<PAGE>

      As filed with the Securities and Exchange Commission on June 24, 2004

                                                    Registration No. 333-_______

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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                               ------------------
                       INTERACTIVE SYSTEMS WORLDWIDE INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                           2 Andrews Drive, 2nd Floor
                             West Paterson, NJ 07424
                            Telephone: (973) 256-8181
                            Facsimile: (973) 256-8211
--------------------------------------------------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

            DELAWARE                                  22-3375134
--------------------------------         -------------------------------------
  (STATE OR OTHER JURISDICTION           (IRS EMPLOYER IDENTIFICATION NUMBER)
       OF INCORPORATION OR
          ORGANIZATION)


            INTERACTIVE SYSTEMS WORLDWIDE INC. 1995 STOCK OPTION PLAN
            INTERACTIVE SYSTEMS WORLDWIDE INC. 1996 STOCK OPTION PLAN
--------------------------------------------------------------------------------
                            (FULL TITLE OF THE PLANS)

                           Bernard Albanese, President
                       Interactive Systems Worldwide Inc.
                           2 Andrews Drive, 2nd Floor
                             West Paterson, NJ 07424
                            Telephone: (973) 256-8181
                            Facsimile: (973) 256-8211
--------------------------------------------------------------------------------
            (NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE
                              OF AGENT FOR SERVICE)
                               ------------------

                                   Copies To:
                            Richard M. Hoffman, Esq.
                      Friedman Kaplan Seiler & Adelman LLP
                                  1633 Broadway
                            New York, New York 10019
                            Telephone: (212) 833-1100
                            Facsimile: (212) 355-1250



<PAGE>





                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================ ================= ===================== ======================= ================
                                                 PROPOSED MAXIMUM       PROPOSED MAXIMUM        AMOUNT OF
 TITLE OF SECURITIES TO BE     AMOUNT TO BE     OFFERING PRICE PER     AGGREGATE OFFERING     REGISTRATION
        REGISTERED            REGISTERED (1)          SHARE                  PRICE                 FEE
---------------------------- ----------------- --------------------- ----------------------- ----------------
<S>                            <C>                    <C>                   <C>                   <C>
Common Stock ($.001 par        325,000 (2)            $2.66                 $864,500              $110
value per share)
============================ ================= ===================== ======================= ================
</TABLE>

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

(1) Pursuant to Rule 416 under the Securities Act of 1933, this Registration
Statement also covers such indeterminable number of additional shares as may
become issuable pursuant to terms designed to prevent dilution resulting from
stock splits, stock dividends or similar events.

(2) Represents the number of shares that may be issued upon exercise of options
available for grant under the Interactive Systems Worldwide Inc. 1996 Stock
Option Plan.

(3) This estimate is made pursuant to Rule 457(h) under the Securities Act of
1933 solely for the purpose of calculating the amount of the registration fee.
In accordance with Rule 457(h), the price shown is based upon the average of the
high and low price of the Registrant's Common Stock as of June 21, 2004 as
reported on the Nasdaq SmallCap Market.




<PAGE>




                                EXPLANATORY NOTE

         We previously registered 649,955 shares of our common stock issuable
upon exercise of options granted or to be granted under the Interactive Systems
Worldwide Inc. 1995 Stock Option Plan. We also previously registered an
aggregate of 1,175,000 shares of our common stock issuable upon exercise of
options granted or to be granted under the Interactive Systems Worldwide Inc.
1996 Stock Option Plan (the "1996 Plan"). On March 10, 2003, our stockholders
approved an amendment to the 1996 Plan increasing the number of shares
authorized for issuance under the 1996 Plan from 1,175,000 to 1,500,000 shares.
The contents of the registration statements upon which the initial 1,824,955
shares were registered (Registration Nos. 333-41847 and 333-84760) are
incorporated herein by reference pursuant to General Instruction E of Form S-8.

         This registration statement is being filed to register an additional
325,000 shares of common stock for issuance pursuant to future grants under the
1996 Plan. The documents constituting the prospectus under Part I of this
registration statement for the 1996 Plan are not set forth herein but will be
sent or given to the participants in the 1996 Plan as specified by Rule 428(b)
under the Securities Act of 1933, as amended. That prospectus, called the Plan
Prospectus, has been omitted from this registration statement as permitted by
Part I of Form S-8.

         This registration statement is also being filed to establish a reoffer
prospectus in accordance with the requirements of Part I of Form S-3 and
pursuant to General Instruction C of Form S-8 to be used in connection with the
reoffer and resale of shares issuable upon the exercise of options which we have
granted or will grant to certain of our officers and directors and other key
employees who may be deemed to be our affiliates.




<PAGE>




REOFFER PROSPECTUS


                         173,000 SHARES OF COMMON STOCK

                       INTERACTIVE SYSTEMS WORLDWIDE INC.

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

         This Prospectus relates to the subsequent resale or offer for sale on
the NASDAQ SmallCap Market or otherwise, of shares of our common stock which may
be acquired by certain persons who may be deemed our affiliates upon the
exercise of options granted to them under the Interactive System Worldwide Inc.
1995 Stock Option Plan and the Interactive Systems Worldwide Inc. 1996 Stock
Option Plan. In connection with such resales or offers for sale, such persons
and the brokers through whom such shares may be sold may be deemed to be
"underwriters" as that term is defined in Section 2(11) of the Securities Act of
1933, as amended. We will not receive any of the proceeds from the sale of the
shares offered hereby.

         Our common stock is listed on the NASDAQ SmallCap Market, under the
symbol "ISWI."

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

         INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE SECTION ENTITLED,
"RISK FACTORS," BEGINNING ON PAGE 4 TO READ ABOUT SOME FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.

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

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

         NEITHER THE NEVADA STATE GAMING CONTROL BOARD NOR THE NEVADA GAMING
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE
INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

                               -----------------
                                  June 24, 2004
                               -----------------
--------------------------------------------------------------------------------



<PAGE>



                                TABLE OF CONTENTS

                                                                          PAGE

OUR COMPANY..................................................................3

RISK FACTORS.................................................................4

FORWARD LOOKING STATEMENTS..................................................10

USE OF PROCEEDS.............................................................11

SELLING STOCKHOLDERS........................................................11

PLAN OF DISTRIBUTION........................................................12

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...........................14

WHERE YOU CAN FIND MORE INFORMATION.........................................15

LEGAL MATTERS...............................................................15

EXPERTS.....................................................................15

         You should rely only on information contained in this document or to
which we have referred you. Neither we nor the selling stockholders have
authorized anyone to provide you with different or additional information. This
document may only be used where it is legal to sell these securities. The
information in this document may only be accurate on the date of this document.
You should not assume that the information in the prospectus, or incorporated
herein by reference, or in any prospectus supplement is accurate as of any date
other than the date on the front of those documents.

