INSIGHT ENTERPRISES INC, S-3, 1996-11-22

INSIGHT ENTERPRISES INC
S-3, 1996-11-22
CATALOG & MAIL-ORDER HOUSES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 22, 1996

REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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INSIGHT ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 86-0766246
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>

1912 WEST FOURTH STREET
TEMPE, ARIZONA 85281
(602) 902-1001
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF PRINCIPAL EXECUTIVE OFFICES)
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ERIC J. CROWN, CHIEF EXECUTIVE OFFICER
INSIGHT ENTERPRISES, INC.
1912 WEST FOURTH STREET
TEMPE, ARIZONA 85281
(602) 902-1001
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPY TO:

JON S. COHEN, ESQ.
SNELL & WILMER L.L.P.
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.

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

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

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

CALCULATION OF REGISTRATION FEE

<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT(2) OFFERING PRICE(2) FEE(2)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value
per share.................... 71,875 $33.50 $2,407,813 $730.00
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</TABLE>

(1) This Registration Statement covers the resale by the current holders (and
any of their successors) of Common Stock Purchase Warrants (the "Warrants")
of up to an aggregate of 71,875 shares of Common Stock they may acquire upon
exercise of the Warrants.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g), based upon the last reported sales price of
the Common Stock on November 15, 1996, as reported by the Nasdaq National
Market.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED NOVEMBER 22, 1996

PROSPECTUS
71,875 SHARES

LOGO

COMMON STOCK

This Prospectus relates to the resale of 71,875 shares of Common Stock,
$.01 par value (the "Common Stock"), of Insight Enterprises, Inc. ("Insight" or
the "Company") which may be acquired upon the exercise of Common Stock Purchase
Warrants of the Company (the "Warrants") that are currently outstanding. The
holders of the Warrants and any of their successors are hereinafter collectively
referred to as the "Selling Securityholders." The Warrants are exercisable at
any time up to January 24, 1998 to purchase 71,875 shares of the Company's
Common Stock for $10.80 per share, subject to adjustment in certain events. The
distribution of the Common Stock by the Selling Securityholders currently is not
subject to any underwriting agreement.

The shares of Common Stock registered for resale hereby have been
registered pursuant to the Company's obligations contained in written agreements
with the Selling Securityholders. The Selling Securityholders may elect to sell
all, a portion or none of the Common Stock offered by them hereunder.

The Common Stock is currently traded on the Nasdaq National Market
("Nasdaq") under the symbol "NSIT." On November 15, 1996, the last reported
sales price of the Common Stock as reported by Nasdaq, was $33.50 per share.

The Common Stock may be sold by the Selling Securityholders from time to
time either in underwritten public offerings, in transactions pursuant to Rule
144 under the Securities Act of 1933, as amended (the "Securities Act"), in
privately negotiated transactions, through the facilities of Nasdaq, or
otherwise, at market prices prevailing at the time of such sale, at prices
relating to such prevailing market prices, or at negotiated prices. The Company
will not receive any of the proceeds from the sale of Common Stock by the
Selling Securityholders, except for the receipt of the exercise price upon
exercise of the Warrants. The net proceeds to the Selling Securityholders will
be the proceeds received by them upon such sales, less brokerage commissions.
All expenses of registration incurred in connection with the registration of the
Common Stock, other than any underwriting or brokerage discounts, commissions
and selling expenses with respect to the shares of Common Stock being sold by
the Selling Securityholders, will be borne by the Company. See "Plan of
Distribution."

SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED
HEREBY.

EACH SELLING SECURITYHOLDER AND ANY BROKER EXECUTING SELLING ORDERS ON
BEHALF OF THE SELLING SECURITYHOLDERS MAY BE DEEMED TO BE AN "UNDERWRITER"
WITHIN THE MEANING OF THE SECURITIES ACT. COMMISSIONS RECEIVED BY ANY SUCH
BROKER MAY BE DEEMED TO BE UNDERWRITING COMMISSIONS UNDER THE SECURITIES ACT.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is November , 1996.
<PAGE> 3

AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form S-3 under the
Securities Act with the Securities and Exchange Commission (the "Commission")
with respect to the shares offered by this Prospectus. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. Statements contained herein concerning the
provisions of any documents are not necessarily complete and, in each instance,
reference is made to the copy of such documents filed as an exhibit to the
Registration Statement, and each such statement shall be deemed qualified in its
entirety by such reference.

The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, and other information with the
Commission. A copy of the reports, and other information filed by the Company in
accordance with the Exchange Act may be inspected without charge at the offices
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and will also be available for inspection and copying at the Commission's
Regional Offices located at 7 World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material may also be obtained by writing to
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site (http://www.sec.gov)
that contains reports, proxy, and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission. Information concerning the registrant is also available for
inspection at the offices of the Nasdaq National Market, Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.

INFORMATION INCORPORATED BY REFERENCE

The following documents filed by the Company with the Commission are hereby
incorporated herein by reference: (i) the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1996 (ii) the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1996; and (iii) the
description of the Company's Common Stock contained in the Company's Form 8-A
filed under the Exchange Act. All documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date hereof and prior to the termination of the offering of
the Common Stock registered hereby shall be deemed to be incorporated by
reference herein and to be a part hereof from the dates of filing of such
documents. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement and this Prospectus to the extent
that a statement contained herein or in any subsequently filed document which
also is, or is deemed to be, incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus. The Company will provide, without
charge, to each person to whom this Prospectus is delivered, upon written or
telephonic request of such person, a copy of any or all of the foregoing
documents incorporated by reference into this Prospectus (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into this Prospectus). Requests should be delivered in writing to the Secretary,
Insight Enterprises, Inc., 1912 West Fourth Street, Tempe, Arizona 85281 or by
telephone at (602) 902-1001.

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<PAGE> 4

THE COMPANY

Insight is a leading direct marketer of microcomputers, peripherals and
software. The Company markets primarily to small and medium-sized enterprises
("SMEs"), comprised of 10 to 1,000 employees, through a combination of targeted
direct mail catalogs, advertising in computer magazines and publications and a
strong outbound telemarketing sales force. The Company offers an extensive
assortment of more than 20,000 SKUs of microcomputer hardware and software,
including such popular name brands as AST, Hewlett-Packard, IBM, Microsoft,
Seagate, Toshiba and Western Digital. Insight's aggressive marketing strategies,
knowledgeable sales force and streamlined distribution, together with its
advanced proprietary information system, have resulted in high customer loyalty
and strong, profitable growth.

Net sales have doubled in the past two years from $170.4 million in fiscal
1994 to $342.8 million in fiscal 1996. Net earnings have grown at an even faster
rate from $1.5 million in fiscal 1994 to $5.7 million in fiscal 1996. For the
fiscal quarter ended September 30, 1996, net sales grew by 44.7% and net
earnings grew by 69.1% over the prior year period. The Company has improved the
profitability of its business by achieving inventory turns of 21 times and a
reduction in selling, general and administrative expenses as a percent of net
sales from 13.9% in fiscal 1994 to 11.4% in fiscal 1996. In addition, the
Company achieved an average order size of $656 in fiscal 1996, which increased
to $751 for the first quarter of fiscal 1997.

The Company seeks to create a strong, long-term relationship with its
customers through the use of a well-trained, dedicated outbound sales force
designed to increase the productivity of its existing accounts, encourage repeat
buying and ensure customer satisfaction. To that end, the Company has more than
tripled its number of account executives from 102 in fiscal 1992 to 388 at the
end of the first quarter of fiscal 1997, most of whom focus on outbound
telemarketing. More than 50% of the Company's orders in each of fiscal 1995 and
fiscal 1996 were placed by customers who had previously purchased products from
the Company.

The Company has developed a highly-refined operating model to support an
efficient fulfillment and distribution infrastructure. The Company believes its
technologically advanced, proprietary real-time information systems enhance the
integration of its sales, distribution and accounting functions, allow it to
leverage operating expenses and further improve customer service. Moreover, its
efficient use of technology has resulted in an expanded product offering while
maintaining a just-in-time inventory system.

The Company operates in one of the fastest growing segments of the economy.
According to industry data, the U.S. PC product resellers market totaled $64.3
billion in 1995 and is expected to grow at a 20% compound annual growth rate to
$131.1 billion in 1999. Direct marketing is one of the fastest growing
distribution channels of this market and is expected to grow at a compound
annual growth rate of 23% from $4.8 billion in 1995 to $11.2 billion in 1999.
Insight believes it is well positioned to take advantage of this anticipated
growth through its close relationships with vendors and its efficient operating
model.

The Company's objective is to increase sales and generate improved
profitability by (i) increasing the penetration of its existing customer base,
(ii) leveraging its existing infrastructure, (iii) expanding its product
offerings and customer base and (iv) utilizing emerging technologies. The
Company's goal is to become the primary source of microcomputer and related
products to its targeted SME market.

The Company's principal executive offices are located at 1912 West Fourth
Street, Tempe, Arizona 85281 and its telephone number is (602) 902-1001. The
Company maintains a World Wide Web site at http://www.insight.com. Information
contained in the Company's Web site shall not be deemed to be part of this
Prospectus.

This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should carefully consider the various factors
identified in this Prospectus, including matters set forth under the caption
"Risk Factors," which would cause actual results to differ materially from those
indicated by such forward-looking statements.

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RISK FACTORS

In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the factors discussed below in
evaluating the Company and its business before purchasing any of the Common
Stock offered hereby. This Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors including those set forth in the following "Risk
Factors" and elsewhere in this Prospectus.

HIGHLY COMPETITIVE INDUSTRY

The microcomputer and related products industry is highly competitive. The
Company expects competition to increase as retailers and direct marketers who
have not traditionally sold microcomputers and related products enter the
industry and as the industry's rate of growth in the United States slows. The
Company competes with a large number and wide variety of marketers and resellers
of microcomputers and related products, including traditional microcomputer and
related products retailers, computer superstores, consumer electronics and
office supply superstores, mass merchandisers and national direct marketers
(including value-added resellers and specialty retailers, aggregators,
distributors, franchisors, manufacturers and national computer retailers which
have commenced their own direct marketing operations). Certain of the Company's
competitors have longer operating histories and greater financial, technical,
marketing and other resources than the Company. In addition, many of these
competitors offer a wider range of products and services than the Company, and
may be able to respond more quickly to new or changing opportunities,
technologies and customer requirements. Many current and potential competitors
also have greater name recognition, more extensive promotional activities and
adopt more aggressive pricing policies than the Company. There can be no
assurance that the Company will be able to compete effectively with current or
future competitors or that the competitive pressures faced by the Company will
not have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business -- Competition."

The microcomputer and related products industry is undergoing significant
change. The Company believes that consumers have become more accepting of
large-volume, cost-effective channels of distribution such as computer
superstores, consumer electronic and office supply superstores, national direct
marketers and mass merchandisers. Computer superstores and direct marketers that
compete with the Company have significantly increased their market share and
certain traditional microcomputer and related products resellers and direct
marketers are combining operations or acquiring or merging with other resellers
and direct marketers to increase efficiency. Moreover, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to enhance their products and services.
Accordingly, it is possible that new competitors or alliances among competitors
may emerge and acquire significant market share. Generally, pricing is very
aggressive in the industry and the Company expects pricing pressures to
continue. There can be no assurance that the Company will be able to offset the
effects of price reductions with an increase in the number of customers, higher
sales, cost reductions or otherwise. Such pricing pressures could result in an
erosion of the Company's market share, reduced sales and reduced operating
margins, any of which could have a material adverse effect on the Company's
business, results of operations and financial condition. The Company expects
gross margins to continue to decline in fiscal 1997 primarily due to a continued
shift in product mix and to industry-wide pricing pressures. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business -- Industry Background" and "-- Competition."

MANAGING RAPID GROWTH; NO ASSURANCE OF ADDITIONAL FINANCING

Since its inception, the Company has experienced substantial changes in and
expansion of its business and operations. The Company's past expansion has
placed, and any future expansion would place, significant demands on the
Company's administrative, operational, financial and other resources. The
Company's operating expenses and staffing levels have increased and are expected
to increase substantially in the future. In particular, the Company has hired a
significant number of additional personnel, including several senior sales
managers, account executives and other persons with experience in both the
computer and direct

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marketing industries, and there can be no assurance that such persons will
perform to the Company's expectations. Competition for such personnel is
intense, and there can be no assurance that the Company will be able to continue
to attract, assimilate and retain additional highly qualified persons in the
future. In addition, the Company expects that any future expansion will continue
to challenge the Company's ability to hire, train, motivate and manage its
employees. The Company also expects over time to expend considerable resources
to expand its management system, to implement a variety of new systems and
procedures and to complete its new sales and administrative facility. The
failure to complete this new facility within the time and budget expected or the
inability to transition smoothly from the current offices to the new facility
could result in increased costs and a disruption in the operations of the
Company. If the Company's sales do not increase in proportion to its operating
expenses, the Company's management systems do not expand to meet increasing
demands, the Company fails to attract, assimilate and retain qualified
personnel, or otherwise fails to manage its expansion effectively, there would
be a material adverse effect on the Company's business, results of operations
and financial condition. There can be no assurance that the Company will achieve
its growth strategy.

