
web site unavailable or prevent us from fulfilling orders efficiently,
reducing the volume of goods we sell and the attractiveness of our
products and services. We may need to add hardware and software and
further develop and upgrade our existing technology, transaction-
processing systems and network infrastructure to accommodate increased
traffic on our web site and increased sales volume. We maintain
substantially all of our computer and communications hardware at two
facilities, in Menlo Park, California and Vancouver, Washington. Our
systems and operations could be damaged or interrupted by fire, flood,
power loss, telecommunications failure, network break-ins, earthquake
and similar events.  Our backup systems and disaster recovery plan may
not be adequate, and we may not have sufficient business interruption
insurance to compensate us for losses from a major interruption.
Computer viruses, physical or electronic break-ins, deliberate attempts
by third parties to exceed the capacity of our systems and similar
disruptions could cause system interruptions, delays and loss of
critical data, and could prevent us from providing services and
accepting and fulfilling customer orders.

**We depend on continued improvements in the Internet infrastructure and
in our own systems.**

We depend upon the number of visitors who use our web site and the
volume of orders we fulfill through our web sites. We use an internally
developed system for our web site and several aspects of transaction
processing, including billing, shipping and tracking. We may be required
to add additional hardware and software and further develop and upgrade
our existing technology, transaction-processing systems and network
infrastructure to accommodate increased traffic on our web site and
increased sales volume through our transaction-processing systems. Any
failure to do so may cause unanticipated systems disruptions, slower
response times, degradation in levels of customer service, impaired
quality and speed of order fulfillment or delays in reporting accurate
financial information.

**We could face litigation risks.**

Intellectual property rights. Our business activities may infringe
upon the proprietary rights of others, and we have in the past received,
and may in the future receive, notices from third parties claiming
infringement by our software or other aspects of our business. Any of
these claims, with or without merit, could result in significant
litigation costs and diversion of resources and management attention,
and could require us to enter into royalty and licensing agreements
(which may not be available on terms acceptable to us or at all).
Successful litigation could result in invalidation of our proprietary
rights or significant liability for damages, which could harm our
business.

Products liability and consumer protection. Our sale of products
through our web sites could subject us to product liability claims or
consumer protection regulation, and states and other jurisdictions other
than California and Washington may interpret their products liability or
consumer protection laws to apply to Internet commerce providers such as
us that enter into transactions with their residents. While we carry
liability insurance, this may not be adequate to compensate for
substantial claims, and these claims could have a harmful effect on our
business.

Liability for information transmitted over our online services. The
law relating to the liability of online services companies for
information carried on or disseminated through our services is currently
unsettled. Claims could be made against us under both United States and
foreign law for defamation, libel, invasion of privacy, negligence,
copyright or trademark infringement, or other theories based on the
nature and content of the materials disseminated through our services.
Several private lawsuits seeking to impose such liability on other
online services companies are currently pending. In addition,
legislation has been proposed that imposes liability for or prohibits
the transmission over the Internet of certain types of information. The
potential imposition of liability on online services companies for
information carried on or disseminated through their services could
require us to alter our service offerings.

**We expect our stock price to be volatile.**

The market price of the shares of our common stock has been, and we
expect it to continue to be, subject to wide fluctuations in response to
several factors, such as:



- actual or anticipated variations in our results of operations;
- announcements of technological innovations;
- new sales formats, services or product introductions by us or our
competitors;
- developments with respect to patents, copyrights or proprietary
rights;
- changes in financial estimates by securities analysts; and
- conditions and trends in the Internet and electronic commerce
industries.

The stock markets generally, and the Nasdaq National Market in
particular, have experienced extreme price and volume fluctuations that
have particularly affected the market prices of equity securities of
many technology companies and that often have been unrelated or
disproportionate to the operating performance of such companies. These
market fluctuations, as well as general economic, political and market
conditions such as recessions, interest rates or international currency
fluctuations, may adversely affect the market price of our common stock.
In the past, stockholders have instituted securities class action
litigation against several companies following periods of volatility in
the market price of their securities. Such litigation, if instituted
against us, could result in diversion of our management's attention and
resources and substantial financial costs.

