<PAGE> 1
As filed with the Securities and Exchange Commission on November 22, 1996
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
INTERACTIVE GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-2925769
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5095 Murphy Canyon Road
San Diego, California 92123
(619) 560-8525
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
--------------------------
Michael D. Reynolds
Chief Financial Officer
INTERACTIVE GROUP, INC.
5095 Murphy Canyon Road
San Diego, California 92123
(619) 560-8525
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
Copies to:
D. Bradley Peck, Esq.
Lance W. Bridges, Esq.
COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
(619) 550-6000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST 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 IN CONNECTION WITH
DIVIDEND OR INTEREST REINVESTMENT PLANS, 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>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Class of Offering Aggregate Amount of
Securities to be Registered Amount to be Registered Price per Share(1) Offering Price (1) Registration Fee
--------------------------- ----------------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share 386,725 shares $ 4.88 $ 1,887,218 $571.88
</TABLE>
(1) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
PURSUANT TO RULE 457(c) OF THE SECURITIES ACT OF 1933 BASED UPON THE
AVERAGE OF THE HIGH AND LOW PRICES OF THE REGISTRANT'S COMMON STOCK AS
REPORTED ON THE NASDAQ NATIONAL MARKET SYSTEM ON NOVEMBER 20, 1996.
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 THAT 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.
- --------------------------------------------------------------------------------
<PAGE> 2
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
386,725 SHARES
INTERACTIVE GROUP, INC.
Common Stock
----------------------
This Prospectus relates to 386,725 shares (the "Shares") of Common
Stock, par value $.001 per share (the "Common Stock"), of Interactive Group,
Inc. (the "Company"). The Shares may be offered by a stockholder of the Company
(the "Selling Stockholder") from time to time in transactions on the Nasdaq
National Market, in privately negotiated transactions or a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholder may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholder or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions).See "Selling Stockholder" and "Plan of Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholder will be received by the Company. The Company has agreed to bear
certain expenses (other than fees and expenses, if any, of counsel or other
advisors to the Selling Stockholder) in connection with the registration and
sale of the Shares being offered by the Selling Stockholder. The Company has
agreed to indemnify the Selling Stockholder against certain liabilities,
including certain liabilities under the Securities Act of 1933, as amended. See
"Plan of Distribution."
The Common Stock of the Company is traded on the Nasdaq National Market
under the symbol "INTE." The last reported sales price of the Company's Common
Stock on the Nasdaq National Market on November 20, 1996 was $5.00 per share.
----------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 3 OF THIS PROSPECTUS.
----------------------
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 _________________, 1996
<PAGE> 3
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN 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, BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: Chicago Regional Office, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. Copies
of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission also maintains a site on the World Wide
Web that contains reports, proxy and information statements and other
information regarding the Company.The address for such site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
portions of which are omitted in accordance with the rules and regulations of
the Commission. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement and
the exhibits and schedules thereto, which may be inspected without charge at,
and copies thereof may be obtained at prescribed rates from, the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December
31, 1995, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996, the Company's Form 8-K/A
dated March 12, 1996 (relating to the Company's Form 8-K dated December 15,
1995), the Company's proxy statement for the 1996 Annual Meeting of Stockholders
filed pursuant to Rule 14a-6 of the Exchange Act, and the Company's Registration
Statement on Form 8-A dated May 8, 1995, filed with the Commission, are hereby
incorporated by reference in this Prospectus except as superseded or modified
herein.
All documents filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other 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 modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been or
may be incorporated by reference herein (other than exhibits to such documents
which are not specifically incorporated by reference into such documents). Such
requests should be directed to the Chief Financial Officer at the Company's
principal executive offices at 5095 Murphy Canyon Road, San Diego, California
92123, telephone number (619) 560-8525.