Historically, cash flow from operations has been insufficient to finance
the Company's growth and the Company has relied upon a line of credit, loans
from stockholders and proceeds from its initial and second public offerings to
finance working capital requirements. There can be no assurance that the
Company's operations will generate sufficient cash flow or that adequate
financing will be available to finance continued growth. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

RELIANCE ON VENDORS; ALLOCATION OF GOODS

The Company acquires products for resale both directly from manufacturers
and indirectly through distributors. Purchases from Merisel, a distributor of
microcomputers and related products, accounted for approximately 19% of the
Company's aggregate purchases for fiscal 1996. No other vendor or supplier
accounted for more than 10% of purchases in fiscal 1996. However, the top five
suppliers as a group accounted for approximately 51% of the Company's product
purchases during this period. There are few supply agreements between the
Company and any vendors. The loss of Merisel or any other vendor could cause a
short-term disruption in the availability of products. Certain of the products
offered by the Company are subject to manufacturer allocation which limits the
number of units of such products available to resellers, including the Company.
The inability of the Company to obtain a sufficient quantity of products, in
particular, high demand products such as notebooks, or an allocation of products
from a manufacturer in a way which favors one of the Company's competitors
relative to the Company, could cause the Company to be unable to fill customers'
orders in a timely manner, or at all, which could have a material adverse effect
on the Company's business, results of operations and financial condition.
Certain vendors provide the Company with substantial incentives in the form of
discounts, advertising allowances, price protections and rebates. Vendor funds
are used to offset, among other things, marketing costs, and the Company
competes with other market competitors for these funds. No assurance can be
given that the Company will continue to receive such incentives or that it will
be able to collect outstanding amounts relating to these incentives in a timely
manner or at all. A reduction in or discontinuance of, a significant delay in
receiving or the inability to collect such incentives could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business -- Marketing and Customers" and "-- Purchasing and
Distribution."

RAPID CHANGES IN PRODUCT STANDARDS AND RISK OF INVENTORY OBSOLESCENCE

The microcomputer and related products industry is characterized by rapid
technological change and the frequent introduction of new products and product
enhancements which can decrease demand for current products or render them
obsolete. In addition, in order to satisfy customer demand and to obtain greater
purchasing discounts, the Company expects to carry increased inventory levels of
certain products in the future. The Company can have limited or no return
privileges with respect to certain of its products. There can be no assurance
that the Company will be able to avoid losses related to inventory obsolescence.
See "Business -- Purchasing and Distribution."

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FLUCTUATIONS IN OPERATING RESULTS; VOLATILITY OF STOCK PRICE

The Company's results of operations have varied from quarter to quarter and
will continue to do so in the future. The Company's results of operations are
influenced by a variety of factors, including general economic conditions, the
condition of the microcomputer and related products industry, shifts in demand
for or availability of microcomputer and related products and industry
announcements of new products or upgrades. Sales can be dependent on specific
product categories and any change in demand for or supply of such products could
have a material adverse effect on the rate of growth of the Company's sales. The
Company's operating results are also highly dependent upon its level of gross
profit as a percentage of net sales which fluctuates due to numerous factors
including the availability of opportunistic purchases, changes in prices from
suppliers, general competitive conditions, and the relative mix of products sold
during the period. If sales do not meet expectations in any quarter or if the
Company experiences difficulty in controlling operating expenses or maintaining
gross margins, the market price of the Company's Common Stock could be
materially adversely effected. The Company expects gross margins to continue to
decline in fiscal 1997 primarily due to a continued shift in product mix and to
industry-wide pricing pressures. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

The technology sector of the United States stock markets has experienced
substantial gains in recent months, and the market price of the Company's Common
Stock has, likewise, increased during this period. The financial and trade press
have attributed these gains to a number of factors. The deterioration of other
conditions which favor the technology sector or the stock markets in general or
the Company in particular, whether or not such events relate to or reflect upon
the Company's operating performance, could adversely affect the market price of
the Company's Common Stock. Furthermore, fluctuations in the Company's operating
results, increased competition, reduced vendor incentives and trade credit,
higher postage and operating expenses and other developments may impact public
perception and analyst reports regarding the Company which could have a
significant impact on the market price of the Common Stock.

BUSINESS INTERRUPTION; RELIANCE ON MANAGEMENT INFORMATION SYSTEMS

The Company believes that its success to date has been, and future results
of operations will be, dependent in large part upon its ability to provide
prompt and efficient service to customers. In addition, the Company's success is
largely dependent on the accuracy, quality and utilization of the information
generated by its management information systems, which affect its ability to
manage its sales, accounting, inventory and distribution systems. Although the
Company has redundant systems, with full data backup, a substantial interruption
in these systems or in the Company's telephone communication systems would have
a material adverse effect on the Company's business, results of operations and
financial condition. In addition, in connection with the move to the Company's
new sales and administrative facility, the Company is upgrading its computer
equipment and there can be no assurance that the transition to the new equipment
will be accomplished without interrupting the Company's business. See
"Business -- Technology Based Operations."

CHANGING METHODS OF DISTRIBUTION

The manner in which microcomputers and related products are distributed and
sold is changing, and new methods of distribution and sale, such as on-line
shopping services have emerged. Hardware and software manufacturers have sold,
and may intensify their efforts to sell, their products directly to end-users.
From time to time, certain manufacturers have instituted programs for the direct
sales of large order quantities of hardware and software to certain major
corporate accounts. These types of programs may continue to be developed and
used by various manufacturers. In addition, manufacturers may attempt to
increase the volume of software products distributed electronically to
end-users. An increase in the volume of products sold through or used by
consumers of any of these competitive programs or distributed electronically to
end-users could have a material adverse effect on the Company's business,
results of operations and financial condition.

STATE SALES OR USE TAX COLLECTION

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sales taxes on the sales of products shipped to that state's residents. The
United States Supreme Court recently affirmed its position that it is
unconstitutional for a state to impose sales or use tax collection obligations
on an out-of-state mail order company whose only contacts with the state are the
distribution of catalogs and other advertising materials through the mail and
the subsequent delivery of purchased goods by United States mail or by
interstate common carrier. If the Supreme Court changes its position or if
legislation is passed to overturn the Supreme Court's recent decision, the
imposition of a sales or use tax collection obligation on the Company in states
to which it ships products would result in additional administrative expenses to
the Company, could result in price increases to the customer or could otherwise
have a material adverse effect on the Company's business, results of operations
and financial condition. From time to time, legislation to overturn this
decision of the Supreme Court has been introduced, although to date, no such
legislation has been passed. See "Business -- Sales or Use Tax."

RISKS ASSOCIATED WITH FUTURE ACQUISITIONS

The Company may seek to acquire businesses to expand or complement its
operations. The magnitude, timing and nature of any future acquisitions will
depend on a number of factors, including suitable acquisition candidates, the
negotiation of acceptable terms, the Company's financial capabilities, and
general economic and business conditions. There is no assurance that the Company
will identify acquisition candidates that would result in successful
combinations or that any such acquisitions will be consummated on acceptable
terms. Any future acquisitions by the Company may result in potentially dilutive
issuances of equity securities, the incurrence of additional debt and
amortization of expenses related to goodwill and intangible assets, all of which
could adversely affect the Company's profitability. In addition, acquisitions
involve numerous risks, including difficulties in the assimilation of operations
of the acquired company, the diversion of management's attention from other
business concerns, risks of entering markets in which the Company has had no or
only limited direct experience and the potential loss of key employees of the
acquired company, all of which in turn, could have a material adverse effect on
the Company's business, results of operations and financial condition.

RISK OF INCREASING MARKETING, POSTAGE AND SHIPPING COSTS

The Company mails catalogs through the United States Postal Service,
generates sales leads through marketing and ships products to customers by
commercial delivery services. Shipping, postage and paper costs are significant
expenses in the operation of the Company's business. Historically, the Company
has experienced increases in postage and paper costs. There can be no assurance
that any such increases can be recouped through an increase in vendor supported
advertising rates or that the Company will be able to offset future increased
costs. The inability to pass on these increased costs could have a material
adverse effect on the Company's business, results of operations and financial
condition. In addition, the Company ships primarily through Federal Express, and
labor disputes or other service interruptions with Federal Express, the U.S.
Postal Service or other commercial carriers could have an adverse effect on the
Company's operating costs and ability to deliver products on a timely basis. See
"Business -- Marketing."

POSSIBLE NONRENEWAL OR CANCELLATION OF OUTSOURCING ARRANGEMENTS

The Company performs outsourcing services for certain manufacturers
pursuant to various arrangements. These parties may cancel such arrangements on
relatively short notice or fail to renew them upon expiration. There is no
assurance that the Company will be able to replace any manufacturers that
terminate or fail to renew their relationships with the Company. The failure to
maintain such arrangements or the inability to enter into new ones could have a
material adverse effect on the Company's business, results of operations and
financial condition.

DEPENDENCE ON KEY PERSONNEL

The Company's future success will be largely dependent on the efforts of
key management personnel, including Eric J. Crown, Chief Executive Officer,
Timothy A. Crown, President, and other key employees. The loss of one or more of
these key employees could have a material adverse effect on the Company's
business, results of operations and financial condition. The Company maintains
and is the beneficiary of a

7
<PAGE> 9

$1,000,000 key-man life insurance policy on each of Eric J. Crown and Timothy A.
Crown. In addition, the Company believes that its future success will be largely
dependent on its continued ability to attract and retain highly qualified
management, sales and technical personnel, and there can be no assurance that
the Company will be able to attract and retain such personnel. Further, the
Company makes a significant investment in the training of its sales account
executives. The inability of the Company to retain such personnel or to train
them rapidly enough to meet its expanding needs could cause a decrease in the
overall quality and efficiency of its sales staff, which could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business -- Personnel and Training" and "Management."

CONTROL BY EXISTING STOCKHOLDERS

Eric J. Crown, Chief Executive Officer, and Timothy A. Crown, President,
beneficially own in the aggregate approximately 23% of the outstanding Common
Stock. Because of their beneficial stock ownership, these stockholders are in a
position to continue to influence the election of the members of the Board of
Directors and decisions requiring stockholder approval.

SHARES ELIGIBLE FOR FUTURE SALE

As of the date of this Prospectus, the Company had 6,644,849 shares of
Common Stock outstanding, of which 5,136,791 are freely tradeable. The 1,508,058
remaining shares are held by certain executive officers, directors and
stockholders who, together with the Company, have agreed not to sell, contract
to sell, or otherwise dispose of, any shares of Common Stock without the consent
of Montgomery Securities for a period of 120 days after November 1, 1996. Upon
expiration of such agreements, such shares will be eligible for sale in the
public markets in accordance with Rule 144 ("Rule 144") promulgated under the
Securities Act. In addition, there are outstanding options to purchase a total
of 657,417 shares of Common Stock. Except as limited by the agreements described
above and by Rule 144 volume limitations applicable to affiliates, shares issued
upon the exercise of stock options generally are available for sale in the open
market. Future sales of such Common Stock and additional presently indeterminate
shares of Common Stock which may be issued by the Company in the future,
including the Common Stock offered by this Prospectus and Common Stock subject
to outstanding options could adversely affect the prevailing market price of the
Common Stock.

ANTI-TAKEOVER EFFECT OF CHARTER AND BYLAW PROVISIONS

The Company's Certificate of Incorporation and Bylaws empower the Board of
Directors, without approval of the stockholders, to fix the rights and
preferences and to issue shares of preferred stock, prohibit a substantial
stockholder of the Company from entering into a business combination or
otherwise significantly increasing its interest in the stock or assets of the
Company without the consent of the Board of Directors or a two-thirds majority
of the stockholders of the Company, prohibit stockholders of the Company from
calling a special meeting unless requested by at least 25% of the outstanding
voting shares, and require that the Board of Directors be divided into three
classes, one of which classes would be elected each year. These provisions could
have the effect of deterring unsolicited takeovers or other business
combinations or delaying or preventing changes in control or management of the
Company, including transactions in which stockholders might otherwise receive a
premium for their shares over then-current market prices. In addition, these
provisions may limit the ability of stockholders to approve transactions that
they may deem to be in their best interests.

8
<PAGE> 10

USE OF PROCEEDS

The Selling Securityholders will receive all of the proceeds from the sale
of the Common Stock offered hereby. The Company will not receive any of the
proceeds from the sale of the Common Stock offered hereby. However, if all of
the outstanding Warrants held by the Selling Securityholders were exercised
other than on a net basis as permitted in the applicable warrant purchase
agreements, the Company would receive gross proceeds of $776,250, which proceeds
the Company expects to use for general corporate purposes. If the Warrants are
exercised on a net basis, the Company will issue fewer shares thereunder and
will not receive any proceeds therefrom.

DIVIDEND POLICY

The Company anticipates that all of its earnings in the foreseeable future
will be retained to finance the growth and development of its business and to
repay indebtedness, and therefore the Company does not anticipate paying cash
dividends on its Common Stock in the foreseeable future. In addition, the
Company's credit agreement contains financial covenants which prohibit the
Company from paying cash dividends without its lender's consent. See
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations -- Liquidity and Capital Resources."