         As used in this prospectus, the terms "company", "we", "our", "ours",
and "us" may, depending upon the context, refer to Interactive Systems Worldwide
Inc. or to Interactive Systems Worldwide Inc. together with its consolidated
subsidiaries taken as a whole.




                                       2
<PAGE>




                                   OUR COMPANY

         The following is only a summary. We urge you to read this entire
prospectus, including the more detailed consolidated financial statements, notes
to the consolidated financial statements and other information incorporated by
reference from our other filings with the SEC. Investing in our common stock
involves risks. Therefore, please carefully consider the information provided
under the heading "Risk Factors" beginning on page 4.

         We have designed, developed and patented an interactive hardware and
proprietary software system (the "SportXction(TM) System") that enables users to
wager at fixed prices during the course of a sporting event, such As soccer,
football, baseball, basketball, golf, tennis, rugby and cricket, among many
others. The SportXction(TM) System accepts bets not only on the outcome of a
sporting event, but also on discrete parts of the event and on specific game
situations. These include such wagers as will a team make a first down, which
player will score next, will a batter get on base or will a penalty shot be
successful. The SportXction(TM) System is unique in thaT it permits betting
continuously while the game is in progress, or between game events, such as
downs, pitches, changes in ball possession and similar situations, permitting
more frequent placing and cashing of wagers.

         The SportXction(TM) System software monitors and changes the odds on
the contestants in a sporting event To induce the players to wager such that the
betting pool for each betting proposition is continuously driven toward a
financial balance, to within a pre-set level. In general, a balanced pool is
achieved when the money bet on the losing outcomes of a betting proposition is
sufficient to pay off the winning outcomes of that proposition plus provide the
operator with a commission for brokering the transaction. The SportXction(TM)
System maintains a record of all wagers placed by each bettor and keeps an
account for each bettor, subtracting bet amounts and adding payouts. The
SportXction(TM) System has been developed to allow wagers to be placed
simultaneously through a variety of input devices, all interconnected to our
central system, such as interactive television set-top boxes, personal computers
communicating via the Internet and mobile telephones. We have also recently
completed the program development of a non-wagering (i.e. contest) version of
the SportXction(TM) System. The SportXction(TM) SYstem is also being readied for
use in conjunction with fixed odds betting terminals, a service which was
previously available with an earlier version of the SportXction(TM)System.

         On July 31, 2002, we acquired all of the outstanding share capital of
Global Interactive Gaming Limited ("GIG"), a British interactive gaming service
provider that markets its services to interactive television carriers which
employ satellite, cable and terrestrial programming, mobile telephone operators,
licensed bookmakers and casinos. GIG is located in London, England. GIG had been
our worldwide exclusive licensee for our technology in all business activities
for which our technology was legally usable other than wagering in Nevada and
for securities transactions and lotteries. GIG has wholly owned subsidiaries,
GIG Operations Limited, which holds a British bookmaker's agency permit, and
Brightform Limited, which holds a British bookmaker's permit, and is therefore
capable of offering its own complete betting service.

         Interactive Systems Worldwide Inc. is a Delaware corporation formed in
1995 with its principal executive offices located at Two Andrews Drive, 2nd
Floor, West Paterson, New Jersey 07424-2672. Our main telephone number is (973)
256-8181 and our main corporate Web site is www.isw.com. All of our EDGAR
filings with the Securities and Exchange Commission may be accessed through this
Web site.


                                       3
<PAGE>

                                  RISK FACTORS

         Investing in our securities involves risk. You should carefully
consider the following factors as well as other information included or
incorporated by reference in this prospectus before deciding to purchase our
common stock. The risks and uncertainties we have described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our business
operations.

         Any of these risks could have a material adverse effect on our
business, financial condition, results of operations, cash flows or prospects,
which could in turn have a material adverse effect on the price of our common
stock. In such case, you may lose all or part of your investment.

OUR SUCCESS IS DEPENDANT ON OUR ABILITY TO MARKET, AND THE MARKET'S ACCEPTANCE
OF, A SINGLE PRODUCT.

         Our success will depend primarily on the success of a single product,
the SportXction(TM) System, and our ability and our business partners, and
customers, ability to market the SportXction(TM) System and develop a
significant number of players with interest in wagering or playing contests
utilizing the SportXction(TM) System. Previously, we pursued an aggressive
marketing and advertising campaign to introduce the SportXction(TM) System to
the gaming public in Nevada. Nonetheless, the total number of players who used
the SportXction(TM) System in NevaDa was limited, and the total amount wagered
through the SportXction(TM) System in Nevada was modest, as a result of which we
ceased our Nevada operations. To achieve commercial success, the SportXction(TM)
System, must be accepteD by a significant number of gaming patrons. There can be
no assurance that the SportXction(TM) System will be accepted by its intended
market. If the SportXction(TM) System does not achieve sufficient market
acceptance, our business, financial condition and results of operations would be
materially and adversely affected.

WE HAVE A HISTORY OF LOSSES AND THE LIKELIHOOD OF OUR SUCCESS DEPENDS ON MANY
FACTORS, INCLUDING SOME THAT ARE OUT OF OUR CONTROL.

         Until entering into license agreements with GIG, we were in the
development stage and generated limited revenues from the SportXction(TM)
System. As of March 31, 2004 and March 31, 2003, we had cumulative net losses
since inception of approximately $10.4 million and $7.6 million, respectively.
We incurred a net loss of $1.5 million during the quarter ended March 31, 2004.
As a result of the acquisition of GIG on July 31, 2002, we no longer receive the
minimum payments under the license agreements. Instead, our revenue is now based
upon our ability and the ability of our business partners to generate revenue
through the SportXction(TM) System. The likelihood of our success must be
considered in light of the problems, delays, expenses and difficulties
encountered by an enterprise in our stage of development, some of which may be
beyond our control. These include, but are not limited to, our ability to
operate our anticipated business; delays in commencement of operation of the
SportXction(TM) System by our business partners; the ability of our company and
our business partners to attract a sufficient number of players desirous of
utilizing the SportXction(TM) System; unanticipated problems relating to further
software enhancement and development; acceptance of the SportXction(TM) System
by the wagering public; gaming regulations and gaming taxes (including those in
the United States, United Kingdom and other foreign countries); the competitive
and regulatory environment in which we operate; marketing problems; and
additional costs and expenses that may exceed current estimates.



                                       4
<PAGE>

WE ANTICIPATE CONTINUED LOSSES AND NEGATIVE CASH FLOW, AND WE CAN NOT PREDICT
WHETHER OR WHEN WE WILL AGAIN BECOME PROFITABLE.

