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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): JANUARY 28, 1998
EGGHEAD, INC.
(Exact name of registrant as specified in charter)
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WASHINGTON 0-16930 91-1296187
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(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
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22705 E. MISSION AVENUE
LIBERTY LAKE, WASHINGTON 99019
(Address of principal executive offices) (Zip Code)
(509) 922-7031
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
Egghead, Inc. (the "Company") has announced that it will change its name
to Egghead.com, Inc., shift its business emphasis to Internet commerce, close
its 80 store retail network due to declining revenues and continuing losses in
the retail channel and close its distribution center in Sacramento, California.
In addition, the Company will combine its management and operations with those
of Surplus Software, Inc. d/b/a Surplus Direct ("Surplus Direct"), a subsidiary
of the Company.
The closing of the Company's retail store network and the loss of
ongoing revenue from its retail stores, the combination of the management and
operations of the Company with those of Surplus Direct and the shift of the
Company's business emphasis to Internet commerce involve substantial risks.
The closing of the Company's retail store network, together with the
combination of the management and operations of the Company and Surplus Direct,
may cause management distraction and operational disruption.
The market for Internet commerce has begun to develop only recently and
is rapidly evolving, and the Company's Internet commerce model is still under
development. The Company has a limited operating history in Internet commerce on
which to evaluate its Internet commerce business and prospects. In addition,
Internet commerce is relatively new and rapidly evolving. The overall market for
computer products, including the Internet commerce channel of such market, is
highly competitive with relatively low barriers to entry. Other resellers and
manufacturers of computer products that are much larger than the Company and
have greater economies of scale operate websites and compete with the Company's
pricing and its merchandise offer. The Company believes that the ability to
compete in Internet commerce will depend on several factors, including, without
limitation, the quality, number and extent of marketing arrangements,
achievement of low operating expense ratios, quality of online offering of
products and services, pricing, website design, effectiveness of Internet
commerce security measures, quality and reliability of technological systems,
ability to attract and retain qualified personnel with technological or web
commerce expertise, and intensity of management focus. In light of the Company's
limited operating history in Internet commerce and the difficulties attendant to
the shift of its primary business focus from retail store operations to Internet
commerce, there can be no assurance that the Company will be able to compete
successfully with respect to any of these factors, and the failure to do so
could have a material adverse effect on the Company's business, prospects,
financial condition and results of operations.
The Company anticipates that its Internet commerce business will incur
substantial operating losses for at least the next two years as it builds its
Internet commerce business and seeks to achieve significant economies of scale.
The Company anticipates raising additional funds during the next twelve months.
There can be no assurance that such financing will be available in amounts or on
terms acceptable to the Company, if at all.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
None.
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SIGNATURE
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, hereunto duly authorized.
EGGHEAD, INC.
By: /s/ George P. Orban
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George P. Orban, Chairman of the Board
and Chief Executive Officer
Dated: January 28, 1998
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