2
<PAGE> 4
THE COMPANY
Except for the historical information contained or incorporated by
reference herein, this Prospectus (and the information incorporated herein by
reference) contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here or incorporated by reference. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in the following section, in the section entitled "Risk Factors," in the
Company's most recent quarterly report on Form 10-Q and in the section entitled
"Risk Factors" and elsewhere in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, as well as those discussed elsewhere in this
Prospectus and any other documents incorporated herein by reference.
The Company develops, markets, implements and supports integrated
business information systems that enable discrete manufacturers to manage their
enterprise-wide information requirements. The Company's primary software
product, INFOFLO, supports make-to-order and make-to-stock manufacturers in
their business re-engineering efforts by providing customer-oriented
capabilities that allow manufacturers to reduce order fulfillment cycle times,
improve operating efficiencies and measure critical company performance against
defined plan objectives. INFOFLO contains a series of integrated software
application modules that are designed to support information processing in the
functional areas of sales and marketing, finance and accounting, manufacturing
and operations. The Company implements its INFOFLO systems as turnkey solutions
featuring the Company's software products integrated with computer and
networking hardware, operating system and database software and object-oriented
development tools. The Company also offers a full complement of services to
assist customers in maximizing the benefits of the Company's software products,
including implementation, customer support and maintenance services. The Company
developed INFOFLO using open systems technology that allows customers to migrate
to different hardware and software technologies and upgrade to new releases of
the Company's application software.
The Company's target market for INFOFLO is primarily mid-sized,
make-to-order manufacturing companies in the United States, United Kingdom,
Canada and Europe with annual revenues between $25 and $500 million. The Company
primarily sells directly to its customers and implements and supports its
systems through its network of offices in the United States, United Kingdom, and
Europe.
The Company's executive offices are located at 5095 Murphy Canyon Road,
San Diego. California 92123, telephone number (619) 560-8525.
RISK FACTORS
An investment in the shares being offered hereby involves a high degree
of risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained in this Prospectus, in the
Company's most recent quarterly report on Form 10-Q, in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, and in any other
documents incorporated herein by reference in evaluating an investment in the
shares of Common Stock offered hereby.
SIGNIFICANT FLUCTUATIONS IN QUARTERLY RESULTS, SEASONALITY. The Company
has experienced and expects to continue to experience significant fluctuations
in its quarterly results. Such fluctuations may be caused by many factors,
including, but not limited to: the size and timing of individual orders;
seasonality of revenues; lengthy sales cycle; delays in introduction of products
or product enhancements by the Company or other providers of hardware, software
and components for the Company's systems; competition and pricing in the
software industry; market acceptance of new products; reduction in demand for
existing products and shortening of product life cycles as a result of new
product introductions by competitors; foreign currency exchange rates; mix of
products sold; conditions or events in the manufacturing industry; and general
economic conditions. The Company does not typically maintain a significant
backlog and therefore the revenue results for each quarter depend substantially
on orders received and delivered in that quarter. As a result of the relatively
high revenue amount per order and relatively low unit volume, any lost or
delayed sales will have a disproportionately greater effect on the Company's
revenues and quarterly results relative to companies that have higher unit sales
volumes and less revenue associated with each sale. The Company's sales cycle is
typically six to twelve months from the time initial sales contact is
3
<PAGE> 5
made with a qualified prospect, making the timing of the Company's license fees
difficult to predict and the Company's quarterly results difficult to forecast.
The Company's expense levels are based in part on its forecasts of future
revenues. Accordingly, since the majority of the Company's expenses are fixed in
nature, the Company would not be able to quickly curtail expenses in response to
a decline in revenues, and operating results for a given quarter would be
adversely affected. As a result, revenues for any quarter are subject to
significant variation and the Company believes that period-to-period comparisons
of its results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. Fluctuations in operating
results may also result in volatility in the price of the Company's Common
Stock.