9
<PAGE> 11

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth the selected consolidated financial and
operating data for the Company. The selected "Statement of Earnings Data" and
"Balance Sheet Data" presented below for, and as of the end of, each of the
years in the five-year period ended June 30, 1996 are derived from the
consolidated financial statements of the Company, which financial statements
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants. The selected "Statement of Earnings Data" and "Balance Sheet Data"
presented below for, and as of, the three months ended September 30, 1995 and
1996 are derived from the unaudited interim consolidated financial statements of
the Company which, in the opinion of management, have been prepared on the same
basis as the audited consolidated financial statements and include all
adjustments, consisting only of normal recurring adjustments, which management
considers necessary for a fair presentation of the financial data shown. The
results of operations for the three months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the year ending June
30, 1997. This information should be read in conjunction with the consolidated
financial statements and the notes thereto incorporated herein by reference and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
---------------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1995 1996
-------- -------- --------- --------- ---------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales.......................... $117,740 $142,951 $ 170,400 $ 244,953 $ 342,813 $ 70,777 $ 102,383
Cost of goods sold................. 99,859 118,194 144,186 207,104 294,292 60,739 88,434
-------- -------- -------- -------- -------- ------- --------
Gross profit....................... 17,881 24,757 26,214 37,849 48,521 10,038 13,949
Selling, general and administrative
expenses(1)...................... 16,269 22,831 23,742 31,848 38,917 8,139 10,919
-------- -------- -------- -------- -------- ------- --------
Earnings from operations........... 1,612 1,926 2,472 6,001 9,604 1,899 3,030
Non-operating expense (income),
net.............................. 144 355 409 663 136 79 (45)
-------- -------- -------- -------- -------- ------- --------
Earnings before income taxes....... 1,468 1,571 2,063 5,338 9,468 1,820 3,075
Income tax expense................. 595 365 561 2,114 3,748 721 1,217
-------- -------- -------- -------- -------- ------- --------
Net earnings....................... $ 873 $ 1,206 $ 1,502 $ 3,224 $ 5,720 $ 1,099 $ 1,858
======== ======== ======== ======== ======== ======= ========
Net earnings per share(2).......... $ 0.61 $ 0.89 $ 1.08 $ 0.24 $ 0.32
Shares used in per share
calculation(2)................... 3,092 3,711 5,290 4,645 5,823
OPERATING DATA:
"Insight" catalogs distributed..... 0 657,000 2,667,000 5,740,000 12,880,000 3,348,000 3,069,000
Account executives (end of
period).......................... 102 114 143 239 321 222 388
Orders filled...................... 179,000 197,000 261,000 406,000 518,000 114,000 135,000
Average order size................. $ 658 $ 724 $ 644 $ 598 $ 656 $ 617 $ 751
Inventory turnover(3).............. 16x 17x 21x 21x 21x 15x 23x
</TABLE>

<TABLE>
<CAPTION>
AS OF
AS OF JUNE 30, SEPTEMBER 30,
---------------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1995 1996
-------- -------- --------- --------- ---------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................... $ 802 $ 1,661 $ 1,922 $ 21,920 $ 34,567 $ 28,066 $ 34,407
Total assets....................... 16,399 18,242 27,732 42,402 73,618 59,831 79,375
Short-term debt.................... 3,077 3,006 7,057 -- -- -- --
Long-term debt, excluding current
portion.......................... 496 371 1,015 6,541 -- 14,115 --
Stockholders' equity............... 1,704 2,910 3,465 18,561 41,785 19,679 43,975
</TABLE>

- ---------------
(1) For a discussion of the adoption of American Institute of Certified Public
Accountants Statement of Position 93-7 "Reporting on Advertising Costs" in
the fourth quarter of fiscal 1995, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

(2) Net earnings per share and shares used in per share calculation for the
years ended June 30, 1994 and 1995 are pro forma and unaudited and (i) for
fiscal 1994 and fiscal 1995, reflect the elimination of executive
compensation expense in excess of the amounts due under employment contracts
with two officers effective as of October 1, 1994 and (ii) for fiscal 1994,
reflect the additional income taxes on S corporation earnings assuming an
effective tax rate of 39.6%. Certain subsidiaries of the Company were S
corporations prior to June 30, 1994 and were not subject to federal and
state income taxes. As a result of these adjustments, pro forma net earnings
are $1,889,000 and $3,307,000 for the year ended June 30, 1994 and 1995,
respectively. Shares used in per share calculation are calculated using the
treasury stock method. Earnings per share calculations reflect the
reincorporation of the Company as a Delaware corporation and the related
share exchange. Note 15 of Notes to Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended June
30, 1996.

(3) Inventory turnover is calculated by dividing cost of goods sold for the
period by the average of the beginning and ending inventory for the period.
Inventory turnover for the three-month periods is annualized.

10
<PAGE> 12

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

The following Management's Discussion and Analysis of Financial Conditions
and Results of Operations contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors including those set forth under "Risk Factors" and elsewhere in this
Prospectus. The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto incorporated by reference in
this Prospectus.

OVERVIEW

The Company commenced operations in 1988 as a direct marketer of hard disk
drives and other mass storage products. In fiscal 1991, the Company began
marketing its own Insight-brand microcomputers and in fiscal 1992 and 1993 added
peripherals, software and other name brand microcomputers to its product line.
Through fiscal 1992, the Company based its marketing practices primarily on
advertising in computer magazines and the use of inbound toll-free
telemarketing. In fiscal 1993, the Company shifted its marketing strategy to
include the publication of proprietary catalogs and the use of outbound account
executives focused on the business, education and government markets. During
fiscal 1995, the Company began to de-emphasize the sale of Insight-brand
computers and discontinued the sale of Insight-brand computers in the second
quarter of fiscal 1996. Although the cost savings from this decision have
positively impacted earnings from operations, gross margin has been negatively
affected. The Company expects gross margins to continue to decline in fiscal
1997 primarily due to a continued shift in product mix and to industry-wide
pricing pressures.

In fiscal 1996, Insight increased its focus on the business, education and
government markets, which aggregated approximately 80% of its business in the
fourth quarter of fiscal 1996. During fiscal 1996, the Company doubled its
catalog circulation to generate leads and aggressively tested new lists. The
Company expects the rate of growth in catalog circulation to decrease in the
future as the Company, using information generated from such testing, targets
mailings to its best prospective customers and increases its focus on
penetrating existing accounts. To that end, the Company has recently hired a
number of senior sales managers and account executives, and plans to continue to
actively increase its account executive base for the foreseeable future.

In order to leverage its infrastructure, the Company, in fiscal 1992, began
outsourcing direct marketing services to third parties, including the
distribution of catalogs and mailings featuring brand name or Insight-brand
products. The Company initiated its turnkey direct marketing outsourcing program
for leading manufacturers in fiscal 1993. Under most of the Company's
outsourcing arrangements, the Company takes title to inventories of products and
assumes the risk of collection of accounts receivable in addition to its sales
functions. Revenues derived from the sales of such products are included in the
Company's net sales. Certain other outsourcing arrangements are primarily
service-based, and the Company generally derives net sales from these types of
arrangements based on a percentage of the revenue generated from products sold.
Accordingly, the rate of the Company's net sales growth in future periods may be
affected by the mix of outsourcing arrangements which are in place from time to
time. Outsourcing represented 12.2% and 9.8% of the Company's sales in fiscal
1995 and fiscal 1996, respectively.

Generally, pricing in the microcomputer and related products industry is
very aggressive. The Company expects pricing pressures to continue and that it
will be required to reduce its prices to remain competitive. Such a reduction
could have a material adverse effect on the Company's financial condition and
results of operations.

11
<PAGE> 13

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain selected
consolidated statement of earnings data as a percentage of net sales:

<TABLE>
<CAPTION>
THREE
MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
--------------------- -------------
1994 1995 1996 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales........................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of goods sold.............................. 84.6 84.6 85.8 85.8 86.4
----- ----- ----- ----- -----
Gross profit..................................... 15.4 15.4 14.2 14.2 13.6
Selling, general and administrative expenses..... 13.9 13.0 11.4 11.5 10.6
----- ----- ----- ----- -----
Earnings from operations......................... 1.5 2.4 2.8 2.7 3.0
Non-operating expense (income), net.............. 0.3 0.3 0.0 0.1 0.0
----- ----- ----- ----- -----
Earnings before income taxes..................... 1.2 2.1 2.8 2.6 3.0
Income tax expense............................... 0.3 0.8 1.1 1.0 1.2
----- ----- ----- ----- -----
Net earnings..................................... 0.9% 1.3% 1.7% 1.6% 1.8%
===== ===== ===== ===== =====
</TABLE>

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1995

Net Sales. Net sales increased $31.6 million, or 44.7%, to $102.4 million
in the first quarter of fiscal 1997 from $70.8 million in the first quarter of
fiscal 1996. The Company's net sales are comprised of two components: direct
marketing sales and sales from outsourcing arrangements with manufacturers and
third-party marketers. Sales derived from direct marketing increased $30.0
million, or 47.8%, to $92.8 million in the first quarter of fiscal 1997 from
$62.8 million in the first quarter of fiscal 1996. The increase in direct
marketing sales resulted primarily from the increased demand for notebook
computers, the continued shift to business customers (including education and
government entities) and the corresponding increase in average order size of
22.4% to $751 in the first quarter of fiscal 1997 compared to $617 in the first
quarter of fiscal 1996, as well as the continued building of the Company's
customer base. The sales increase occurred despite a decrease in the "Insight"
catalog circulation from 3.3 million in the first quarter of fiscal 1996 to 3.1
million in the first quarter of fiscal 1997. The Company is refining its
circulation strategy with the goal of more efficiently targeting its business
customer audience and improving the profitability and return on investment of
its marketing activities. Sales derived from outsourcing arrangements increased
$1.6 million, or 19.6%, to $9.6 million in the first quarter of fiscal 1997 from
$8.0 million in the first quarter of fiscal 1996. The increase in sales from
outsourcing services resulted from the addition of outsourcing contracts with
manufacturers and increased sales from existing outsourcing arrangements.

Gross Profit. Gross profit increased $3.9 million, or 39.0%, to $13.9
million in the first quarter of fiscal 1997 from $10.0 million in the first
quarter of fiscal 1996. As a percentage of sales, gross margin decreased from
14.2% in the first quarter of fiscal 1996 to 13.6% in the first quarter of
fiscal 1997. The gross margin on the Company's direct marketing sales decreased
due to industry pricing pressure, but was partially offset by the Company's
ability, as a result of its increased volume and financial position, to take
advantage of vendor discounts, rebates and bulk purchasing opportunities. In
addition, the Company's decision to eliminate its private label line and instead
emphasize other name brand computers has had a negative impact on the gross
margin, although the cost savings from this decision have positively affected
earnings from operations. Sales of Insight-brand computers accounted for 11% of
sales in the first quarter of fiscal 1996, but did not account for any sales in
the first quarter of fiscal 1997. Additionally, the Company has experienced
significant growth in the name brand microcomputer category which carries a
lower gross margin. The Company expects gross margins to continue to decline in
fiscal 1997 primarily due to the continued shift in product mix and to
industry-wide pricing pressures. The gross margin on the Company's outsourcing
business also declined primarily as a result of a decrease in the Company's
service-based outsourcing business, which has margins that are higher than those
in other outsourcing arrangements.

12
<PAGE> 14

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $2.8 million, or 34.1%, to $10.9 million in
the first quarter of fiscal 1997 from $8.1 million in the first quarter of
fiscal 1996, and decreased as a percentage of net sales to 10.6% in the first
quarter of fiscal 1997 from 11.5% in the first quarter of fiscal 1996. The
decline was primarily attributable to the Company's continued shift in marketing
strategy, the elimination of higher general and administrative expenses
associated with the Insight-brand computers and increased economies of scale as
general and administrative expenses were allocated over a greater net sales
base. In addition, the Company decreased circulation of catalogs, reduced more
expensive advertising in computer publications and received greater cooperative
marketing reimbursements from manufacturers.

During the fourth quarter of fiscal 1995, the Company adopted the American
Institute of Certified Public Accountants Statement of Position 93-7, "Reporting
on Advertising Costs" (SOP 93-7). SOP 93-7 requires the capitalization and
amortization of direct response advertising costs over their expected revenue
stream, generally three months. This adjustment resulted in a net increase of
$143,000 and a net deferral of $85,000 of advertising costs for the three months
ended September 30, 1996 and 1995, respectively.

Non-Operating Expense (Income), net. Non-operating expense (income), net,
which consists primarily of interest, changed from $79,000 of interest expense,
net in the first quarter of fiscal 1996 to $45,000 of interest income, net in
the first quarter of fiscal 1997. Interest expense primarily relates to
borrowings under the Company's line of credit which have been necessary to
finance the Company's growth. Interest expense has decreased as a result of the
use of the net proceeds from Insight's initial and second public offerings in
January 1995 and November 1995. Additionally, the interest expense associated
with the Company's new facility has been capitalized. Interest income is
generated by the Company through overnight investments in government repurchase
agreements with a financial institution acting as the principal.

