<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------------
FORM 10-Q/A
(Mark one)
/x/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1996
OR
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to .
-------- --------
Commission File Number: 0-26026
INTERACTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2925769
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
5095 MURPHY CANYON ROAD, SAN DIEGO, CA 92123
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 560-8525
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
The number of shares outstanding of the Registrant's Common Stock, $.001 par
value, as of November 12, 1996 was 4,438,738.
<PAGE> 2
OVERVIEW
The Company develops, markets, implements and supports integrated business
information systems that enable discrete manufacturers to manage their
enterprise-wide information requirements. The Company primarily sells and
implements its business information systems directly. Since 1992, the Company
has expanded its sales, implementation, and customer service capabilities
through the addition of offices as well as the establishment of centralized
customer service centers in both the United States and United Kingdom.
Substantially all of the Company's revenues are generated from the sale of its
systems, which usually consist of proprietary and third-party software licenses,
implementation and software support services, third-party hardware and
maintenance contracts. The Company's proprietary software licenses are sold on a
packaged or individual module basis, and the license fee is determined in part
by the number of modules and concurrent system users. Implementation and
software support services are furnished on a daily or hourly basis and billed
monthly as incurred. Maintenance fees are based on a percentage of software
license fees.
Revenues from software licenses are recognized upon delivery, provided that no
significant obligations of the Company remain and collection of the related
receivable is deemed probable. Software support services revenues are recognized
in the period in which the services are performed. Revenues from hardware sales
are recognized upon shipment of the product. Revenues from software maintenance
contracts are recognized ratably over the period of the contract. Revenues from
turnkey systems, which include both hardware and software, are recognized upon
delivery of the software and related hardware that is considered essential to
the functionality of the system, provided that no significant obligations remain
and collection of the related receivable is deemed probable.
The Company derives a significant portion of its revenues from its international
business, which is subject to various risks common to international activities,
including currency fluctuations. Revenues and expenses of the Company's
international operations are translated at the average exchange rate in effect
during the period. Translation adjustments are reported as a separate component
of stockholders' equity.
The Company plans to expand its business through expansion of its distribution
network in the United States and internationally with the objective of
increasing total revenues and profits. There can be no assurance, however, that
the efforts and funds directed to expansion of the Company's distribution
network will result in revenue and profit growth. Any future growth of the
Company will also depend on, among other things, the Company's ability to gain
market acceptance for its products in new geographic areas and to monitor and
control the additional costs and expenses associated with expansion and new
product development. There can be no assurance that the Company will be able to
successfully manage these aspects of its business. The success of the Company's
expansion in continental Europe and other international markets will depend
largely upon the success of Company's "affiliates", or business partner program.
This program is, in turn, dependent upon the successful identification and
recruitment of appropriate international partners, the Company's success in
instilling a service-driven culture in these foreign organizations that the
Company does not own or control, and the development of adequate resources
within each affiliate to successfully sell and implement the Company's business
information systems on a turnkey basis. No assurance can be given that the
Company will be able to meet these challenges or successfully implement its
international business partner program.
On December 31, 1995, the Company acquired all of the outstanding shares of JIT,
which, prior to the acquisition, developed and marketed the Company's JIT
Enterprise System application software product. The acquisition of JIT was
accounted for as a purchase, and accordingly, the results of operations for JIT
are not included in the Company's results of operations for the three and nine
months ended September 30, 1995. Interactive and JIT differ in certain respects,
and the Company anticipates that the integration of JIT will continue to divert
some of its management resources and working capital for an indefinite period of
time. There can be no assurance that difficulties will not arise in integrating
the operations of JIT. Moreover, there can be no assurance that the Company will
realize any product enhancements or increased revenues as a result of the
acquisition of JIT. The success of the acquisition of JIT will depend, in large
part, on the ability of the Company to retain the customers and employees of
JIT, to continue to develop
7
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERACTIVE GROUP, INC.
Dated: December 6, 1996 /s/ Robert C. Vernon
---------------------
ROBERT C. VERNON
Chairman of the Board and
Chief Executive Officer
Dated: December 6, 1996 /s/ Michael D. Reynolds
------------------------
MICHAEL D. REYNOLDS
Vice President of Finance and
Administration and
Chief Financial Officer
12