         Following the acquisition of GIG, our revenue, expenses and overall
profitability have been adversely impacted. By recovering our software license,
we now act as the primary operator of the SportXction(TM) System and are
entitled to all of the net proceeds generated by our technology, net of any
revenue sharing arrangements with our business partners, rather than the
fractional share we would have received as a licensor of our technology. We
incur and will continue to incur greater costs, including operating, marketing,
and advertising expenses, without the comfort of previous minimum license fees.
We expect to incur losses and negative cash flow at least for the fiscal year
ending September 30, 2004.

A CHANGE IN OUR BUSINESS PLAN MAY RESULT IN THE NEED TO RAISE ADDITIONAL
FINANCING, WHICH MAY NOT BE AVAILABLE ON TERMS ACCEPTABLE TO US, IF AT ALL.

         We anticipate that our existing resources, including the proceeds of
our recent financing, will be adequate to fund our capital and operating
requirements through at least the next 12 months based upon our current business
plan and longer, subject to the revenues generated by the SportXction(TM)
System. Our cash requirements may vary materially from those now planned due to
a number of factors, including the extent to which we develop the
SportXction(TM) System under our own brand, the response of competitors to the
SportXction(TM) System and our ability and the ability of our management to
satisfy applicable licensing requirements. We may need to raise additional
capital to fund our future operations. There can be no assurance that additional
financing will be available when needed on terms acceptable to us, or at all. If
additional funds are raised by issuing equity securities, further dilution to
existing stockholders will result and future investors may be granted rights
superior to those of existing stockholders. Moreover, raising additional funds
in the future may trigger the anti-dilution provisions in the debentures or
warrants issued in our recent financing, resulting in further dilution to
existing stockholders. Insufficient funds may prevent us from implementing our
business strategy or may require us to limit our operations significantly.

IF WE ARE FORCED TO REPAY THE DEBENTURES IN CASH, WE MAY NOT HAVE ENOUGH CASH TO
FUND OUR OPERATIONS AND MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING.

         Our debentures issued in November 2003 contain certain provisions and
restrictions, which if violated, could result in the full principal amount
together with interest and other amounts becoming immediately due and payable in
cash. If such an event occurred and if a holder of the debentures demanded
repayment, we might not have the cash resources to repay such indebtedness when
due. The debentures are repayable in 24 equal monthly installments beginning in
May 2004 with interest payable quarterly. Subject to certain conditions, the
monthly principal payments and the quarterly interest payments on the debentures
may be paid, at our option, in cash or additional shares of our common stock. If
we make these payments in cash rather than additional shares of common stock, it
would reduce the amount of cash available to fund operations. The debentures
contain restrictions upon incurring additional indebtedness. The existence of
debt service obligations and the terms and anti-dilution provisions of the
debentures and warrants may limit our ability to obtain additional financing on
favorable terms, or at all.



                                       5
<PAGE>

IF THE INVESTORS IN OUR RECENT FINANCING CONVERT THEIR DEBENTURES OR EXERCISE
THEIR WARRANTS, OR IF WE ELECT TO PAY PRINCIPAL AND/OR INTEREST ON THE
DEBENTURES WITH SHARES OF OUR COMMON STOCK, OUR EXISTING STOCKHOLDERS WILL BE
SIGNIFICANTLY DILUTED. IN ADDITION, SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON
STOCK COULD CAUSE THE MARKET PRICE TO GO DOWN.

         To the extent that the debentures are converted and/or the warrants are
exercised, a significantly greater number of shares of our common stock will be
outstanding and the interests of our existing stockholders will be substantially
diluted. If these additional shares are sold into the market, it could decrease
the market price of our common stock and encourage short sales. Short sales and
other hedging transactions could place further downward pressure on the price of
our common stock. We cannot predict whether or how many additional shares of our
common stock will become issuable as a result of these provisions. Additionally,
we may elect to make payments of principal of and interest on the debentures in
shares of our common stock, which could result in increased downward pressure on
our stock price and further dilution to our existing stockholders. We made our
January 2004 and April 2004 interest payments on the debentures in shares of our
common stock. We made our May 2004 principal repayment on the debentures in
cash, deferred our June 2004 principal repayment as permitted under the
debenture, and have advised the holders of the debentures of our current
intention to make future interest and principal payments in shares of our common
stock.

OUR SALES AND INTEGRATION CYCLES WITH POTENTIAL BUSINESS PARTNERS ARE LONG AND
UNPREDICTABLE, AND MAY ENCOUNTER UNANTICIPATED PROBLEMS.

         The sales and integration cycles with potential business partners for
our SportXction(TM) System are long and unpredictable. Potential business
partners typically undertake a lengthy evaluation process. As a result, we may
not recognize revenue from sales efforts for an extended period of time, if at
all. Assuming an agreement is reached, the SportXction(TM) System must then be
integrated with the business partner's technical environment. The length of time
to complete the integration process may be adversely impacted by a number of
factors, including the business partner's system infrastructure, its strategic
priorities and technical resources. Unanticipated problems during the
integration process could result in extensive delays in launching the
SportXction(TM) System or termination of an agreement, which could materially
and adversely affect our business, financial condition and results of
operations.

OUR INTERNATIONAL OPERATIONS SUBJECT US TO CURRENCY EXCHANGE RISKS.

         A significant portion of our operations and all of our current sales
are in the United Kingdom and denominated in British Pounds. As a result, our
operating results may be adversely affected by changes in exchange rates. Given
the volatility of currency exchange rates, we cannot predict the effect of
exchange rate fluctuations on our future operating results.



                                       6
<PAGE>

OUR BUSINESS IS RELIANT ON OBTAINING AND RETAINING CERTAIN GAMING LICENSES.

         Sports wagering and wagering over the Internet is highly regulated
throughout the world. Our inability to obtain and/or retain any gaming licenses
or other approvals that may be required could have a material adverse impact on
us.

WE FACE SUBSTANTIAL COMPETITION IN THE GAMING INDUSTRY AND MAY NOT BE ABLE KEEP
UP WITH FUTURE TECHNOLOGICAL CHANGES.

         Our SportXction(TM) System and the business intended to be operated by
us competes with other forms of gambling, including, but not limited to, sports
wagering as currently conducted world-wide, casino games (such as traditional
slot machines, video slot, poker and blackjack machines, roulette, card games,
keno and craps), bingo, government-sponsored lotteries, on and off- track
betting on horses and dogs, jai alai, offshore cruise ships, riverboats, illegal
wagering of all types including that conducted over the Internet, and Native
American gaming operations. The gaming industry is also subject to shifting
consumer preferences and perceptions. A shift in consumer acceptance or interest
in gaming could adversely affect us. There can be no assurance that future
technological advances will not result in improved products or services that
could adversely affect our business or that we will be able to develop and
introduce competitive uses for our products and to bring such uses to market in
a timely manner.