During its recent history, the Company's revenues have varied from
quarter to quarter, with the largest portion of revenues typically recognized in
the fourth quarter of each year. The procurement process of the Company's
customers is long and involves competing capital budget decisions. As a result
of such budgeting and buying patterns, the Company's prospective customers are
more likely to order the Company's products, if at all, near the end of each
year. Consequently, the Company has historically realized lower revenues in the
first quarter of each year than in the preceding fourth quarter, and the first
quarter has typically resulted in an operating loss. There can be no assurance
that the Company will be profitable on a quarter-to-quarter basis.
INTENSE COMPETITION. The manufacturing information systems industry is
intensely competitive and rapidly changing. A number of companies offer products
similar to the Company's products. Many of the Company's existing competitors,
as well as a number of potential competitors, have larger technical staffs, more
established and larger marketing and sales organizations, and significantly
greater financial resources than the Company. Moreover, the Company has no
proprietary barriers to entry that could keep its competitors from developing
similar products or selling competing products in the Company's markets. As a
result, there can be no assurance that such competitors will not develop
products that are superior to the Company's products or that achieve greater
market acceptance. There also can be no assurance that suppliers of relational
database management systems or companies that develop management information
software applications for large multinational manufacturers will not target the
manufacturers targeted by the Company or otherwise develop applications that
compete effectively in the Company's targeted markets. The Company's future
success will depend, in part, upon its ability to increase revenues in its
targeted markets. There can be no assurance that the Company will be able to
compete successfully against its competitors or that the competitive pressures
faced by the Company will not adversely affect its financial performance. The
Company believes its use of open systems technologies is an important
competitive element. The Company also believes that the number of competitors
offering open systems solutions will grow over the next several years. The
Company anticipates that a significant source of such future competition may be
from larger manufacturing software companies that may tailor their products for
this market. Only a few of the larger and better capitalized manufacturing
software companies currently compete in the Company's targeted markets. There
can be no assurance that such companies will not develop products that are
superior to the Company's products or achieve greater market acceptance for
their products due to greater sales, marketing or product development resources.
Due to intense competition in the computer hardware market, the Company has
experienced declining hardware revenues as a percentage of each system it sells
and shrinking profit margins with respect to such hardware revenues. The Company
believes this trend will continue. As a result, the Company's average revenues
from each system it sells and its overall profit margins and results of
operations may be materially adversely affected unless the Company is able to
increase its revenues with respect to its other products and services. There can
be no assurance that the Company will be able to increase its revenues with
respect to its other products and services.
The Company sells its products and services in a highly fragmented
market and its competitors consist of a few relatively large multinational
suppliers and a much larger number of small, regional competitors. The Company
believes that its industry may experience consolidation as business information
systems become more complex and as more manufacturers adopt sophisticated
business information systems, forcing smaller companies in the industry to
specialize or attempt to merge with their competitors. To compete effectively in
the markets the Company targets, the Company will need to continue to grow and
attain sufficient size to have the resources to timely develop new products in
response to evolving technology and customer demands, and sell products to a
variety of manufacturing industries worldwide. No assurance can be given that
the Company will be able to grow sufficiently to enable it to compete
effectively.
4
<PAGE> 6
INTEGRATION OF INTREPID SOFTWARE, INC. AND JUST-IN-TIME ENTERPRISE
SYSTEMS, INC. In March 1995, Interactive, Inc., the Company's predecessor,
completed a stock-for-stock merger with ISI, which, prior to the merger,
developed and marketed the Company's Intrepid application software product on a
turnkey basis. 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 ("JES") application software product.
Interactive, ISI 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
or integrating the Intrepid and INFOFLO products. Moreover, there can be no
assurance that the Company will realize any product enhancements or increased
revenues as a result of the merger with ISI or the acquisition of JIT. The
success of the merger with ISI and the acquisition of JIT will depend, in large
part, on the ability of the Company to retain the customers and employees of ISI
and JIT, and to continue to develop and release product enhancements and new
product releases of the JIT product. There can be no assurance that the Company
will be successful in this regard. The failure to accomplish any of the goals of
the merger and acquisition, or the failure to successfully integrate the
operations of JIT, would have a material adverse effect on the Company's future
operating results and working capital.