Income Tax Expense. The Company's effective tax rate was 39.6% in each of
the quarters ended September 30, 1996 and 1995.

FISCAL 1996 COMPARED TO FISCAL 1995

Net Sales. Net sales increased $97.9 million, or 40.0%, to $342.8 million
in fiscal 1996 from $244.9 million in fiscal 1995. Sales derived from direct
marketing increased $94.3 million, or 43.9%, to $309.3 million in fiscal 1996
from $215.0 million in fiscal 1995. This increase resulted primarily from an
increase in the number of account executives from 239 to 321, increased emphasis
on outbound telemarketing, a more than doubling in "Insight" catalog circulation
from 5,740,000 to 12,880,000, and an increase in the Company's customer base and
average order size. A significant factor in the average order size increase was
an increase in sales of notebook computers. Sales derived from outsourcing
arrangements increased $3.6 million, or 12.0%, to $33.5 million in fiscal 1996
from $29.9 million in fiscal 1995. The increase in outsourcing sales resulted
from increased sales from existing outsourcing arrangements and the addition of
new outsourcing contracts with manufacturers and retailers, offset in part by a
de-emphasis of sales to third-party marketers and the termination of outsourcing
services provided to Ambra, a subsidiary of IBM.

Gross Profit. Gross profit increased $10.7 million, or 28.2%, to $48.5
million in fiscal 1996 from $37.8 million in fiscal 1995. As a percentage of
sales, gross margin decreased from 15.4% in fiscal 1995 to 14.2% in fiscal 1996.
The gross margin on the Company's direct marketing sales decreased due to
industry pricing pressures but was partially offset by the Company's ability, as
a result of its increased volume and financial position, to take advantage of
vendor discounts, rebates and bulk purchasing opportunities. In addition, the
Company's decision to eliminate its private label computer line and instead
emphasize other name brand computers has had a negative impact on the gross
margin, although the cost savings from this decision has positively affected
operating margins. Sales of Insight-brand computers accounted for 21% of sales
in fiscal 1995 but only 3% of sales in fiscal 1996. Additionally, the Company
experienced significant growth in the notebook category which carries a lower
gross margin. The gross margin on the Company's outsourcing business also
declined primarily as a result of the loss of the Company's outsourcing business
with Ambra, which had a higher gross margin than other outsourcing arrangements.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $7.1 million, or 22.3%, to $38.9 million in
fiscal 1996 from $31.8 million in fiscal 1995, but decreased as a

13
<PAGE> 15

percent of sales to 11.4% in fiscal 1996 from 13.0% in fiscal 1995. This decline
was attributable to increased economies of scale, a $137,500 reduction in
compensation expense and the Company's continued shift in its marketing
strategy, including the reduction in advertising costs as a percent of sales due
to the increase in cooperative marketing reimbursements from manufacturers and a
reduction of more expensive advertising in computer publications. These
decreases were partially offset by additional costs associated with an increase
in catalog circulation, the number of account executives and losses experienced
in the initial months of new outsourcing contracts.

During the fourth quarter of fiscal 1995, the Company adopted the American
Institute of Certified Public Accountants Statement of Position 93-7, "Reporting
on Advertising Costs" (SOP 93-7), that requires the capitalization and
amortization of direct response advertising costs over their expected revenue
stream (generally three months). This adjustment resulted in deferrals of
advertising costs of $143,000 and $214,000 in fiscal 1996 and fiscal 1995,
respectively.

Non-Operating Expense, net. Non-operating expense, net, which consists
primarily of interest expense, decreased from $633,000 in fiscal 1995 to
$136,000 in fiscal 1996. Interest expense primarily relates to borrowings under
the Company's line of credit which have been necessary to finance the Company's
growth. Interest expense has decreased because of Insight's initial and second
public offerings in January 1995 and November 1995 and a more favorable interest
rate available to the Company under its new credit facility entered in June
1995. Additionally, the interest expense associated with the Company's new
facility has been capitalized.

Income Tax Expense. The Company's effective tax rate was 39.6% in each of
fiscal 1996 and 1995.

FISCAL 1995 COMPARED TO FISCAL 1994

Net Sales. Net sales increased $74.5 million, or 43.8%, to $244.9 million
in fiscal 1995 from $170.4 million in fiscal 1994. Sales derived from direct
marketing increased $67.5 million, or 45.8%, to $215.0 million in fiscal 1995
from $147.5 million in fiscal 1994. This increase resulted primarily from a more
than doubling in catalog circulation ("Insight" and outsourcing) from 3,363,000
to 7,451,000, added account executives and the continued building of the
Company's customer base. Sales from outsourcing arrangements increased $7.0
million, or 30.6%, to $29.9 million in fiscal 1995 from $22.9 million in fiscal
1994. The increase in outsourcing sales resulted from increased sales from
existing outsourcing arrangements and the addition of new outsourcing contracts
with manufacturers and retailers, offset in part by a de-emphasis of sales to
third-party marketers and the termination of outsourcing services provided to
Ambra, a subsidiary of IBM.

Gross Profit. Gross profit increased $11.6 million, or 44.3%, to $37.8
million in fiscal 1995 from $26.2 million in fiscal 1994. As a percentage of
sales, gross margin remained constant at 15.4% in fiscal 1995. Gross margin on
the Company's direct marketing sales decreased due to increased industry pricing
pressures, but was offset by the Company's ability to take advantage of vendor
payment term discounts, increased bulk purchasing opportunities and increased
price protection received from vendors. Additionally, gross margin was
positively affected by the Company's new outsourcing business with Ambra, a
subsidiary of IBM, which had higher gross margin than its other outsourcing
arrangements since the Company did not maintain inventory and did not ship
products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $8.1 million, or 34.1%, to $31.8 million in
fiscal 1995 from $23.7 million in fiscal 1994, but decreased as a percent of
sales to 13.0% in fiscal 1995 from 13.9% in fiscal 1994. This decline was
attributable to increased economies of scale, a $927,000 reduction in
compensation expense and the Company's continued shift in its marketing
strategy, including the increase in circulation of catalogs offset by an
increase in cooperative marketing reimbursements from manufacturers and a
reduction in advertising costs as a percent of sales. These declines were
partially offset by additional costs associated with an increase in the number
of account executives and the addition of new outsourcing contracts which
typically incur operating losses during their initial months of operation.

14
<PAGE> 16

capitalization and amortization of direct response advertising costs over their
expected revenue stream (generally three months). This adjustment resulted in
deferrals of advertising costs of $214,000 in fiscal 1995.

Non-Operating Expense, net. Non-operating expense, net, which consists
primarily of interest expense, increased from $409,000 in fiscal 1994 to
$663,000 in fiscal 1995. This increase was due to increased borrowings under the
Company's line of credit incurred to finance the Company's growth.

Income Tax Expense. The Company's effective tax rate for fiscal 1995 was
39.6%. On June 30, 1994, a corporate reorganization occurred in which certain
corporations owned by individuals who at that time were the Company's sole
stockholders became subsidiaries of the Company. The subsidiaries elected to be
treated as S corporations for federal income taxes prior to June 30, 1994 and,
accordingly, were not subject to federal and state income taxes. At June 30,
1994, these subsidiaries terminated their S corporation elections and became
subject to federal and state income taxes. Accordingly, the primary difference
between the Company's effective tax rate of 39.6% and the tax rate shown on the
financial statements of 27.2% in fiscal 1994 relates to income tax expense that
would have been incurred by these S corporation subsidiaries had they been taxed
as C corporations.

SEASONALITY AND QUARTERLY FLUCTUATIONS

The Company has historically experienced, and expects to continue to
experience, seasonal fluctuations in its net sales, earnings from operations and
net earnings. As the Company continues to increase its percentage of sales from
business, education and government markets, management believes that the
Company's quarterly net sales will be less impacted by seasonality. The
following table sets forth certain quarterly information for the Company's two
most recent fiscal years and the first quarter of fiscal 1997:

<TABLE>
<CAPTION>
FISCAL
FISCAL 1995 FISCAL 1996 1997
-------------------------------------- -------------------------------------- --------
SEPT. DEC. MAR. JUNE SEPT. DEC. MAR. JUNE SEPT.
30, 31, 31, 30, 30, 31, 31, 30, 30,
1994 1994 1995 1995 1995 1995 1996 1996 1996
------- ------- ------- ------- ------- ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales.......................... $53,726 $66,384 $64,238 $60,605 $70,777 $76,431 $94,655 $100,950 $102,383
Gross profit....................... 8,921 10,014 9,848 9,066 10,038 11,036 13,431 14,016 13,949
Earnings from operations........... 1,162 1,615 1,517 1,707 1,899 2,094 2,673 2,938 3,030
Net earnings....................... $ 596 $ 840 $ 833 $ 955 $ 1,099 $ 1,232 $ 1,599 $ 1,790 $ 1,858
Net earnings per share............. $ 0.22(1) $ 0.27 $ 0.20 $ 0.21 $ 0.24 $ 0.24 $ 0.29 $ 0.31 $ 0.32
Shares used in per share
calculation...................... 3,092 3,092 4,123 4,539 4,645 5,202 5,585 5,727 5,823
</TABLE>

- ---------------
(1) Pro forma net earnings per share for the quarter ended September 30, 1994 of
$0.22 includes the impact of pro forma adjustments as described in Note 15
of Notes to Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended June 30, 1996.

LIQUIDITY AND CAPITAL RESOURCES

In January 1995, the Company completed its initial public offering of
Common Stock. The Company received approximately $11.9 million, net of
underwriting discounts, commissions and offering expenses. The Company primarily
used the proceeds to repay indebtedness under its then-existing line of credit
and to repay certain stockholder loans.

In November 1995, the Company completed a second public offering of Common
Stock. The Company received approximately $16.6 million, net of underwriting
discounts, commissions and offering expenses. The Company used a substantial
portion of the net proceeds to repay amounts outstanding under the line of
credit. The balance of the net proceeds from that offering were used for general
corporate purposes.

In November 1996, the Company completed a third public offering of Common
Stock. The Company received approximately $36.92 million, net of underwriting
discounts and commissions, but before deducting estimated offering expenses of
$350,000, which are payable by the Company. The Company plans to use the net
proceeds from that offering for general corporate purposes, including working
capital, capital expenditures, facilities expansion, and potential acquisitions
of businesses to expand or complement its operations.

15
<PAGE> 17

The Company's primary capital needs have been to fund the working capital
requirements and capital expenditures necessitated by its sales growth. During
fiscal 1996, the Company's capital expenditures totaled approximately $4.9
million primarily for the purchase of 17 acres of vacant land and the
construction, in progress, of a facility on that site which will consolidate its
sales, executive and administrative functions. Construction is expected to be
completed in fiscal 1997. Based on current plans, the Company estimates that it
will incur approximately $11 million in capital expenditures, the majority of
which will be incurred in fiscal 1997, related to the acquisition of the land
and constructing and equipping the facility. Capital expenditures for the first
three months of fiscal 1997 were approximately $3.0 million.

The Company's net cash provided by operating activities was $6.8 million
for the three months ended September 30, 1996 as compared to $7.9 million used
in operating activities for the three months ended September 30, 1995. The
positive cash flow in the current year is primarily due to a $3.4 million
increase in accounts payable net earnings of $1.8 million and a $.9 million
decrease in inventory.

Cash flows from operations generally have been negative due primarily to
increases in accounts receivable and inventories necessitated by the sales
growth of the Company and the continued shift from sales to the home market to
sales in the business, education and government markets. Accounts receivable
have increased primarily due to an increase in open account purchases by
commercial customers due to the Company's continued efforts to increase its
sales to end users in the business, education and government markets as well as
the overall Company sales increase. The Company's net cash used by operating
activities was $7.7 million for fiscal 1996, including $25.8 million and $4.5
million to fund the increase in account receivables and inventories,
respectively. These increases were primarily funded with the proceeds from the
public offerings of Common Stock and an increase of trade accounts payable of
$14.3 million.

In June 1995, the Company entered into a new $30 million credit facility
with a finance company. The agreement provides for cash advances outstanding at
any one time up to a maximum of $22.5 million on the line of credit, subject to
limitations based upon the Company's eligible accounts receivable and
inventories. As of June 30, 1996, the Company had no outstanding balance under
its line of credit, and $22.5 million was available under the line of credit at
that date. Cash advances bear interest at the London Interbank Offered Rate
(LIBOR) plus 1.90% (7.37% at June 30, 1996) payable monthly. The additional $7.5
million of the credit facility is used to facilitate the purchases of
inventories from certain vendors and is classified on the balance sheet as
accounts payable. The credit facility expires in June 1998. The line is secured
by substantially all of the assets of the Company. The line of credit contains
various covenants including the requirement that the Company maintain a
specified dollar amount of tangible net worth.

The Company's future capital requirements include financing the growth of
working capital items such as accounts receivable and inventories, the
construction of the Company's sales and administrative facility, and the
purchase of equipment, furniture and fixtures. The Company anticipates that cash
flow from operations, amounts available under its existing line of credit and
the proceeds of this offering should be adequate to support the Company's
presently anticipated cash and working capital requirements through the
foreseeable future.