OUR SUCCESS DEPENDS SIGNIFICANTLY UPON OUR ABILITY TO PROTECT OUR INTELLECTUAL
PROPERTY AND TO AVOID INFRINGING THE INTELLECTUAL PROPERTY OF THIRD PARTIES,
WHICH COULD RESULT IN COSTLY AND TIME-CONSUMING LITIGATION.

         We regard the SportXction(TM) System and related technology as
proprietary and we rely primarily on A combination of patent, trademark,
copyright and trade secret laws and employee and third party non disclosure
agreements to protect our proprietary rights. We have two United States patents
for our proprietary wagering methods and our related computer processing system.
Corresponding applications have been filed in certain foreign countries some of
which have been issued and some of which are pending. We also have a patent
pending to use our technology in the trading of financial instruments. No
assurance can be given that any of our pending domestic or foreign patent
applications will issue as patents, that any issued patents will provide us with
significant competitive advantages, or that challenges will not be instituted
against the validity or enforceability of any patent we own or, if instituted,
that such challenges will not be successful. Defense of intellectual property
rights can be difficult and costly, and there can be no assurance that we will
be able effectively to protect our technology from misappropriation by
competitors. Additionally, third party infringement claims may result in our
being required to enter into royalty arrangements or pay damages, any of which
could materially and adversely affect our business, financial condition and
results of operations.

         As the number of software products in the industry increases and the
functionality of these products further overlap, software developers and
publishers may increasingly become subject to infringement claims. Although we
have not received any claim that we are infringing any patent or trade secrets
and are not currently aware of any claim that we are infringing any such rights
of others, there can be no assurance that we will not face such claims, with or
without merit, in the future. Any such claims or litigation could be costly and
could result in a diversion of our management's attention, which could have a
material adverse effect on our business, financial condition and results of
operations. Any settlement of such claims or adverse determinations in such
litigation could also have a material adverse effect on our business, financial
condition and results of operations.



                                       7
<PAGE>

OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.

         We are dependent upon the continued efforts and abilities of our
executive officers and other key personnel such as Barry Mindes, our founder,
Chairman of the Board and Chief Executive Officer, and Bernard Albanese, one of
our directors and our President. The loss or unavailability of Messrs. Mindes or
Albanese for any significant period could have a material adverse effect on our
business, financial condition and results of operations. Messrs. Mindes and
Albanese have entered into employment agreements with us which terminate on
December 31, 2005 and June 30, 2005, respectively. No assurance can be given
that those agreements will be extended or renewed by us or the employees upon
expiration of their term and if not extended or renewed, whether individuals
with similar backgrounds and experience could be hired to replace them. In
addition, no assurance can be given that Mr. Mindes will not retire prior to the
expiration of his employment agreement, as permitted by such agreement, or
whether an individual with a similar background and experience could be hired to
replace him. We do not maintain and do not intend to obtain key person life
insurance on the life of either Messrs. Mindes or Albanese. Our operations will
also depend to a great extent on our ability to attract new key personnel and
retain existing key personnel in the future. Competition is intense for highly
skilled employees and there can be no assurance that we will be successful in
attracting and retaining such personnel, or that we can avoid increased costs in
order to do so. Our failure to attract additional qualified employees or to
retain the services of key personnel could have a material adverse effect on our
business, financial condition and results of operations.

CERTAIN OF OUR EXECUTIVE OFFICERS AND DIRECTORS ARE LIKELY TO HAVE THE ABILITY
TO EXERCISE EFFECTIVE CONTROL OF US AS THEY AND THEIR AFFILIATES OWN AND CONTROL
A SIGNIFICANT PERCENTAGE OF OUR OUTSTANDING COMMON STOCK.

         As of June 1, 2004, Barry Mindes, Mindes Family Limited Partnership, of
which an entity controlled by Mr. Mindes is general partner, Bernard Albanese
and the Marie Albanese Trust, a trust for the benefit of Mr. Albanese's wife,
together beneficially own approximately 37% of the outstanding shares of our
common stock (excluding any stock options held by Mr. Albanese which could, in
the future, be exercised). As a result of such ownership, such stockholders are
likely to have the ability to control the election of our directors and the
outcome of issues submitted to a vote of our stockholders.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE HIGHLY VOLATILE.

         The market price of securities of many emerging and high technology
companies has been highly volatile, experiencing wide fluctuations not
necessarily related to the operating performance of such companies. Factors such
as our operating results, announcements by us or our competitors concerning
technological innovations, new products or systems may have a significant impact
on the market price of our securities.



                                       8
<PAGE>

IF WE FAIL TO MEET NASDAQ SMALLCAP MARKET'S CONTINUED LISTING REQUIREMENTS, OUR
SHARES MAY BE DELISTED, WHICH COULD REDUCE THE LIQUIDITY OF OUR COMMON STOCK,
MAKE IT MORE DIFFICULT TO RAISE CAPITAL AND CAUSE AN EVENT OF DEFAULT UNDER OUR
DEBENTURES.

         The trading of our common stock on NASDAQ is conditioned upon our
meeting certain asset, capital and surplus earnings and stock price tests set
forth by NASDAQ. To maintain eligibility for trading on the NASDAQ SmallCap
Market, we will be required to, among other things, (i) maintain stockholders'
equity of at least $2,500,000, have a market capitalization of $35 million, or
have net income of $500,000 in the most recently completed fiscal year or in two
out of the last three most recently completed fiscal years; (ii) maintain a
minimum bid price of $1.00 per share; and (iii) adhere to certain corporate
governance provisions.

         In two instances in the past, we have received correspondence from
NASDAQ indicating that we did not meet the requirements for continued listing on
the NASDAQ SmallCap Market. In each of those instances, we were able to overcome
these problems, achieve compliance with the requirements for continued listing
and were able to have our common stock continue to be listed on the NASDAQ
SmallCap Market.

         The effects of delisting include the limited publication of the market
prices of our securities and limited news coverage of us. Delisting will result
in an event of default under our debentures and the full principal amount
together with interest and other amounts owing will immediately become due and
payable in cash. Delisting may reduce investors' interest in our securities and
materially adversely affect the trading market and prices for our securities and
our ability to issue additional securities or to secure additional financing.

         In addition to the risk of volatile stock prices and possible
delisting, low price stocks are subject to the additional risks of federal and
state regulatory requirements and the potential loss of effective trading
markets. In particular, if our common stock was delisted from trading on NASDAQ
and the trading price of our common stock was less than $5.00 per share, our
common stock could be subject to Rule 15g-9 under the Securities Exchange Act of
1934 which, among other things, requires that broker/dealers satisfy special
sales practice requirements, including making individualized written suitability
determinations and receiving purchasers' written consent, prior to any
transaction. If our securities were also deemed penny stocks under the
Securities Enforcement and Penny Stock Reform Act of 1990, additional
disclosures in connection with trades in our securities, including the delivery
of a disclosure schedule explaining the nature and risks of the penny stock
market would be required. The SEC's regulations define a "penny stock" to be any
non NASDAQ equity security that has a market price (as therein defined) of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. Such requirements could severely limit the
liquidity of our securities.