**Item 3.  Quantitative and Qualitative Disclosures About Market Risk.**

Our exposure to market risk, for changes in interest rates, relates
primarily to our investment portfolio and long term debt. We do not use
derivative financial instruments in our investment portfolio.  We consider
investments in highly liquid instruments purchased with an original maturity
of 90 days or less to be cash equivalents.  We place our investments in
instruments that meet high credit quality standards, as specified in our
investment policy guidelines; the policy also limits the amount of credit
exposure to any one issue, issuer, and type of investment. All of our cash
equivalents and short-term investments, consisting principally of commercial
paper, debt securities and governmental securities, are classified as
available-for-sale as of March 31, 2000. We do not expect any material loss
with respect to our investment portfolio.

The table below presents principal (or notional) amounts and related
weighted average interest rates by year of maturity for our investment
portfolio.

`(In thousands, except interest rates)                               2000
                                                                    ----
Cash Equivalents...........................................      $ 47,960
        Fixed Interest Rate................................          5.72%

Investments................................................      $ 12,354
        Fixed Interest Rate................................          5.90%`

We also have market risk related to our long-term debt obligation, which
matures in 2002.  The principal amount of this obligation is $2.0 million
and has a variable rate of interest which is equal to the prime rate of
the Dai-ichi Kangyo Bank in Tokyo, Japan.  At March 31, 2000 this prime
rate was 1.375%.

**PART II**

**Item 1.Legal Proceedings.**

From time to time, we are subject to litigation in the ordinary course
of our business. We believe that none of the currently pending litigation
will have a material adverse effect on our business, results of operations
or financial condition.

**Item 2.Changes in Securities and Use of Proceeds.**

Not applicable.

**Item 3.Defaults upon Senior Securities.**

Not applicable.

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

Not applicable.

**Item 5.Other Information.**

In January, 2000 Jeffrey Sheahan became our President, in addition to
continuing his role as Chief Operating Officer.  S. Jerrold Kaplan
continues to serve as our Chief Executive Officer.

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

(a) The following exhibits are being filed as part of this report:

`Exhibit                                                      Incorporated by Reference     Filed
Number                Exhibit Description              Form  File No.  Exhibit Filing Date Herewith
------- ---------------------------------------------  ----  --------  ------- ----------- --------
10.01   Common Stock Purchase Agreement between the     8-K              1.01   02/23/00
        Registrant and Acqua Wellington North American
        Equities Fund, Ltd., dated February 17, 2000.

10.02   Letter Agreement dated March 29, 2000 between   8-K             99.01   04/04/00
        Registrant and Acqua Wellington North American
        Equities Fund, Ltd.

27.01   Financial data schedule                                                              X`

On January 31, 2000, we filed a current report on Form 8-K/A under Item
7 to include pro forma financial information and Management Discussion
and Analysis of financial condition and results of operations.  This
report amended our report filed on December 1, 1999 under Item 2 with
respect to the merger between Onsale and Egghead.

On February 23, 2000, we filed a current report on Form 8-K under Item 5
announcing that we had entered into an equity financing agreement with
Acqua Wellington North American Equities Fund, Ltd., providing for the
sale of up to 5 million shares of our common stock over a nine-month
period.

On April 4, 2000, we filed a current report on Form 8-K under Item 5
announcing that we had entered into a letter agreement with Acqua
Wellington, providing for the sale of approximately 2.3 million shares
of our common stock.

**SIGNATURES**

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

`Date:  May 15, 2000                          By:      /s/ John E. Labbett
                                                      -------------------
                                                          John E. Labbett
                                                          Executive Vice President and
                                                          Chief Financial Officer`

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