INFLATION

Management does not believe that inflation has had a material effect on the
Company's results of operations during the past three fiscal years.

NEW ACCOUNTING STANDARD

Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" (SFAS 123) requires that companies can elect to
account for stock-based compensation plans using a method based upon fair value
or can continue measuring compensation expense for those plans using the
"intrinsic value method" prescribed by Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" (APB 25). Companies electing to
continue using the intrinsic value method must make pro forma disclosures in
fiscal 1997 of net earnings and earnings per share as if the "fair value based
method" had been applied. The Company will continue using APB 25; therefore,
SFAS 123 is not expected to have an impact on the Company's results of
operations or financial position.

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<PAGE> 18

BUSINESS

The following Business section contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth under "Risk Factors" and
elsewhere in this Prospectus.

GENERAL

Insight is a leading direct marketer of microcomputers, peripherals and
software. The Company markets primarily to small and medium-sized enterprises
("SMEs"), comprised of 10 to 1,000 employees, through a combination of targeted
direct mail catalogs, advertising in computer magazines and publications and a
strong outbound telemarketing sales force. The Company offers an extensive
assortment of more than 20,000 SKUs of microcomputer hardware and software
including such popular name brands as AST, Hewlett-Packard, IBM, Microsoft,
Seagate, Toshiba and Western Digital. Insight's aggressive marketing strategies,
knowledgeable sales force and streamlined distribution, together with its
advanced proprietary information system, have resulted in high customer loyalty
and strong, profitable growth.

INDUSTRY BACKGROUND

According to industry data published in August 1996, domestic sales of
microcomputers, peripherals, software and accessories reached $64.3 billion in
1995. Such sales are projected to reach $131.1 billion in 1999, representing a
compound annual growth rate of 20%. The Company believes that the sales of
microcomputers and related products have increased principally as a result of
the following: (i) decreases in prices of microcomputers, peripherals and
software resulting primarily from intense competition among manufacturers,
retailers and resellers; (ii) improvements in microcomputer hardware performance
and development of new software applications; (iii) increased use of
microcomputers by businesses, education institutions and governments; (iv)
increased user familiarity with microcomputers; (v) rapid technological advances
and resulting short product life cycles; and (vi) the emergence of industry
standards and component commonality.

The market for microcomputers and related products is served by a variety
of distribution channels, and intense competition for market share has forced
microcomputer manufacturers to seek new channels through which to distribute
their products. According to industry data, the direct marketing channel is one
of the fastest growing segments of the U.S. PC product resellers market, and is
expected to increase at a compound annual growth rate of 23% from $4.8 billion
in 1995 to $11.2 billion in 1999.

Many individuals and businesses, increasingly familiar with microcomputers,
seem to have become more receptive to direct marketing and now make their
purchase decisions based primarily on product selection and availability, price,
convenience and customer service. Direct marketers generally are able to offer
broader product selection, lower prices and greater purchasing convenience than
traditional retail stores.

The Company believes new entrants into the direct marketing channel must
overcome a number of significant barriers to entry, including the time and
resources required to build a customer base of sufficient size, quality and
responsiveness for cost-effective circulation, the significant investment
required to develop the information and operating infrastructure required for a
direct catalog marketer, the advantages enjoyed by larger established
competitors in terms of purchasing and operating efficiencies, the established
relationships of manufacturers who may be reluctant to allocate product and
cooperative advertising funds to additional participants and the difficulty of
identifying and recruiting management personnel with significant relevant
experience.

The Company believes that it will continue to benefit from industry changes
as a cost-effective provider of a full range of microcomputer and related
products through direct marketing. The Company believes that traditional
distribution channels, such as retail stores, have not satisfied the key
customer purchase criteria of product selection and availability, price,
convenience and service, thus creating an opportunity for growth of direct
marketers of microcomputer products such as the Company.

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<PAGE> 19

OPERATING STRATEGY

The Company's objective is to become the leading direct marketer of
microcomputer and related products to the computer literate end-user. The key
elements of the Company's strategy are as follows:

Small to Medium-Sized Enterprises (SME) Market Focus. The Company targets
the SME market, businesses with 10 to 1,000 employees, which it believes is one
of the most valuable segments of the computer market. The Company's operating
model positions it to more effectively serve this business segment of the market
through its extensive product selection, high service levels, cost-effective
distribution system, and technological innovation. The Company believes these
business customers represent the most attractive segment of the industry because
they demand leading, high-performance technology products, purchase frequently,
are value conscious and require less technical support.

Targeted Marketing. The Company has continued to increase its focus on
outbound telemarketing and, to this end, has increased the number of account
executives at a compound annual rate of 33% over the last four years to 321 in
fiscal 1996. To support this effort, the Company has prioritized its database,
assigned account responsibility and enhanced sales training. In addition, the
Company is refining its circulation strategy to more efficiently target its
business customer audience and improve the profitability and return on
investment of its catalog operations. The Company continues to offer its
products through integrated direct marketing that includes print, direct mail,
catalogs, inbound and outbound telemarketing, electronic marketing such as the
Internet, package inserts and fax broadcasts.

Building Customer Loyalty. The Company strives to create a strong,
long-term relationship with its customers to increase the productivity of its
existing accounts, encourage repeat buying and ensure customer satisfaction. The
Company believes that a key to building customer loyalty is a team of
knowledgeable and empowered account executives backed by a strong technical and
support staff. Most business customers are assigned a trained account executive
who handles customer orders, notifies them of products and services that may be
of specific interest and acts as a liaison between the customer and the rest of
the Company. The Company believes these strong one-on-one relationships improve
the likelihood that the customer will consider the Company for future purchases.
Product support technicians are available to customers and account executives
during an extended workday. As a result of this effort, more than 50% of the
Company's orders in each of fiscal 1995 and fiscal 1996 were placed by customers
who had previously purchased products from the Company.

Broad Selection of Branded Products. The Company provides the convenience
of one-stop shopping by offering its customers a broad, comprehensive selection
of more than 20,000 computer and computer-related products primarily based on
the Wintel standard. The Company has received authorization from and offers
brand name products of vendors, including, among others, AST, Hewlett-Packard,
IBM, Microsoft, Seagate, Toshiba and Western Digital. The Company's breadth of
product offering combined with its efficient, high-volume and cost-effective
direct marketing practices allow it to offer its customers competitive prices.
The Company has developed "direct-ship" programs with some of its suppliers
through the use of electronic data interchange, allowing it to expand further
its product offerings without increasing its inventory and handling costs or
exposure to inventory risk.

Efficient Technologically-Driven Operator. The Company has developed a
highly refined operating model to support an efficient fulfillment and
distribution infrastructure. The Company's business model has yielded inventory
turns approximating 21 times for each of the past three fiscal years. The
Company also uses technologically advanced, proprietary, real-time information
systems to enhance the integration of its sales, distribution and accounting
functions, with the goal of lowering operating expenses and further improving
customer service and satisfaction levels. To minimize its inventory exposure,
the Company uses a variety of inventory control procedures and policies,
including automated just-in-time management and electronic drop-ship programs
with vendors. In addition, the Company uses other automated systems involving
telephone, credit card processing, and electronic catalog production to further
streamline operations and to continue to improve profitability and increase
customer satisfaction. The Company has leveraged these core operating
competencies by offering outsourcing of direct marketing services to leading
manufacturers and expects to continue to opportunistically leverage these
capabilities in the future.

18
<PAGE> 20

GROWTH STRATEGY

The Company's growth strategy is to increase sales and earnings by (i)
increasing penetration of its existing customer base, (ii) leveraging its
existing infrastructure, (iii) expanding its product offerings and customer base
and (iv) utilizing its emerging technologies.

Increase Penetration of Existing Customer Base. The Company seeks to
become the primary source of computer and related products to its target market.
To achieve this goal, the Company's principal focus going forward will be to
increase penetration of existing accounts by developing the ranks of account
executives who focus on outbound telemarketing opportunities. The Company
believes proactive account management and the assignment of individual account
executives, dedicated to developing closer relationships with active business
customers, will enable it to increase the volume, frequency and breadth of the
business. The Company has more than tripled the number of its account executives
since 1992 to 388 at the end of the first quarter of fiscal 1997, a substantial
portion of which are dedicated to outbound telemarketing. In addition, the
Company has added four high-level sales managers to its management team in order
to enhance sales productivity. The Company continues to prioritize its customer
database to better understand and service its customers and to expand the
long-term nature of its customer relationships.

Leverage Existing Infrastructure. The Company has expended considerable
resources to develop its infrastructure to support its planned growth. Since the
end of fiscal 1995, the Company has added four senior sales managers, increased
the number of its account executives by 149, invested in system upgrades and
improvements and begun construction of a new sales and administrative facility.
The Company believes that these investments should allow the Company to increase
its sales without a corresponding increase in selling, general and
administrative expenses. The Company expects to continue to reduce its selling,
general and administrative expenses as a percent of sales to further improve
profitability through increased productivity of the new account executives,
cost-effective marketing, and economies of scale. In addition, the Company has
developed strong relationships with its vendors and continues to reduce
advertising expenses through increases in cooperative marketing reimbursements.
The Company intends to continue to leverage its core operations by offering
outsourcing of direct marketing services to leading manufacturers of
microcomputer and related products.

Expand Product Offering and Customer Base. The Company offers an extensive
assortment of products and has recently expanded its offerings through the use
of its proprietary technology which enables the Company to maintain a "virtual
inventory" through real-time access to vendor products via electronic data
interchange. The Company will continue to expand its product offerings through
increased use of the electronic drop-ship programs with vendors as well as
seeking new product authorizations as they become available to direct channels.
In addition, the Company, from time to time, analyzes acquisition opportunities
that would further expand and enhance its existing product offerings to the
business customer. The Company seeks to acquire new accounts through targeted
catalog mailings, its outbound telemarketing force, and its other marketing
strategies.

Utilize Emerging Technologies. The Company believes it has historically
been a leader in creating and capitalizing on emerging technologies within
direct marketing, and it expects to continue to capitalize on such new advances.
The Company has begun to and expects to continue to utilize emerging marketing
and distribution channels such as the Internet and on-line computer services to
distribute product information, provide product support, generate sales and
obtain additional customer leads. The Company believes that its business
customer audience is technologically sophisticated and will be early adopters of
such services. These new distribution channels continue to increase the scope of
the Company's marketing efforts, and management believes that they will lead to
increased sales and profitability. In particular, the Company believes that its
direct marketing capabilities will provide it a competitive advantage in the
rapidly expanding Internet commerce channel. The Company expects to further
utilize its direct marketing expertise in order fulfillment and distribution to
take advantage of these new direct marketing channels as they continue to
develop.

19
<PAGE> 21

MARKETING AND CUSTOMERS

The Company sells its products through the direct marketing channel. The
Company's marketing programs are designed to attract new customers and to
stimulate additional purchases from existing customers. Through its marketing
programs, the Company emphasizes its broad product offering, competitive
pricing, fast delivery, customer support and multiple payment options. The
Company uses a number of marketing techniques to reach existing and prospective
customers including catalogs, outbound telemarketing, advertising and specialty
marketing programs.

Outbound Telemarketing. The Company maintains a core group of outbound
telemarketing account executives who contact specified customers on a systematic
basis to generate additional sales. In addition, when time permits, these
account executives utilize various prospecting techniques in order to increase
the size of their customer base. The Company believes that SMEs respond
favorably to a one-on-one relationship with personalized, well-trained account
executives. Once established, these one-on-one relationships are maintained and
enhanced through frequent telecommunications and supplemented by customized
marketing materials designed to meet each customer's specific computing needs.
At September 30, 1996, the Company employed 388 account executives, an increase
of 75% from 222 account executives at September 30, 1995, a substantial portion
of which are focused on outbound marketing.

Catalogs. The Company's catalogs are mailed to the Company's customers and
to potential customers. During fiscal 1995 and 1996, the Company published and
distributed 5.7 million and 12.9 million catalogs, respectively. The Company
publishes three separate catalogs: a business catalog for SMEs and the education
and government markets; a network catalog for technology managers; and a general
catalog for non-business customers. Active customers receive a catalog several
times a year depending on their purchasing history. Each catalog provides
detailed product descriptions, manufacturers' specifications, pricing and the
Company's service and support features. As part of its outsourcing services, the
Company also produces catalogs for certain manufacturers. These catalogs are
circulated periodically, and for select manufacturers, the catalog is inserted
into the manufacturer's product packaging.

The Company's catalog circulation strategy is supported by sophisticated
database marketing techniques which identify customer needs through the
collection, analysis and delivery of customer and prospect information. Detailed
demographic, psychographic and behavioral data collected from internal and
external sources, allows the Company to create a composite picture of the best
customers and prospects.