WE DO NOT INTEND TO PAY CASH DIVIDENDS FOR THE FORESEEABLE FUTURE.

         We have not paid any dividends on our outstanding preferred stock or
common stock since our inception and do not intend to pay any dividends to our
stockholders in the foreseeable future. We currently intend to reinvest
earnings, if any, in the development and expansion of our business.



                                       9
<PAGE>

CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND DELAWARE LAW MAY HAVE
THE EFFECT OF DISCOURAGING, DELAYING OR PREVENTING A CHANGE OF CONTROL THAT OUR
STOCKHOLDERS MAY CONSIDER FAVORABLE.

         Our certificate of incorporation authorizes the issuance of 2,000,000
shares of preferred stock (of which 60,000 have been designated as Series A
Preferred Stock and are outstanding) with such designations, rights and
preferences as may be determined from time to time by our board of directors.
Accordingly, our board of directors is empowered, without obtaining stockholder
approval, to issue such preferred stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of our common stock. In the event of issuance, the
preferred stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in the control of us. Certain
provisions of Delaware law may also discourage third party attempts to acquire
control of us.


                           FORWARD LOOKING STATEMENTS

         This prospectus and the documents incorporated by reference into this
prospectus, except for the historical information contained herein and therein,
contain "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward looking statements include, without
limitation, statements regarding whether wagering using fixed odds betting
terminals will be introduced, whether we will attract adequate numbers of
players to the SportXction(TM) System for sports wagering and sports contests,
the length of time that we will incur net losses and negative cash flow, the
length of time our cash resources will last and our ability to meet our cash
requirements, whether we will be able to raise additional financing if required,
whether legal or regulatory requirements will inhibit marketing of our products
as intended by us, the likelihood that our securities will continue to be listed
on NASDAQ, whether we will enter into agreements with others for use of the
SportXction(TM) System, whether we will bring the SportXction(TM) System to
market using additional interactive mediums, whether we will complete product
extensions to the SportXction(TM) System such as a fixed-odds horseracing
product and a non-wagering version, and the ultimate dilutionary effect that our
recent issuance of debentures and warrants will have on existing stockholders,
whether the multi-currency and multi-language enhancement will be made available
in the second quarter of calendar 2004, the potential market size for
interactive wagering in conjunction with television broadcast and using mobile
telephones and the SportXction(TM) System, whether the Company will have the
interface needed to provide compatibility between the SportXction (TM) System
and BSkyB's digital television platform available for final testing in July of
this year and whether the Company will launch the SportXction (TM) System on
BSkyB's digital television platform; whether the SportXction (TM) system will be
migrated onto Sportingbet's next generation back end software; whether the
Company will launch the SportXction (TM) System on Stanley Leisure's on-line
betting business; whether the Company will deploy its mobile phone product on
additional networks in the UK; and whether the contest version of the
SportXction (TM) System will be made available to the users of Sportinglife.com
in June and July 2004; whether we will add snooker and darts to the range of
sports for which the SportXction(TM) System may be used, whether GIG will offer
live play-by-play wagering on 800 events during fiscal year 2004, the likelihood
that we will receive and maintain any needed gaming licenses or other approvals
for use of our products, Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of our company, or industry results, to be
materially different from any future results, performance, or achievements,
expressed or implied, by such forward-looking statements. Such risks and factors
include, among others, those set forth in "Risk Factors" above. When used in
this prospectus, statements that are not statements of current or historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "anticipates," "plans," "intends," "expects," "believes"
and similar expressions are intended to identify such forward-looking
statements. Readers are cautioned that these forward-looking statements are
inherently uncertain and are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. We undertake
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.




                                       10
<PAGE>

                                 USE OF PROCEEDS

         We will not receive any proceeds from the sale of shares of our common
stock by the selling stockholders.


                              SELLING STOCKHOLDERS

         This prospectus relates to the resale of shares of our common stock
that have been or may be acquired by the selling stockholders pursuant to grants
under our 1995 Stock Option Plan and our 1996 Stock Option Plan. The following
table sets forth for each selling stockholder (i) the number of shares of common
stock and the percentage of common stock outstanding that are beneficially owned
by such selling stockholder prior to the offering as of the date of this
prospectus, (ii) the number of shares of common stock that may be offered by
such selling stockholder under this prospectus and (iii) the number of shares of
common stock that will be owned by such selling stockholder and the percentage
of common stock outstanding that such remaining shares will represent assuming
the sale of all the shares of common stock upon completion of the offering. The
number of shares offered for sale by such individuals, or by individuals not
named herein, may be updated or added, as the case may be, in supplements to
this prospectus.

         Because the selling stockholders may sell all, some or none of the
shares of common stock that they hold and because the number of shares of common
stock outstanding may increase or decrease, we have estimated the amounts and
percentages of shares of common stock that they will hold after completion of
the offering by assuming that (i) the selling stockholders will not acquire
beneficial ownership of any additional shares of common stock, (ii) they will
dispose of only shares offered under this prospectus prior to completion of the
offering, (iii) all options to acquire common stock that they beneficially own
have become fully vested and have been exercised, and (iv) they will sell all of
the shares offered by this prospectus.







                                       11
<PAGE>

<TABLE>
<CAPTION>
--------------------------------- ------------------------------- ---------------- ------------------------------
                                                                  MAXIMUM NUMBER
                                    SHARES BENEFICIALLY OWNED     OF SHARES BEING    SHARES BENEFICIALLY OWNED
      NAME OF STOCKHOLDER               BEFORE OFFERING(1)          OFFERED(3)        AFTER OFFERING(1)(3)(4)
--------------------------------- ------------------------------- ---------------- ------------------------------
                                     NUMBER        PERCENTAGE(2)                     NUMBER     PERCENTAGE (2)
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
<S>                                <C>                 <C>             <C>          <C>              <C>
Bernard Albanese                   517,419(5)          5.5%            15,000       502,419          5.4%
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
James McDade                        30,000(6)             *            60,000             0             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Andrew Harbison                    219,990(7)          2.4%             6,000       213,990          2.3%
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Bruce Feldman                       40,000(8)             *            20,000        40,000             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Fredric Kupersmith                  98,696(9)          1.1%            36,000        62,696             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Harold Rapaport                    96,368(10)          1.0%            36,000        60,368             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
</TABLE>
------------------
*  Represents less than 1% of the outstanding common stock.