DEPENDENCE ON MANUFACTURING INDUSTRY. The Company's business depends
substantially upon the capital expenditures of mid-sized discrete manufacturers
and large contract manufacturers, which in part depends upon the demand for such
manufacturers' products. A recession or other adverse event affecting the
manufacturing industry in the United States, the United Kingdom, or other
markets served by the Company could affect such demand, forcing manufacturers in
the Company's targeted markets to curtail or postpone capital expenditures on
business information systems. Any such change in the amount or timing of capital
expenditures in its targeted markets would have a material adverse effect on the
Company's financial condition and results of operations.
DEPENDENCE ON PRINCIPAL PRODUCTS. Substantially all of the Company's
revenue is derived from the sale of manufacturing information systems and
related support services. Accordingly, any event that adversely affects fees
derived from the sale of such systems, such as competition from other products,
significant flaws in the Company's software products or incompatibility with
third party hardware or software products, negative publicity or evaluation, or
obsolescence of the hardware platforms or software environments in which the
systems run, would have a material adverse effect on the Company's results of
operations. The Company's future financial performance will depend, in
substantial part, on the continued development and introduction of new and
enhanced versions of INFOFLO, JES and other products, and customer acceptance of
such new and enhanced products.
NEW PRODUCTS AND RAPID TECHNOLOGICAL CHANGE. The markets for the
Company's products are characterized by rapid technological advances, evolving
industry standards, changes in end-user requirements and frequent new product
introductions and enhancements. The introduction of products embodying new
technologies and the emergence of new industry standards could render the
Company's existing products and products currently under development obsolete
and unmarketable. The Company's future success will depend upon its ability to
enhance its current products and develop and successfully introduce and sell new
products that keep pace with technological developments and respond to evolving
end-user requirements. Any failure by the Company to anticipate or respond
adequately to technological developments or end-user requirements, or any
significant delays in product development or introduction, could damage the
Company's competitive position in the marketplace and reduce revenues. The
Company may need to increase the size of its product development staff in the
near term to meet these challenges. There can be no assurance that the Company
will be successful in hiring and training adequate product development personnel
to meet its needs. In the past, the Company has occasionally experienced delays
in the introduction of new products and product enhancements. There can be no
assurance that the Company will be successful in developing and marketing new
products or product enhancements on a timely basis or that the Company will not
experience significant delays in the future. Any failure to successfully develop
and market new products and product enhancements would have a material adverse
effect on the Company's results of operations.
KEY EMPLOYEES. The Company's continued success will depend upon its
ability to retain a number of key employees, including Robert C. Vernon, Mark
Hellinger, Bruce H. Leith, Ken Cooper and Douglas J. McGregor, none of whom is
subject to employment agreements that restrict their ability to compete with the
Company following the termination of their employment. In addition, the Company
believes that its future success will depend, in large part, on its ability to
attract and retain highly skilled technical, managerial and marketing personnel.
Competition for such personnel, in particular for product development and
product implementation personnel, is
5
<PAGE> 7
intense, and the Company competes in the market for such personnel against
numerous companies, including larger, more established companies with
significantly greater financial resources than the Company. The Company has at
times experienced difficulty in recruiting qualified personnel and there can be
no assurance that the Company will not experience such difficulties in the
future. There can be no assurance that the Company will be successful in
attracting and retaining skilled personnel. The loss of certain key employees or
the Company's inability to attract and retain other qualified employees could
have a material adverse effect on the Company's business.
EXPANSION PLANS. 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 the 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.
MANAGEMENT OF GROWTH. The Company has recently experienced rapid growth
in the number of its employees. This growth has resulted in an increase in the
level of responsibility for both existing and new management personnel. To
manage its growth effectively, the Company will be required to improve its
operating and financial systems and to expand, train and manage its employee
base. There can be no assurance that the management skills and systems currently
in place will be adequate if the Company continues to grow or that the Company
will be able to effectively manage its recent growth and successfully assimilate
its new employees.