Advertising. The Company places advertising in selected personal computer
and trade magazines, such as Computer Shopper and PC Magazine. These color
advertisements provide detailed product descriptions, manufacturers'
specifications and pricing information, and emphasize the Company's service and
support features. The Company uses 800-INSIGHT as the phone number in its
advertising as part of its brand awareness strategy. The Company also advertises
its sales oriented Web site through independent content providers on commercial
on-line services such as C/Net(@), AudioNet(@), Computer News Daily(@), and
Computer Shopper(@).

Specialty Marketing. Specialty marketing includes direct mail, other
inbound and outbound telemarketing services, bulletin board services, "fax on
demand" services, package inserts and fax broadcasts. The Company also
communicates with customers through the emerging technology of the Internet. The
Company has developed, and continuously updates, a Web site that features
selected product offerings and specials and other useful information.

Cooperative Marketing. The Company enters into cooperative marketing
agreements with product manufacturers. Under these agreements, the Company
places advertisements in catalogs and personal computer and trade magazines that
feature the manufacturer's product. The manufacturer may provide a mailing list
and generally reimburses the Company through discounts, advertising allowances,
price protections and rebates. No assurance can be given that the Company will
continue to receive such incentives or that it will be able to collect
outstanding amounts relating to these incentives in a timely manner or at all. A
reduction in or discontinuance of, a significant delay in receiving, or the
inability to collect such incentives could have a material adverse effect on the
Company's business, results of operations and financial condition.

20
<PAGE> 22

See "Risk Factors -- Reliance on Vendors; Allocation of Goods." Additionally,
the Insight logo and telephone number are included in promotions by selected
manufacturers and incoming calls are handled by Insight account executives. The
Company believes that cooperative marketing leverages the Company's marketing
reach and builds relationships with leading manufacturers. Cooperative marketing
reimbursements totaled $5.7 million in fiscal 1995 and $10.0 million in fiscal
1996.

Customers. The Company currently maintains an extensive database of
customers and potential customers. Based on dollar volume, approximate
percentages of net sales for fiscal 1996 to end-users in the Company's four
major market segments were as follows: business - 64%, education
institutions - 8%, government organizations - 5%, and home - 23%. The percentage
of sales to business customers has increased from 54% in fiscal 1995. No single
customer accounted for more than 3% of net sales during fiscal 1996.

SALES

Insight believes that its ability to establish and maintain long term
relationships and to encourage repeat purchases is dependent, in part, on the
strength of its account executives. Because its customers' primary contact with
the Company is through its account executives, the Company is committed to
maintaining a qualified and knowledgeable sales staff.

The Company emphasizes recruiting and training high-quality personnel. New
account executives are required to participate in an extensive training program
to develop proficiency and knowledge of the Company's products. This program
consists of class work focusing on technical product information, sales and
customer service and inbound and outbound sales experience. Additionally, the
Company, in conjunction with product manufacturers and distributors, sponsors
mandatory, weekly training sessions introducing new products and emphasizing
fast-selling products. The Company also has a training program which seeks to
refine sales skills and introduce new policies and procedures. The Company's
main sales division is open 365 days a year, 24 hours a day.

Each account executive is responsible for building a customer base. Most
first time callers are assigned to an account executive. All subsequent incoming
calls from that customer are then directed to this account executive. The
Company's information system allows on-line retrieval of relevant customer
information, including the customer's history and product information, including
list price, cost and availability, as well as upselling and cross-selling
opportunities. The account executive is empowered to negotiate sales prices and
is compensated based upon the gross profit dollars generated. Most account
executives also make outbound sales calls to customers. If required, a technical
product engineer can be conferenced into any customer telephone call to provide
additional assistance.

The Company attributes its high inbound call volume and favorable repeat
orders in part to the strength of its account executives. During fiscal 1995 and
1996, more than 50% of the Company's orders were placed by repeat customers. The
Company has established a dedicated sales division focusing on business,
education and government accounts. These account executives have been promoted
from the direct inbound sales division or have been hired directly into this
position and have demonstrated the experience needed to interact with
sophisticated purchasing agents and the management information staffs of larger
organizations.

The Company has experienced an increase in average order size of 9.7% from
$598 in fiscal 1995 to $656 in fiscal 1996. This increase in average order size
is primarily attributable to the increased sales of high-end notebooks and was
partially offset by decreasing prices on many products offered by the Company
and the lower average order size associated with the Company's outsourcing
programs, which tend to feature accessory and peripheral products.

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<PAGE> 23

MERCHANDISING

The Company offers microcomputers, hardware and software products. The
following chart provides information regarding selected products offered by the
Company during fiscal 1995 and fiscal 1996:

<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
---------------------------------
PRODUCT CATEGORIES 1995 1996 SELECTED PRODUCT MANUFACTURERS
- --------------------------- -------------- -------------- -------------------------------------
<S> <C> <C> <C> <C>
Microcomputers:
Name brand............... 13% 29% AST Texas Instruments
IBM Toshiba
Insight-brand............ 21% 3% Insight
Hard disk drives........... 24% 23% Fujitsu Seagate
Quantum Western Digital
Memory..................... 6% 9% IBM PNY
Kingston Toshiba
Monitors/Video............. 10% 7% CTX NEC
Mag Innovision ViewSonic
Network/Connectivity....... 3% 6% Cisco 3Com
Intel U.S. Robotics
Printers................... 7% 5% Canon Hewlett-Packard
Epson Panasonic
Multimedia................. 6% 5% Creative Labs Sony
Plextor TEAC
Software................... 4% 5% Corel Microsoft
Lotus Novell
Miscellaneous.............. 6% 8% American Power Colorado Memory
Conversion Intel
</TABLE>

Name brand microcomputers, including notebooks, are the fastest growing
product category of the Company representing 29% of net sales in fiscal 1996, up
from 13% of net sales in fiscal 1995. The growth of this product category is due
to the increasing acceptance of the use of notebooks by the business customer,
the Company's emphasis on the sale of name brand microcomputers and the
elimination of Insight-brand microcomputers during the second quarter of fiscal
1996. Insight-brand microcomputers decreased from 21% of net sales in fiscal
1995 to 3% of net sales in fiscal 1996, and memory and network/connectivity
products increased as a percentage of net sales from 6% to 9% and 3% to 6% in
fiscal 1995 and 1996, respectively, due to computing needs as well as improved
price to performance values.

The Company selects its products based upon existing and proven technology.
The Company does not introduce a new product until it believes that a sufficient
market has developed for such product. The Company's product managers and buyers
evaluate new products and the effectiveness of existing products and select
products for inclusion in its marketing based upon product features, quality,
sales trend, price, margins and warranties. As a result of the Company's goal to
offer the latest in technology, the Company quickly replaces slower selling
products with new products. The Company offers more than 20,000 computer and
computer-related products primarily based on the Wintel standard.

More than 50% of the Company's orders in each of fiscal 1995 and fiscal
1996 were placed by repeat customers who had previously purchased products from
the Company.

SERVICE AND SUPPORT

Insight believes it achieves high levels of customer satisfaction. The
Company's dedication to prompt, efficient customer service and technical support
are important factors in customer retention and overall satisfaction.

Toll-Free Technical Support. The Company provides toll-free technical
support to its customers six days each week. Product support technicians assist
customers with questions concerning compatibility, installation, determination
of defects and general questions of product use. The product support technicians

22
<PAGE> 24

authorize customers to return defective or incompatible products to either the
manufacturer or to the Company for warranty service.

Fast Product Delivery. Utilizing the Company's proprietary information
system, customer orders are sent to the Company's distribution center for
processing immediately after they are credit approved. Federal Express has set
up its own packing facility within the Company's distribution facility and
integrated its labeling and tracking system into the Insight information system
to ensure prompt delivery. The Company ships most of its orders on the day the
orders are received at the distribution center. For an extra delivery charge,
the Company's customers can receive products on the same day the customer places
the order for deliveries within certain large metropolitan areas.

Specialty Communications. Company employees use the Internet network to
enhance customer support and inter-business correspondence. The network access
provides a convenient communication device enabling customers to contact their
sales, customer service and technical support representatives via text-based
messages. The customer receives a message via electronic mail immediately upon
shipment to confirm that the order has been shipped.

Warranties and Product Returns. The majority of the products marketed by
the Company are warranted by the manufacturer. The Company usually requests that
customers return their defective products directly to the manufacturer for
warranty service. On selected products and for selected customer services
reasons, the Company accepts returns directly from the customer and then either
credits the customer or ships the customer a similar but usually previously
repaired product from the Company's inventory. The Company offers a limited
30-day money back guarantee for all unopened products and selected opened
products, and selected products are subject to restocking fees. The returned
products are quickly processed and returned to the manufacturer for repair,
replacement or credit to the Company. Products that can not be returned to the
manufacturer for warranty processing are sold at a discount through a local
retail outlet and through the Company's Web site, which helps to minimize losses
to the Company from returned products.

TECHNOLOGY BASED OPERATIONS

The Company believes its implementation of advanced technological systems
provides competitive advantages by increasing the productivity of its account
executives, delivering more efficient customer service and reducing order
processing and inventory costs. The Company's account executives can access the
information system to obtain (i) a customer history, (ii) the cost and
availability of the current order, (iii) the compatibility of products ordered,
and (iv) cross-selling and up-selling opportunities based upon products ordered.
The Company believes that the information available to the Company's account
executives empowers them to make better decisions, provide superior customer
service and increase overall profitability. In addition, in connection with the
construction of the Company's new sales and administrative facility, the Company
is making a substantial investment in computer, telecommunication and other
technology. The Company believes that its investment in such technology will
continue to improve its efficiency, substantially increase redundancy in the
Company's management information systems and make available back-up systems and
generators that will help to minimize the impact of any interruption in the
Company's management information systems or telecommunication systems.

The Company has integrated its sales, accounting, inventory and
distribution systems. Utilizing the Company's proprietary information system,
orders are sent to the Company's distribution center for processing immediately
after they are received from a customer after credit approval. All products
received in the Company's distribution center have a UPC code, manufacturer bar
code or supplier bar code, or are issued an Insight bar code. The Company's
proprietary superscan process checks orders to ensure accurate fulfillment prior
to shipping and tracks the reduction in inventory. Currently, the Company has
implemented a re-ordering system that calculates lead times and, in some
instances, automatically re-orders from certain vendors. The Company has
developed a sophisticated re-ordering system that accepts vendor price quotes
from several competing vendors and automatically re-orders from the vendor with
the most competitive price. The Company has integrated its order processing,
labeling and tracking systems with Federal Express to ensure overnight delivery
to the correct location. Additionally, the Company has implemented an on-line,
real

23
<PAGE> 25

time credit card address verification and approval system through a third-party
provider with Visa(@), MasterCard(@), American Express(@) and Discover(@) to
instantaneously match the address provided by the customer with the specific
credit card billing address and obtain transaction approval.

Through the use of approximately 700 toll-free telephone numbers, the
Company can track specific catalog responses based on a variety of demographic
and product parameters and focus its marketing efforts and product selection to
specific target markets. The system can automatically route calls, depending on
their originating data, to specific sales groups or the best-selling account
executives. The telephone system also uses menu systems that permit the
customers to route themselves to the appropriate service or sales area, or to
their assigned account executives.

PURCHASING AND DISTRIBUTION

Purchasing/Inventory Management. During fiscal 1996, the Company purchased
products from approximately 300 suppliers. Approximately 61% (based on dollar
volume) of these purchases were directly from manufacturers, with the balance
from distributors. Purchases from Merisel, a distributor and the Company's
largest supplier, accounted for approximately 19% of the Company's product
purchases in fiscal 1996. The top five suppliers as a group (Merisel, Toshiba,
Seagate, Ingram MicroD (a distributor) and Western Digital) accounted for
approximately 51% of the Company's product purchases during the same period.

The Company believes it has excellent relationships with its suppliers,
which have resulted in favorable return and price protection policies, as well
as promotional and marketing allowances. Although brand names and individual
products are important to the Company's business, the Company believes that
competitive sources of supply are available in substantially all of its product
categories and therefore it is not dependent on any single vendor.

Inventory Management. Just-in-time inventory management is utilized by the
Company as a way of reducing inventory costs. The Company's order fulfillment
and inventory controls allow the Company to forecast and order products
just-in-time for shipping. The Company promotes the use of electronic data
interchange with its vendors, which helps to reduce overhead and the use of
paper in the ordering process. Additionally, some distributors will "direct
ship" products directly to the customer, which reduces physical handling by the
Company. Such direct-shipments are not apparent to the customer. These inventory
management techniques have allowed the Company to offer a greater range of
products without increased inventory requirements, and to maintain inventory
turns of 21 times a year.

The industry in which the Company operates is characterized by rapid
technological change and the frequent introduction of new products and product
enhancement, and, while the Company attempts to anticipate and react to new
product introductions and to mitigate its exposure to losses from inventory
obsolescence, there can be no assurance that such efforts will be successful or
that unexpected new product introductions will not have a material adverse
effect on the demand for the Company's inventory.