(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC under the Securities Exchange Act of 1934, as amended.
They may include securities owned by or for, among others, the spouse and/or
minor children of an individual and any other relative who has the same home as
such individual, as well as, other securities as to which the individual has or
shares voting or investment power. The number of shares beneficially owned by
the selling stockholders includes options to purchase shares of our common stock
exercisable as of, or within 60 days of, the date of this prospectus. Beneficial
ownership may be disclaimed as to certain of the securities.

(2) The percentage of beneficial ownership shown in the table is based on
9,355,665 shares of common stock issued and outstanding as of June 1, 2004.

(3) The amounts for each selling shareholder assume full vesting and exercise of
all outstanding options to purchase common stock held by that selling
stockholder.

(4) Assuming the sale of all shares covered by this prospectus and that the
number of shares of common stock issued and outstanding upon the completion of
the offering will include only such shares together with all other shares issued
and outstanding on the date hereof.

(5) Includes 366,267 shares of common stock issuable upon exercise of vested
options. Does not include 302,304 shares held by The Marie Albanese Trust, Marie
Albanese and Christine Albanese, trustees. Marie Albanese and Christine Albanese
are the wife and daughter, respectively of Mr. Albanese. Mr. Albanese disclaims
beneficial interest in the shares held in such Trust. Mr. Albanese is our
President.

(6) Includes 30,000 shares of common stock issuable upon exercise of vested
options. Does not include 30,000 shares of common stock issuable pursuant to
options not presently exercisable and not exercisable within 60 days of the date
of this prospectus. Mr. McDade is our Chief Financial Officer.

(7) Includes 183,714 shares of common stock issuable upon exercise of vested
options. Mr. Harbison is our Vice President - Software Development.

(8) Does not include 20,000 shares of common stock issuable pursuant to options
not presently exercisable and not exercisable within 60 days of the date of this
prospectus. Mr. Feldman is a member of our board of directors.

(9) Includes 79,500 shares of common stock issuable upon exercise of vested
options. Mr. Kupersmith is a member of our board of directors.

(10) Includes 88,604 shares of common stock issuable upon exercise of vested
options. Mr. Rapaport is a member of our board of directors.




                                       12
<PAGE>

                              PLAN OF DISTRIBUTION

         The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:

         o   ordinary brokerage transactions and transactions in which the
             broker dealer solicits purchasers;

         o   block trades in which the broker dealer will attempt to sell the
             shares as agent but may position and resell a portion of the block
             as principal to facilitate the transaction;

         o   purchases by a broker dealer as principal and resale by the broker
             dealer for its account;

         o   an exchange distribution in accordance with the rules of the
             applicable exchange;

         o   privately negotiated transactions;

         o   broker dealers may agree with the selling stockholders to sell a
             specified number of such shares at a stipulated price per share;

         o   a combination of any such methods of sale; and

         o   any other method permitted pursuant to applicable law.

         The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker dealers
engaged by the selling stockholders may arrange for other brokers dealers to
participate in sales. Broker dealers may receive commissions or discounts from
the selling stockholders (or, if any broker dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Broker dealers may
agree to sell a specified number of such shares at a stipulated price per share,
and, to the extent such broker dealer is unable to do so acting as agent for us
or a selling stockholder, to purchase as principal any unsold shares at the
price required to fulfill the broker-dealer commitment. Broker dealers who
acquire shares as principal may thereafter resell such shares from time to time
in transactions, which may involve block transactions and sales to and through
other broker dealers, including transactions of the nature described above, in
the over the counter markets or otherwise at prices and on terms then prevailing
at the time of sale, at prices other than related to the then-current market
price or in negotiated transactions. In connection with such resales,
broker-dealers may pay to or receive from the purchasers such shares commissions
as described above.

         The selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.


                                       13
<PAGE>

         The selling stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

         The selling stockholders and any broker dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.


                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

         The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. The prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. The documents contain important information about Interactive Systems
Worldwide Inc. and its finances.

         We incorporate by reference:

         o   our Annual Report on Form 10-KSB for the year ended September 30,
             2003, as filed on December 24, 2003;

         o   our Quarterly Reports on Form 10-QSB for the quarters ended
             December 31, 2003 and March 31, 2004, as filed on February 13, 2004
             and May 17, 2004, respectively; and

         o   the description of the our common stock contained in our
             Registration Statement on Form SB-2 filed October 26, 1996, as
             amended.

         We also incorporate by reference additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and prior to the completion of the offering of the
shares of common stock offered hereby. These documents include periodic reports,
such as Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and proxy statements.

         Information furnished under Items 9 and 12 of any of our Current
Reports on Form 8-K is not incorporated by reference in this prospectus or the
registration statement of which this prospectus is a part.

         When reading this prospectus, you should consider that any statement
contained in this prospectus may be modified or superseded by any other
statement made in this prospectus to the extent that the second statement
modifies or supersedes the first statement. This would also apply to any
statement that is incorporated by reference, or deemed to be incorporated by
reference, in any document filed by us after the date of this prospectus,
including any supplement to this prospectus. Any statement which is modified or
superseded as described in the previous sentence is not a part of this
prospectus, except as such statement is modified or superseded.


                                       14
<PAGE>

                       WHERE YOU CAN FIND MORE INFORMATION

         We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's Web site at http://www.sec.gov.

         You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

                  INTERACTIVE SYSTEMS WORLDWIDE INC.
                  Investor Relations
                  Two Andrews Drive
                  West Paterson, New Jersey 07424
                  (973) 256-8181

         You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than on the front of this document.


                                  LEGAL MATTERS

         Certain matters with respect to the validity of the shares of common
stock offered by this prospectus will be passed upon for us by Friedman Kaplan
Seiler & Adelman LLP. Certain members of Friedman Kaplan Seiler & Adelman LLP
own shares and options to purchase shares of our common stock.


                                     EXPERTS

         The consolidated financial statements of Interactive Systems Worldwide
Inc. as of September 30, 2003 and for the year then ended, incorporated by
reference in this prospectus and in the registration statement of which this
prospectus is part, have been audited by Eisner LLP, independent certified
public accountants, as indicated in their report with respect to such
consolidated financial statements. The incorporation by reference in this
prospectus and in the registration statement of which it is part, is in reliance
upon such report given upon the authority of Eisner LLP, as experts in
accounting and auditing.





                                       15
<PAGE>


                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         We incorporate by reference:

         o   our Annual Report on Form 10-KSB for the year ended September 30,
             2003, as filed on December 24, 2003;

         o   our Quarterly Reports on Form 10-QSB for the quarters ended
             December 31, 2003 and March 31, 2004, as filed on February 13, 2004
             and May 17, 2004, respectively; and

         o   the description of the our common stock contained in our
             Registration Statement on Form SB-2 filed October 26, 1996, as
             amended.

         We also incorporate by reference additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and prior to the completion of the offering of the
shares of common stock offered hereby. These documents include periodic reports,
such as Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and proxy statements.