INTERNATIONAL OPERATIONS AND RISK OF INTERNATIONAL SALES. The Company
derives a substantial portion of its total revenues from operations outside
North America. The international business is subject to various risks common to
international activities, including exposure to currency fluctuations, political
and economic instability, the greater difficulty of administering business
abroad, and the need to comply with a wide variety of foreign import and United
States export laws and regulatory requirements. The Company does not currently
engage in foreign currency hedging transactions.
DEPENDENCE ON THIRD PARTY SOFTWARE AND HARDWARE. INFOFLO and JES
incorporate and use software products and computer hardware and equipment
developed by other entities. The fourth generation language ("4GL") set of
development tools used by the Company is provided by UniData, Inc. (previously
Millsoft, Inc.) and Oracle Corporation. The relational database management
systems used in the Company's products have been developed by UniData, Inc.,
VMARK Software, Inc., and Oracle Corporation, and the operating systems on which
the Company's products can function (UNIX, DOS, NT) have been developed or are
owned by Novell Corporation and Microsoft Corporation. A portion of the software
in the Company's ezXpert Product Configurator module is provided by Expert
Application Systems Limited. The computer hardware and equipment sold as part of
the Company's turnkey systems are manufactured by Hewlett-Packard Company
("Hewlett-Packard"), International Business Machines Corporation ("IBM"),
Digital Equipment Corporation ("Digital Equipment") and others. There can be no
assurance that all of these entities will remain in business, that their product
lines will remain viable or that these products will otherwise continue to be
available to the Company. If any of these entities ceases to do business, or
abandons or fails to enhance a particular product line, the Company may need to
seek other suppliers. This could have a material adverse effect on the Company's
results of operations. In addition, there also can be no assurance that the
Company's current suppliers will not significantly alter their pricing in a
manner adverse to the Company.
6
<PAGE> 8
SIGNIFICANT RISK OF PRODUCT LIABILITY AND LACK OF INSURANCE. Because
the Company markets and sells its software products on a turnkey basis, which
includes rendering professional consulting services, the Company incurs
significant risks of professional and other liability. The Company has no
insurance covering product liability or damages arising from negligent acts,
errors, mistakes or omissions in rendering or failing to render its professional
services. In addition, there can be no assurance that the limitations of
liability set forth in the Company's license agreements or other contracts would
be enforceable or would otherwise protect the Company from liability for damages
to a customer resulting from a defect in one of the Company's products or
arising as a result of professional services rendered by the Company. Such a
claim, if successful and of sufficient magnitude, could have a material adverse
effect on the Company and its financial position and results of operations.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS. The Company attempts to
protect ownership of its software with a combination of copyright, trademark and
trade secret laws, employee and third-party nondisclosure agreements, and other
methods of protection common in the industry. Despite these precautions, it may
be possible for an unauthorized third party to copy or reverse-engineer certain
portions of the Company's products or to obtain and use information that the
Company regards as proprietary. The Company has no patents. The Company licenses
the source code for its software to some customers to enable them to customize
the software to meet particular requirements. Although the Company's source code
license contains confidentiality and nondisclosure provisions, there can be no
assurance that such customers will take adequate precautions to protect the
source code. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to the same extent as do the laws of the United
States. There can be no assurance that the mechanisms used by the Company to
protect its software will be adequate or that the Company's competition will not
independently develop software products that are substantially equivalent or
superior to the Company's software products. As the number of software products
in the industry increases and the functionality of these products further
overlaps, the Company believes that software programs could become increasingly
the subject of infringement claims. Although the Company's products have never
been the subject of infringement claims, there can be no assurance that third
parties will not assert infringement claims against the Company in the future or
that any such assertion will not require the Company to enter into royalty
arrangements or result in costly litigation and liability.