Distribution Center. Activities performed in the Company's approximately
122,000-square feet of distribution space in Tempe, Arizona, include receipt and
shipping of inventory, configuration of microcomputer systems, processing of
returned products, a "will call" facility where Arizona customers can pick up
orders and a retail outlet where heavily discounted products are offered for
sale. Orders are transmitted electronically from the account executive to the
distribution center after credit approval, where a packing slip is printed
automatically for order fulfillment. All inventory items are bar coded and
placed in designated bin locations that are marked with both readable and bar
coded identifiers. Product movement is computer directed and radio frequency
scanned for verification. Radio frequency technology also is used to perform
daily inventory cycle counts to ensure inventory accuracy. A proprietary
superscan process also is used to ensure accurate order fulfillment. Recently,
the Company expanded to a separate building where all return product and
technical services are now performed.

24
<PAGE> 26

OUTSOURCING

The Company seeks to leverage its core competencies in direct marketing by
providing turnkey direct marketing services to leading manufacturers. The
Company believes that outsourcing provides the manufacturers the ability to
reduce operational overhead, stimulate demand for their products through other
marketing channels, increase sales and enhance customer satisfaction.

The Company currently provides direct marketing services to certain
manufacturers, including Toshiba and Seagate. These services generally include
publishing and circulating catalogs, placing advertisements under the
manufacturer's name, providing account executives dedicated solely to the
manufacturer's product line and fulfilling and shipping orders. The account
executives interface with customers as representatives of the applicable
manufacturers. In most cases, the Company is responsible for the granting of
credit and for the collection of accounts generated by these product sales, but
the manufacturer typically retains responsibility for warranty, service and
technical support of its products. During fiscal 1996, the Company also provided
outsourcing services to Air Taser, a manufacturer of non-lethal self defense
products. The arrangement with Air Taser is the Company's first outsourcing
arrangement involving a non-computer-related product. While the Company's
predominant market focus will remain on computer-related products, the Company
intends to evaluate opportunities to leverage its sales, marketing and
distribution capabilities in areas involving selected non-computer products from
time to time.

The Company also made changes in its arrangements with other marketers,
such as American Express and Fingerhut, in which brand name products are
included in catalogs and other mailings produced and distributed by and under
the name of the marketer. The marketer purchases products from the Company that
are ordered by its customers and pays the Company the contracted-for purchase
price. The products were usually subject to the manufacturer's warranties and
servicing. Continued margin pressure caused these types of arrangements to
become less advantageous to the Company and other marketers. Consequently, the
Company phased out of sales to third party marketers in fiscal 1996.

COMPETITION

Certain of the Company's competitors have longer operating histories and
greater financial, technical, marketing and other resources than the Company. In
addition, many of these competitors offer a wider range of products and services
than the Company, and may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. Many current and
potential competitors also have greater name recognition and more extensive
promotional activities, offer more attractive terms to customers and adopt more
aggressive pricing policies than the Company. There can be no assurance that the
Company will be able to compete effectively with current or future competitors
or that the competitive pressures faced by the Company will not have a material
adverse effect on the Company's business, results of operations and financial
condition.

SALES OR USE TAX

The Company presently collects sales tax only on sales of products to
residents of the State of Arizona. Sales to customers located within the State
of Arizona were approximately 12% of the Company's net sales during fiscal 1996.
Various states have sought to impose on direct marketers the burden of
collecting state sales taxes on the sales of products shipped to that state's
residents. The United States Supreme Court recently affirmed its position that
it is unconstitutional for a state to impose sales or use tax collection

25
<PAGE> 27

obligations on an out-of-state mail order company whose only contacts with the
state are the distribution of catalogs and other advertising materials through
the mail and the subsequent delivery of purchased goods by United States mail or
by interstate common carrier. If the Supreme Court changes its position or if
legislation is passed to overturn the United States Supreme Court's recent
decision, the imposition of a sales or use tax collection obligation on the
Company in states to which it ships products would result in additional
administrative expenses to the Company, could result in price increases to the
customer or otherwise have a material adverse effect on the Company. From time
to time, legislation to overturn this decision of the Supreme Court has been
introduced, although to date, no such legislation has been passed.

PATENTS, TRADEMARKS AND LICENSES

The Company does not maintain a traditional research and development group,
but works closely with microcomputer product vendors and other technology
developers to stay abreast of the latest developments in microcomputer
technology. Where necessary, the Company has obtained patent licenses for
certain technology. The Company conducts its business under the trademark and
service mark "Insight" and its related logo. The Company intends to use and
protect these and its other marks, as it deems necessary. The Company believes
its trademarks and service marks have significant value and are an important
factor in the marketing of its products.

PERSONNEL AND TRAINING

As of June 30, 1996, the Company employed 695 persons, 197 were in
management support services and administration; 321 were account executives; 66
were in technical support and customer service; and 111 were in
warehouse/distribution. The Company's employees are not represented by any labor
union, and the Company has experienced no work stoppages. The Company believes
its employee relations are good.

Insight has invested in its employees' future and the Company's future,
through Insight University, an ongoing program of internal and external
training. The training programs include: Sales Training Program, New Hire
Training Program, LEAD, TEAM, and Management Development. Insight's Sales
Training Program is dedicated to ensuring quality sales and customer services.
Classes offered target sales management, account executives, customer service,
customer engineers and technical support by providing new skills through the
entire sales process. The Company's New Sales Training Program encompasses a
three-week extensive product, system, and procedural training program. Insight
has contracted with Learning International to assist in focusing training in the
areas of account penetration and development. LEAD (Leadership Enhancement and
Development) is a weekly one-hour informational/training session for supervisors
and managers designed to improve management skills and enhance communication
throughout the Company. TEAM (Train Everyone to Achieve More) provides every
account executive with weekly product, industry, and operational training.
Management Development training is a new focus for Insight and provides each
manager with individual development plans by taking classes relevant to his/her
needs.

REGULATORY AND LEGAL MATTERS

The direct response business as conducted by the Company is subject to the
Merchandise Mail Order Rule and related regulations promulgated by the Federal
Trade Commission, the Arizona Attorney General and various regulatory
authorities in other states from which the customers purchase products. The
Company believes it is in compliance with such regulations and has implemented
programs and systems to assure its ongoing compliance with such regulations.
There are no material legal proceedings pending against the Company.

PROPERTIES

The Company's principal facilities include 174,000 square feet of leased
space in seven facilities in Tempe, Arizona which houses its executive,
administrative, sales, warehouse and distribution activities. The leases for
approximately 70% of such space expire in 1997 and the remaining 30% expire in
1999. In July 1995, the Company acquired approximately 17 acres of vacant land
in Tempe, Arizona. The Company started

26
<PAGE> 28

construction in the third quarter of fiscal 1996 and will be consolidating its
sales, executive and administrative functions into a 103,000 square foot
facility on the acquired land during fiscal 1997 to better support the Company's
expanding operations. Such functions currently are located in four facilities.
Based on current plans, the total cost of constructing and equipping this new
facility is expected to be approximately $11 million. The Company may require
more space in the future. The amount and timing of future space needs will
depend upon the extent of the Company's growth. The Company believes that
suitable facilities will be available as needed.

USE OF TRADENAMES AND PRODUCT NAMES

The following trademarks or tradenames are used in this Prospectus to
identify the entities claiming the marks or names of their products: "Air Taser"
for Air Taser, Inc., "American Express" for American Express Travel Related
Services Company, Inc., "American Power Conversion" for American Power
Conversion Corporation, "AST" for AST Research Inc., "Canon" for Canon Computer
Systems, Inc., "Cisco" for Cisco Systems, Inc., "Colorado Memory" for Colorado
Memory Systems, Inc., "Corel" for Corel Corporation, "Creative Labs" for
Creative Labs, Inc., "CTX" for CTX International, Inc., "Epson" for Epson
America, Inc., "Federal Express" for Federal Express Corporation, "Fingerhut"
for Fingerhut Companies, Inc., "Fujitsu" for Fujitsu Computer Products of
America, Inc., "Hewlett-Packard" for Hewlett-Packard Company, "IBM" for
International Business Machines Corporation, "Ingram Micro D" for Ingram Micro
D, Inc., "Kingston" for Kingston Technology Corporation, "Intel" for Intel
Corporation, "Lotus" for Lotus Development Corporation, "MAG Innovision" for MAG
InnoVision, Inc., "Merisel" for Merisel, Inc., "Microsoft" for Microsoft
Corporation, "NEC" for NEC Technologies, Inc., "Novell" for Novell Inc,
"Panasonic" for Matsushita Electric Corporation of America, "Plextor" for
Plextor, Inc., "Quantum" for Quantum Corporation, "Seagate" for Seagate
Technology, Inc., "Sony" for Sony Electronics Inc., "TEAC" for Teac America,
Inc., "Texas Instruments" for Texas Instruments, Incorporated, "3Com" for 3Com
Corporation, "Toshiba" for Toshiba America Information Systems, Inc., "U.S.
Robotics" for U.S. Robotics, Inc., "ViewSonic" for ViewSonic, a Division of
Keypoint Technology Corporation, and "Western Digital" for Western Digital
Corporation. None of the companies listed above has participated in or endorsed
this offering.

27
<PAGE> 29

MANAGEMENT

The following table sets forth information with respect to directors and
executive officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------------------- --- -------------------------------------
<S> <C> <C>
Eric J. Crown(1)............................ 34 Chief Executive Officer and Chairman
of the Board of the Company
Timothy A. Crown(1)......................... 32 President and Director of the Company
Stanley Laybourne(1)........................ 47 Chief Financial Officer, Secretary,
Treasurer and Director of the Company
Michael A. Gumbert.......................... 37 Chief Operating Officer of Insight
Direct, Inc.
Branson M. Smith............................ 40 Chief Operating Officer of Direct
Alliance Corporation
Larry A. Gunning(2)......................... 52 Director
Robertson C. Jones(2)....................... 52 Director
</TABLE>

- ---------------
(1) Member of Executive Committee of the Board of Directors.

(2) Member of Audit and Compensation Committees of the Board of Directors.

Eric J. Crown has been the Chief Executive Officer and Chairman of the
Board of the Company since 1988, and is one of its founders. In 1984, he
received a Bachelor of Science degree in Business Computer Information Systems
from Arizona State University. From 1983 to 1986, Mr. Crown operated an
independent computer firm. From 1986 to 1988, Mr. Crown was a partner in
MicroNet Consulting, a computer consulting and sales company. Eric J. Crown is
the brother of Timothy A. Crown.

Timothy A. Crown has been employed by the Company since its inception in
1988 and has been its President since 1989. He received a Bachelor of Science
degree in Business and Computer Science from the University of Kansas in 1986.
From 1986 until 1987, Mr. Crown was employed by NCR Corporation as an
Administrative Analyst. From 1987 to 1988, Mr. Crown was a partner in MicroNet
Consulting. Timothy A. Crown is the brother of Eric J. Crown.

Stanley Laybourne was an independent consultant to the Company from
September 1990 through March 1991 and became its Chief Financial Officer and
Treasurer in April 1991. In November 1994, he became Secretary of the Company.
Mr. Laybourne received a Bachelor of Science degree in Accounting from The Ohio
State University in 1971, with a Masters in Business Administration degree from
Arizona State University in 1972. From 1972 to 1985, he was employed by Touche,
Ross & Co., a predecessor to Deloitte & Touche, where he was an audit partner
from 1983 to 1985. From 1985 to 1989, Mr. Laybourne was President and Chief
Executive Officer of The Scottscom Group, a financial services company. From
1989 to 1990, Mr. Laybourne was Executive Vice President of Ovation Broadcasting
Company, a company which operated commercial radio broadcast properties. Mr.
Laybourne is the Chief Financial Officer of the Fiesta Bowl and a member of the
City of Scottsdale Citizen's Bond Review Commission. Mr. Laybourne is a
Certified Public Accountant.

Michael A. Gumbert was hired on July 1, 1996, as Insight Direct, Inc.'s
Chief Operating Officer. From August 1995 to June 1996, Mr. Gumbert was Senior
Vice President, General Manager of Tandy Corporation, a consumer electronics
retailer. From 1983 through 1990, Mr. Gumbert held various positions within
MicroAmerica, Inc., a value added computer distributor. In 1990, MicroAmerica,
Inc. was acquired by Merisel, Inc., a distributor of computers, software and
peripherals. From 1990 through June 1995, Mr. Gumbert held several positions
with Merisel, Inc., including Senior Vice President, Sales and Operation from
April 1992 to June 1995. Mr. Gumbert received a Bachelor of Business
Administration in Marketing from North Texas State University in 1981.

Branson M. Smith has been employed by Insight Direct, Inc. since March 1992
and has served as its Vice President of Distribution and Senior Vice President
of Fulfillment Services. In September 1996, Mr. Smith

28
<PAGE> 30

was promoted to Chief Operating Officer of Direct Alliance Corporation. From May
1991 to March 1992, Mr. Smith was a principal in Southwest Automation, an
industrial operations consulting firm. From December 1987 to May 1991, Mr. Smith
was a Division Manager of Shape West, a computer disk manufacturer. Mr. Smith
received a Bachelor of Science degree in Business Administration from the
University of Arizona in 1978. Mr. Smith is a member of the Board of Advisors of
the National Catalog Operations Forum.