         Information furnished under Items 9 and 12 of any of our Current
Reports on Form 8-K is not incorporated by reference in this prospectus or the
registration statement of which this prospectus is a part.

ITEM 4.  DESCRIPTION OF SECURITIES

         Not Applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL

         Certain matters with respect to the validity of the shares of common
stock offered by this prospectus will be passed upon for us by Friedman Kaplan
Seiler & Adelman LLP. Certain members of Friedman Kaplan Seiler & Adelman LLP
own shares and options to purchase shares of our common stock.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
The Registrant's Bylaws include provisions to require the Registrant to
indemnify its directors and officers to the fullest extent permitted by Section
145, including circumstances in which indemnification is otherwise
discretionary. Section 145 also empowers the Registrant to purchase and maintain
insurance that protects its officers, directors, employees and agents against
any liabilities incurred in connection with their service in such positions. 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.



                                       16
<PAGE>

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED

         Not Applicable.

ITEM 8.  EXHIBITS

         The following is a complete list of exhibits filed as part of this
registration statement.

        EXHIBIT NO.    DOCUMENT
        -----------    --------
        4.1            Interactive Systems Worldwide Inc. 1995 Stock Option
                       Plan, as amended January 7, 1999 (incorporated by
                       reference to Exhibit 10.11 to the Registrant's Annual
                       Report on Form 10-KSB, filed on December 22, 2000).

        4.2            Interactive Systems Worldwide Inc. 1996 Stock Option
                       Plan, as amended January 2, 2003 (incorporated by
                       reference to Exhibit 10.8 to the Registrant's Annual
                       Report on Form 10-KSB, filed on December 24, 2003).

        5.1            Opinion of Friedman Kaplan Seiler & Adelman LLP.

        23.1           Consent of Friedman Kaplan Seiler & Adelman LLP
                       (included in Exhibit 5.1).

        23.2           Consent of Eisner LLP.

        24.1           Powers of Attorney (included on the signature page of
                       this Registration Statement).

ITEM 9. UNDERTAKINGS

         (a) 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 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;



                                       17
<PAGE>

                 (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 paragraphs (a)(1)(i) and (a)(1)(ii) of this section 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.

             (2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such 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.

             (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.

         (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.

         (c) 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
Securities Act of 1933 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 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 of 1933 and will be governed by the final adjudication of such issue.




                                       18
<PAGE>


                                   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-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in West Paterson, State of New Jersey, on June 24, 2004.

INTERACTIVE SYSTEMS WORLDWIDE INC.


By:           /s/ Barry Mindes
    -----------------------------------
    Barry Mindes, Chairman of the Board
    and Chief Executive Officer





                                       19
<PAGE>




                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Barry Mindes and Bernard Albanese, and
each of them, his true and lawful attorneys -in-fact and agent, with full power
of substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all amendments to this registration
statement (including post-effective amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and to make any and all state securities law
or blue sky filings, granting unto said attorney-in-fact and agents, each acting
alone, 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 for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, each acting alone, 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, as amended,
this Registration Statement has been signed by the following persons in the
capacities on the dates indicated.

     SIGNATURE                            TITLE                      DATE
-------------------------   ---------------------------------    -------------

    /s/ Barry Mindes        Chairman of the Board and Director   June 24, 2004
-------------------------   (Principal Executive Officer)
      Barry Mindes

  /s/ Bernard Albanese      President and Director               June 24, 2004
-------------------------
    Bernard Albanese

    /s/ James McDade        Chief Financial Officer (Principal   June 24, 2004
-------------------------   Financial and Accounting Officer)
      James McDade

    /s/ Bruce Feldman       Director                             June 24, 2004
-------------------------
      Bruce Feldman

 /s/ Fredric Kupersmith     Director                             June 24, 2004
-------------------------
   Fredric Kupersmith

   /s/ Harold Rapaport      Director                             June 24, 2004
-------------------------
     Harold Rapaport



                                       20
<PAGE>




                                  EXHIBIT INDEX

EXHIBIT NO.   DOCUMENT
-----------   --------
4.1           Interactive Systems Worldwide Inc. 1995 Stock Option Plan, as
              amended January 7, 1999 (incorporated by reference to Exhibit
              10.11 to the Registrant's Annual Report on Form 10-KSB, filed
              on December 22, 2000).

4.2           Interactive Systems Worldwide Inc. 1996 Stock Option Plan, as
              amended January 2, 2003 (incorporated by reference to Exhibit
              10.8 to the Registrant's Annual Report on Form 10-KSB, filed
              on December 24, 2003).

5.1           Opinion of Friedman Kaplan Seiler & Adelman LLP.

23.1          Consent of Friedman Kaplan Seiler & Adelman LLP (included in
              Exhibit 5.1).

23.2          Consent of Eisner LLP.

24.1          Powers of Attorney (included on the signature page of this
              Registration Statement).



                                       21
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{"company-data": {"conformed-name": "INTERACTIVE SYSTEMS WORLDWIDE INC /DE", "cik": "0001025995", "assigned-sic": "7373", "irs-number": "223375134", "state-of-incorporation": "DE", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-116802", "film-number": "04878620"}, "business-address": {"street1": "TWO ANDREWS DR", "street2": "SECOND FL", "city": "WEST PATERSON", "state": "NJ", "zip": "07424", "phone": "9732568181"}, "mail-address": {"street1": "TWO ANDREWS D", "street2": "SECOND FL", "city": "WEST PATERSON", "state": "NJ", "zip": "07424"}, "former-company": {"former-conformed-name": "INTERNATIONAL SPORTS WAGERING INC", "date-changed": "19961028"}}
As filed with the Securities and Exchange Commission on June 24, 2004

                                                    Registration No. 333-_______

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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                               ------------------
                       INTERACTIVE SYSTEMS WORLDWIDE INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                           2 Andrews Drive, 2nd Floor
                             West Paterson, NJ 07424
                            Telephone: (973) 256-8181
                            Facsimile: (973) 256-8211
--------------------------------------------------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

            DELAWARE                                  22-3375134
--------------------------------         -------------------------------------
  (STATE OR OTHER JURISDICTION           (IRS EMPLOYER IDENTIFICATION NUMBER)
       OF INCORPORATION OR
          ORGANIZATION)

            INTERACTIVE SYSTEMS WORLDWIDE INC. 1995 STOCK OPTION PLAN
            INTERACTIVE SYSTEMS WORLDWIDE INC. 1996 STOCK OPTION PLAN
--------------------------------------------------------------------------------
                            (FULL TITLE OF THE PLANS)

                           Bernard Albanese, President
                       Interactive Systems Worldwide Inc.
                           2 Andrews Drive, 2nd Floor
                             West Paterson, NJ 07424
                            Telephone: (973) 256-8181
                            Facsimile: (973) 256-8211
--------------------------------------------------------------------------------
            (NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE
                              OF AGENT FOR SERVICE)
                               ------------------