CONTROL BY EXISTING STOCKHOLDERS. The Company's executive officers and
directors beneficially owned a substantial portion of the Company's outstanding
shares of Common Stock. As a result, these stockholders, if acting together,
would effectively be able to control most matters requiring approval by the
stockholders of the Company, including the election of a majority of the
directors. The voting power of these stockholders under certain circumstances
could have the effect of delaying or preventing a change in control of the
Company. The Company has entered into agreement with its executive officers and
directors indemnifying them against losses they may incur in legal proceedings
arising from their service to the Company.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS. The Company's Board
of Directors has the authority to issue up to 5,000,000 shares of Preferred
Stock and to determine the price, rights, preferences and privileges of those
shares without any further vote or action by the stockholders. The rights of the
holders of common stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of the outstanding voting stock of the Company. The Company has no present plans
to issue shares of Preferred Stock. In addition, the Company will become subject
to the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which could delay or make more difficult a merger, tender offer
or proxy contest involving the Company. Furthermore, certain provisions of the
Company's Certificate of Incorporation may have the effect of delaying or
preventing changes in control of management of the Company, which could
adversely affect the market price of the Company's Common Stock.
7
<PAGE> 9
SELLING STOCKHOLDERS
The following table sets forth the name of the Selling Stockholder, the
number of shares of Common Stock owned beneficially by him as of November 20,
1996 and the number of shares which may be offered pursuant to this Prospectus.
This information is based upon information provided by the Selling Stockholder.
Because the Selling Stockholder may offer all, some or none of its Common Stock,
no definitive estimate as to the number of shares thereof that will be held by
the Selling Stockholder after such offering can be provided.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING (1) SHARES OFFERING (1)(3)
------------------- BEING ------------------
NAME NUMBER PERCENT (2) OFFERED NUMBER PERCENT(2)
---- ------ ----------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Randolph S. Naylor (4), (5), (6)....................... 386,725 8.7% 386,725 0 0%
</TABLE>
- ---------------------
(1) The individual named in the table has sole voting and investment power with
respect to all shares beneficially owned by him.
(2) Applicable percentage of ownership is based on 4,438,734 shares of Common
Stock outstanding on November 20, 1996, adjusted as required by rules
promulgated by the Commission.
(3) Assumes the sale of all shares offered hereby.
(4) Mr. Naylor has served as a director of the Company since March 1995. He was
a founder of Intrepid Software, Inc. ("ISI") and served as President of ISI
from 1976 to March 1995, when ISI was acquired by the Company. In April
1996, Mr. Naylor became Senior Vice President of the Company. From the
merger of ISI with the Company in March 1995 until April 1996, Mr. Naylor
served as Vice President, Marketing of the Company.
(5) Mr. Naylor entered into a two-year employment agreement with the Company in
March 1995. Such agreement may continue after the expiration of the two-year
term subject to the right of either party to terminate the agreement upon
six months notice. In addition, after the expiration of the two-year term,
the Company may terminate the agreement without notice provided that it pays
Mr. Naylor an amount equal to one half of the annual compensation, including
bonuses, paid to Mr. Naylor in the prior year. Mr. Naylor's annual
compensation is set by the Compensation Committee of the Company's Board of
Directors.
(6) In October 1990, Mr. Naylor loaned the Company $200,000 pursuant to a 10%
Subordinated Debenture. Pursuant to the terms of the Subordinated Debenture,
interest was paid to Mr. Naylor semi-annually at an annual rate of 10%, and
the entire principal amount was to become due and payable on December 31,
1995. In March 1995, Mr. Naylor exercised a warrant to purchase 141,361
shares of Common Stock. The aggregate exercise price of $25,000 was paid by
reducing the principal amount of the Subordinated Debenture to $175,000,
which was paid in full during 1995.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Stockholder may sell
Shares from time to time in transactions on the Nasdaq National Market, in
privately negotiated transactions or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholder may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholder or the purchasers of the Shares for whom such broker-dealers
may act as agent or to whom they sell as principal, or both (which compensation
to a particular broker-dealer might be in excess of customary commission).