Larry A. Gunning has been a director of the Company since January 1995. He
has been President of Pasco One, Inc. and Pasco Petroleum Corp., petroleum
marketing companies, since 1990 and 1988, respectively. Mr. Gunning received a
Bachelor of Science degree in Business Management from Arizona State University
in 1966. Mr. Gunning is a member of the Arizona State University College of
Business Dean's Council of 100 and a director of several nonprofit
organizations.

Robertson C. Jones has been a director of the Company since January 1995.
Mr. Jones has been Vice President and General Counsel of Del Webb Corporation, a
developer of master-planned residential communities, since January 1992. From
March 1990 to November 1991, he was a partner with the law firm of Gaston &
Snow, and from January 1985 to February 1990, he was a director and shareholder
of Moya, Bailey, Bowers & Jones, P.C., which was a partner of Gaston & Snow. In
October 1991, while Mr. Jones was a partner of such firm, Gaston & Snow filed a
voluntary petition under Chapter 11 of the Bankruptcy Code. Mr. Jones was never
a member of that firm's management or executive committees. All of Mr. Jones'
involvement with Gaston & Snow was formally terminated in September 1993. During
November and December 1991, Mr. Jones was an attorney with the law firm of
Quarles & Brady. Mr. Jones received his Bachelor of Arts degree from Williams
College in 1966, his Masters in Business Administration degree from Oklahoma
City University in 1969 and his Juris Doctor degree from the University of
California, Hastings College of Law, in 1977.

29
<PAGE> 31

SELLING SECURITYHOLDERS

The following table provides information with respect to the shares of
Common Stock issuable upon exercise of the Warrants by each Selling
Securityholder, and as adjusted to reflect the sale of the securities offered
hereby by the Selling Securityholders.

<TABLE>
<CAPTION>
BENEFICIAL
BENEFICIAL OWNERSHIP OWNERSHIP
PRIOR TO THE NUMBER OF AFTER THE
OFFERING(1) SHARES OFFERING(1)
--------------------- BEING -------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ----------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Principal Financial Securities,
Inc.(2)................................ 43,125 * 43,125 -- --
Pennsylvania Merchant Group Ltd(3)....... 28,750 * 28,750 -- --
</TABLE>

- ---------------
* Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting or
investment power with respect to securities. In accordance with SEC rules,
shares which may be acquired upon exercise of stock options and warrants
options which are currently exercisable or which become exercisable within
60 days of the date of the information in the table, are deemed to be
beneficially owned by the optionee or warrant holder. Except as indicated
by footnote, and subject to community property laws where applicable, the
persons or entities named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.

(2) Consists of 43,125 shares underlying the Warrants that are currently
exercisable at any time up to January 24, 1998, which will be offered as
part of this offering. Principal Financial Securities, Inc. is a market
maker for the Company's Common Stock and was an underwriter of two of the
Company's public offerings in 1995.

(3) Consists of 28,750 shares underlying the Warrants that are currently
exercisable at any time up to January 24, 1998, which will be offered as
part of this offering. Pennsylvania Merchant Group Ltd is a market maker
for the Company's Common Stock and was an underwriter of two of the
Company's public offerings in 1995.

30
<PAGE> 32

PLAN OF DISTRIBUTION

This Prospectus relates to the resale of 71,875 shares of Common Stock
which may be acquired upon the exercise of Warrants that are currently
outstanding. The Warrants are exercisable at any time up to January 24, 1998 to
purchase 71,875 shares of Common Stock for $10.80 per share, subject to
adjustment in certain events. The distribution of the Common Stock by the
Selling Securityholders contemplated hereby is not subject to any underwriting
agreement.

The Common Stock may be sold by the Selling Securityholders from time to
time in either underwritten public offerings, in transactions pursuant to Rule
144 under the Securities Act, in privately negotiated transactions, through the
facilities of Nasdaq, or otherwise, at market prices prevailing at the time of
such sale, at prices relating to such prevailing market prices, or at negotiated
prices. The Company will not receive any of the proceeds from the sale of Common
Stock by the Selling Securityholders, except for receipt of the exercise price
upon exercise of the Warrants. The net proceeds to the Selling Securityholders
will be the proceeds received by them upon such sales, less brokerage
commissions.

In the case of sales of the shares of Common Stock effected to or through
broker-dealers, such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders or the
purchasers of the Common Stock sold by or through such broker-dealers, or both.
The Company has advised the Selling Securityholders that the anti-manipulative
Rules 10b-6 and 10b-7 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") may apply to their sales in the market and has informed them of
the need for delivery of copies of this Prospectus. The Company is not aware as
of the date of this Prospectus of any agreements between any of the Selling
Securityholders and any broker-dealers with respect to the sale of the Common
Stock offered by this Prospectus. The Selling Securityholders and any
broker-dealer or other agent executing sell orders on behalf of the Selling
Securityholders may be deemed to be "underwriters" within the meaning of the
Securities Act, in which case the commissions received by any such broker-dealer
or agent and profit on any resale of the Common Stock may be deemed to be
underwriting commissions under the Securities Act. The commissions received by a
broker-dealer or agent may be in excess of customary compensation.

The Selling Securityholders may elect to sell all, a portion or none of the
Common Stock offered by them hereunder.

The Company will pay all of the expenses incident to the registration of
the shares of Common Stock offered hereby, other than underwriting or brokerage
discounts, commissions and selling expenses with respect to the Common Stock
being sold by the Selling Securityholders.

TRANSFER AGENT

The Transfer Agent and Registrar for the Common Stock is ChaseMellon
Shareholder Services.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Snell & Wilmer L.L.P., Phoenix, Arizona.

EXPERTS

The consolidated financial statements of Insight Enterprises, Inc. as of
June 30, 1995 and 1996, and for each of the years in the three-year period ended
June 30, 1996, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.

31
<PAGE> 33

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

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, to any
person in any jurisdiction in which such offer to sell or solicitation is not
authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.

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

TABLE OF CONTENTS
----------------------------

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Information Incorporated by
Reference........................... 2
The Company........................... 3
Risk Factors.......................... 4
Use of Proceeds....................... 9
Dividend Policy....................... 9
Selected Consolidated Financial and
Operating Data...................... 10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 11
Business.............................. 17
Management............................ 28
Selling Securityholders............... 30
Plan of Distribution.................. 31
Transfer Agent........................ 31
Legal Matters......................... 31
Experts............................... 31
</TABLE>

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
71,875 SHARES

LOGO

COMMON STOCK
------------------------

PROSPECTUS
------------------------

November , 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 34

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses to be borne by the Registrant
in connection with the offering being registered hereby:

<TABLE>
<S> <C>
SEC filing fee........................................................... $ 730
Blue Sky fees and expenses, including legal fees*........................ $ 500
Printing and engraving*.................................................. $ 2,000
Legal fees and expenses*................................................. $20,000
Accounting fees and expenses*............................................ $10,000
Miscellaneous*........................................................... $ 1,770
-------
Total.......................................................... $35,000
=======
</TABLE>

- ---------------
* Estimated

The Company will pay all expenses of the offering.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145(a) of the General Corporation Law of the State of Delaware (the
"General Corporation Law"), provides that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no cause to believe his or her conduct was unlawful.

Section 145(b) Provides that a Delaware corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses actually
and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if be or she acted under similar standards,
except that no indemnification may be made in respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court in which such action or
suit was brought shall determine that despite the adjudication of liability,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.

Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense or any claim, issue or
matter therein, he or she shall be indemnified against expenses actually and
reasonably incurred by him or her in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and that the corporation may
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or her or incurred by him
or her in any such capacity or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against such
liabilities under such Section 145.

II-1
<PAGE> 35

Section 102(b)(7) of the General Corporation Law provides that a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders may eliminate or limit personal liability of
members of its board of directors or governing body for violations of a
director's duty of care.

However, no such provision may eliminate or limit the liability of a
director for breaching his or her duty of loyalty, acting or failing to act in
good faith, engaging in intentional misconduct or knowingly violating a law,
paying an unlawful dividend or approving an unlawful stock repurchase, or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission, for
breach of fiduciary duty. The Company's Certificate of Incorporation contains
such a provision.

The Company's Bylaws provide that the Company shall indemnify officers and
directors to the full extent permitted by and in the manner permissible under
the laws of the State of Delaware.

The Company has a directors and officers' liability insurance policy with a
policy limit of $1,000,000 and coverage for, among other things, liability for
violations of federal and state securities laws.

The Company has entered into indemnity agreements with its directors and
officers for indemnification of and advance of expenses to such persons to the
full extent permitted by law. The Company intends to execute such indemnity
agreements with its future officers and directors.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION METHOD OF FILING
- ------ --------------------------------------------------------- -----------------------------
<C> <S> <C>
2.1 Articles of Merger and Certificate of Merger between Incorporated by reference to
Insight Enterprises, Inc., an Arizona corporation, and Exhibit 2.1 of the Company's
Insight Enterprises, Inc., a Delaware corporation (the Form S-1 Registration
"Registrant") Statement No. 33-86142 (Form
S-1 No. 33-86142)
4.1 Specimen Common Stock Certificate Incorporated by reference to
Exhibit 4.1 of the Form S-1
No. 33-86142
4.2 Form of Common Stock Warrant between the Registrant and Incorporated by reference to
certain Warrant Holders Exhibit 4.4 of the Form S-1
No. 33-86142
5 Opinion of Snell & Wilmer L.L.P. Filed herewith
23 Consent of KPMG Peat Marwick LLP Filed herewith
24 Power of Attorney See signature page
</TABLE>

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-

II-2
<PAGE> 36

tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.

The undersigned registrant hereby undertakes to remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.

II-3
<PAGE> 37

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Insight
Enterprises, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix, State of
Arizona, on November 22, 1996.

INSIGHT ENTERPRISES, INC.

By: /s/ ERIC J. CROWN

------------------------------------
Eric J. Crown,
Chairman of the Board and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Eric J. Crown and Stanley Laybourne, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Form S-3
Registration Statement and to sign any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) of the
Securities Act of 1993, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as he might or could do in person hereby ratifying and confirming that
all said attorneys-in-fact and agents, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

<TABLE>
<CAPTION>
PERSON TITLE DATE
- ------------------------------------- --------------------------------- ------------------
<C> <S> <C>
/s/ ERIC J. CROWN Chairman of the Board of November 22, 1996
- ------------------------------------- Directors and Chief Executive
Eric J. Crown Officer (Principal Executive
Officer)
/s/ TIMOTHY A. CROWN President and Director November 22, 1996
- -------------------------------------
Timothy A. Crown
/s/ Stanley Laybourne Chief Financial Officer, November 22, 1996
- ------------------------------------- Secretary, Treasurer and Director
Stanley Laybourne (Principal Financial and
Accounting Officer)
/s/ LARRY A. GUNNING Director November 22, 1996
- -------------------------------------
Larry A. Gunning
/s/ ROBERTSON C. JONES Director November 22, 1996
- -------------------------------------
Robertson C. Jones
</TABLE>

II-4
<PAGE> 38

EXHIBIT INDEX

<PAGE> 1
EXHIBIT 5

[SNELL & WILMER L.L.P. LETTERHEAD]

November 22, 1996

Insight Enterprises, Inc.
1912 West Fourth Street
Tempe, AZ 85281

RE: REGISTRATION STATEMENT ON FORM S-3

Ladies and Gentlemen:

In connection with the Registration Statement on Form S-3, including
amendments and exhibits thereto (the "Registration Statement"), for the proposed
offer and sale of up to 71,875 shares of Common Stock of Insight Enterprises,
Inc. (the "Company") to be sold upon exercise of the outstanding warrants (the
"Shares"), we are of the opinion that the Shares being sold upon exercise of the
outstanding warrants, when such warrants are duly exercised in accordance with
their terms, will be legally issued, fully paid, and nonassessable.

In rendering this opinion, we have reviewed and relied upon such
documents and records of the Company as we have deemed necessary and have
assumed the following:

1. The genuineness of all signatures and the authenticity of
documents submitted to us as originals and the conformity to
originals of all documents submitted to us as copies;

2. The accuracy, completeness, and genuineness of all
representations and certifications, with respect to factual
matters, made to us by officers of the Company and public
officials; and

3. The accuracy and completeness of Company records.

The opinion expressed herein is limited solely to the General
Corporation Law of the State of Delaware. We express no opinion on the laws of
any other jurisdiction or principles of conflicts of law and can assume no
responsibility for the applicability of any such laws or principles.

The opinion expressed herein is based on the law and other matters in
effect on the date hereof, and we assume no obligation to review or supplement
this opinion should such law be changed by legislative action, judicial decision
or otherwise, or should any facts or other matters upon which we have relied be
changed.
<PAGE> 2
Insight Enterprises, Inc.
November 22, 1996
Page 2

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Registration Statement.

Very truly yours,

/s/ SNELL & WILMER L.L.P.
-------------------------
SNELL & WILMER L.L.P.

<PAGE> 1
EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Insight Enterprises, Inc.:

We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the headings "Selected Consolidated
Financial and Operating Data" and "Experts" in the prospectus.

/s/ KPMG PEAT MARWICK LLP

Phoenix, Arizona
November 22, 1996