The Selling Stockholder and any broker-dealers who act in connection
with the sale of Shares hereunder may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
Notwithstanding the foregoing, broker-dealers who are qualifying
registered market makers on the National Association of Securities Dealers
Automated Quotation System (the "Nasdaq") may engage in passive
8
<PAGE> 10
market making transactions in the Common Stock of the Company on the Nasdaq
Stock Market in accordance with Rule 10b-6A under the Exchange Act, during the
two business day period before commencement of sales in this offering. The
passive market making transactions must comply with applicable price and volume
limits and be identified as such. In general, a passive market maker may display
its bid at a price not in excess of the highest independent bid for the
security. If all independent bids are lowered below the passive market maker's
bid, however, such bid must then be lowered when certain purchase limits are
exceeded. Net purchases by a passive market maker on each day are generally
limited to a specified percentage of the passive market maker's average daily
trading volume in the Common Stock of the Company during a prior period and must
be discontinued when such limit is reached. Passive market making may stabilize
the market price of the Common Stock of the Company at a level above that which
might otherwise prevail and, if commenced, may be discontinued at any time.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby has
been passed upon for the Company by Cooley Godward LLP, San Diego, California.
EXPERTS
The consolidated financial statements of Interactive Group, Inc.,
appearing in Interactive Group, Inc.'s Annual Report (Form 10-K) for the year
ended December 31, 1995, have been audited by Ernst & Young LLP, Romito,
Tomasetti & Associates, P.C., and Morison Stoneham, independent auditors, as set
forth in their reports thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 3
Risk Factors.............................................................. 3
Selling Stockholder....................................................... 8
Plan of Distribution...................................................... 8
Legal Matters............................................................. 9
Experts................................................................... 9
</TABLE>
9
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the
underwriting discounts and commissions, payable by the Registrant in connection
with the sale of the Common Stock being registered. All the amounts shown are
estimates except for the registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Registration Fee ............................... $ 571.88
Legal fees and expenses ........................ 6,000.00
Accounting fees and expenses ................... 3,500.00
----------
Total ................................. $10,071.88
==========
</TABLE>
ITEM 15. .........INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its Directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
The Registrant's Certificate of Incorporation and By-laws include
provisions to (i) eliminate the personal liability of its directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by Section 102(b)(7) of the General Corporation Law of Delaware (the "Delaware
Law") and (ii) require the Registrant to indemnify its directors and officers to
the fullest extent permitted by Section 145 of the Delaware Law, including
circumstances in which indemnification is otherwise discretionary. Pursuant to
Section 145 of the Delaware law, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate the directors' duty of care, and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware Law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Registrant, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
acts or omissions that the director believes to be contrary to the best
interests of the Registrant or its stockholders, for any transaction from which
the director derived an improper personal benefit, for acts or omissions
involving a reckless disregard for the director's duty to the Registrant or its
stockholders when the director was aware or should have been aware of a risk of
serious injury to the Registrant or its stockholders, for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the Registrant or its stockholders, for improper
transactions between the director and the Registrant and for improper
distributions to stockholders and loans to directors and officers. The provision
also does not affect a director's responsibilities under any other law, such as
the federal securities law or state or federal environmental laws.
The Registrant has entered into indemnity agreements with each of its
directors and executive officers that require the Registrant to indemnify such
persons against expenses, judgments, fines, settlements and other amounts
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be made a
party by reason of the fact that such person is or was a director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Registrant and,
II-1
<PAGE> 12
with respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification
thereunder.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
The Registrant has an insurance policy covering the officers and
directors of the Registrant with respect to certain liabilities, including
liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
<S> <C>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Romito, Tomasetti & Associates, P.C., Independent Auditors.
23.3 Consent of Morison Stoneham, Independent Auditors.
23.4 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 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
Securities 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
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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;
(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
II-2
<PAGE> 13
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;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided however, that clauses (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by these clauses is
contained in periodic reports filed by the Registrant pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement; (2) that, for the purpose of determining any liability
under the Securities Act, each post-effective amendment 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; and (3) 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.
The undersigned Registrant undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of the 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 shall be
deemed to be part of the registration statement as of the time it was declared
effective; (2) for the purpose of determining any liability under the Securities
Act, 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; and (3) for the purposes of determining
any liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the 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.
II-3
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on November 22, 1996.
INTERACTIVE GROUP, INC.
By: /s/ ROBERT C. VERNON
--------------------------------
Robert C. Vernon
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert C. Vernon and Michael D. Reynolds, and
each of them, as 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 (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other 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 connection therewith,
as fully 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 any of
them or their or his substitute or substituted, 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 by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ ROBERT C. VERNON Chairman of the Board and Chief Executive November 22, 1996
- ------------------------------------------ Officer (Principal Executive Officer)
(Robert C. Vernon)
/s/ MICHAEL D. REYNOLDS Chief Financial Officer and Secretary November 22, 1996
- ------------------------------------------ (Principal Financial and Accounting Officer)
(Michael D. Reynolds)
/s/ RANDOLPH S. NAYLOR
- ------------------------------------------ Senior Vice President and Director November 22, 1996
(Randolph S. Naylor)
/s/ MARK HELLINGER President and Chief Operating Officer-North November 22, 1996
- ------------------------------------------ American Operations and Director
(Mark Hellinger)
/s/ MICHAEL H. GAY
- ------------------------------------------ Director November 22, 1996
(Michael H. Gay)
/s/ LYNDOL L. COOK
- ------------------------------------------ Director November 22, 1996
(Lyndol L. Cook)
</TABLE>
II-4
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
------ ----------- --------
<S> <C>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Romito, Tomasetti & Associates, P.C., Independent Auditors.
23.3 Consent of Morison, Stoneham, Independent Auditors.
23.4 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5.1
OPINION OF COOLEY GODWARD LLP
November 22, 1996
Interactive Group, Inc.
5085 Murphy Canyon Road
San Diego, California 92123
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Interactive Group, Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of 386,725 shares of the Company's
Common Stock, $.001 par value, to be sold by a certain stockholder, as described
in the Registration Statement (the "Common Stock").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation, and By-laws, and such
other documents, records, certificates, memoranda and other instruments as we
deem necessary as a basis for this opinion. We have assumed the genuineness and
authenticity of all documents submitted to us as originals, the conformity to
originals of all documents submitted to us as copies thereof, and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Common Stock is validly issued, fully paid and nonassessable.
We consent to reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
/S/ D. BRADLEY PECK
- --------------------------
D. Bradley Peck
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement Form S-3 and related Prospectus of Interactive Group,
Inc. for the registration of 386,725 shares of its common stock and to the
incorporation by reference therein of our report dated February 22, 1996, with
respect to the consolidated financial statements of Interactive Group, Inc.
included in its Annual Report on Form 10-K for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
November 20, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ROMITO, TOMASETTI & ASSOCIATES, P.C.,
INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Interactive
Group, Inc. for the registration of shares of its common stock and to the
incorporation by reference therein of our report dated March 17, 1995 with
respect to the combined financial statements of Intrepid Software, Inc. included
in the Form 10-K filed with the Securities and Exchange Commission on March 28,
1996.
ROMITO, TOMASETTI & ASSOCIATES, P.C.
Burlington, Massachusetts
November 19, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF MORISON STONEHAM, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Interactive
Group, Inc. for the registration of shares of its common stock and to the
incorporation by reference therein of our report dated March 15, 1994 with
respect to the combined financial statements of Interactive (UK) Ltd. included
in the Form 10-K filed with the Securities and Exchange Commission on March 28,
1996.
MORISON STONEHAM
London, England
November 20, 1996