                                   Copies To:
                            Richard M. Hoffman, Esq.
                      Friedman Kaplan Seiler & Adelman LLP
                                  1633 Broadway
                            New York, New York 10019
                            Telephone: (212) 833-1100
                            Facsimile: (212) 355-1250
CALCULATION OF REGISTRATION FEE
============================ ================= ===================== ======================= ================
                                                 PROPOSED MAXIMUM       PROPOSED MAXIMUM        AMOUNT OF
 TITLE OF SECURITIES TO BE     AMOUNT TO BE     OFFERING PRICE PER     AGGREGATE OFFERING     REGISTRATION
        REGISTERED            REGISTERED (1)          SHARE                  PRICE                 FEE
---------------------------- ----------------- --------------------- ----------------------- ----------------
Common Stock ($.001 par        325,000 (2)            $2.66                 $864,500              $110
value per share)
============================ ================= ===================== ======================= ================
--------------

(1) Pursuant to Rule 416 under the Securities Act of 1933, this Registration
Statement also covers such indeterminable number of additional shares as may
become issuable pursuant to terms designed to prevent dilution resulting from
stock splits, stock dividends or similar events.

(2) Represents the number of shares that may be issued upon exercise of options
available for grant under the Interactive Systems Worldwide Inc. 1996 Stock
Option Plan.

(3) This estimate is made pursuant to Rule 457(h) under the Securities Act of
1933 solely for the purpose of calculating the amount of the registration fee.
In accordance with Rule 457(h), the price shown is based upon the average of the
high and low price of the Registrant's Common Stock as of June 21, 2004 as
reported on the Nasdaq SmallCap Market.
EXPLANATORY NOTE

         We previously registered 649,955 shares of our common stock issuable
upon exercise of options granted or to be granted under the Interactive Systems
Worldwide Inc. 1995 Stock Option Plan. We also previously registered an
aggregate of 1,175,000 shares of our common stock issuable upon exercise of
options granted or to be granted under the Interactive Systems Worldwide Inc.
1996 Stock Option Plan (the "1996 Plan"). On March 10, 2003, our stockholders
approved an amendment to the 1996 Plan increasing the number of shares
authorized for issuance under the 1996 Plan from 1,175,000 to 1,500,000 shares.
The contents of the registration statements upon which the initial 1,824,955
shares were registered (Registration Nos. 333-41847 and 333-84760) are
incorporated herein by reference pursuant to General Instruction E of Form S-8.

         This registration statement is being filed to register an additional
325,000 shares of common stock for issuance pursuant to future grants under the
1996 Plan. The documents constituting the prospectus under Part I of this
registration statement for the 1996 Plan are not set forth herein but will be
sent or given to the participants in the 1996 Plan as specified by Rule 428(b)
under the Securities Act of 1933, as amended. That prospectus, called the Plan
Prospectus, has been omitted from this registration statement as permitted by
Part I of Form S-8.

         This registration statement is also being filed to establish a reoffer
prospectus in accordance with the requirements of Part I of Form S-3 and
pursuant to General Instruction C of Form S-8 to be used in connection with the
reoffer and resale of shares issuable upon the exercise of options which we have
granted or will grant to certain of our officers and directors and other key
employees who may be deemed to be our affiliates.
REOFFER PROSPECTUS

                         173,000 SHARES OF COMMON STOCK

                       INTERACTIVE SYSTEMS WORLDWIDE INC.

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

         This Prospectus relates to the subsequent resale or offer for sale on
the NASDAQ SmallCap Market or otherwise, of shares of our common stock which may
be acquired by certain persons who may be deemed our affiliates upon the
exercise of options granted to them under the Interactive System Worldwide Inc.
1995 Stock Option Plan and the Interactive Systems Worldwide Inc. 1996 Stock
Option Plan. In connection with such resales or offers for sale, such persons
and the brokers through whom such shares may be sold may be deemed to be
"underwriters" as that term is defined in Section 2(11) of the Securities Act of
1933, as amended. We will not receive any of the proceeds from the sale of the
shares offered hereby.

         Our common stock is listed on the NASDAQ SmallCap Market, under the
symbol "ISWI."

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

         INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE SECTION ENTITLED,
"RISK FACTORS," BEGINNING ON PAGE 4 TO READ ABOUT SOME FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.

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

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

         NEITHER THE NEVADA STATE GAMING CONTROL BOARD NOR THE NEVADA GAMING
COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE
INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.

                               -----------------
                                  June 24, 2004
                               -----------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS

                                                                          PAGE

OUR COMPANY..................................................................3

RISK FACTORS.................................................................4

FORWARD LOOKING STATEMENTS..................................................10

USE OF PROCEEDS.............................................................11

SELLING STOCKHOLDERS........................................................11

PLAN OF DISTRIBUTION........................................................12

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...........................14

WHERE YOU CAN FIND MORE INFORMATION.........................................15

LEGAL MATTERS...............................................................15

EXPERTS.....................................................................15

         You should rely only on information contained in this document or to
which we have referred you. Neither we nor the selling stockholders have
authorized anyone to provide you with different or additional information. This
document may only be used where it is legal to sell these securities. The
information in this document may only be accurate on the date of this document.
You should not assume that the information in the prospectus, or incorporated
herein by reference, or in any prospectus supplement is accurate as of any date
other than the date on the front of those documents.

         As used in this prospectus, the terms "company", "we", "our", "ours",
and "us" may, depending upon the context, refer to Interactive Systems Worldwide
Inc. or to Interactive Systems Worldwide Inc. together with its consolidated
subsidiaries taken as a whole.

                                       2
OUR COMPANY

         The following is only a summary. We urge you to read this entire
prospectus, including the more detailed consolidated financial statements, notes
to the consolidated financial statements and other information incorporated by
reference from our other filings with the SEC. Investing in our common stock
involves risks. Therefore, please carefully consider the information provided
under the heading "Risk Factors" beginning on page 4.

         We have designed, developed and patented an interactive hardware and
proprietary software system (the "SportXction(TM) System") that enables users to
wager at fixed prices during the course of a sporting event, such As soccer,
football, baseball, basketball, golf, tennis, rugby and cricket, among many
others. The SportXction(TM) System accepts bets not only on the outcome of a
sporting event, but also on discrete parts of the event and on specific game
situations. These include such wagers as will a team make a first down, which
player will score next, will a batter get on base or will a penalty shot be
successful. The SportXction(TM) System is unique in thaT it permits betting
continuously while the game is in progress, or between game events, such as
downs, pitches, changes in ball possession and similar situations, permitting
more frequent placing and cashing of wagers.

         The SportXction(TM) System software monitors and changes the odds on
the contestants in a sporting event To induce the players to wager such that the
betting pool for each betting proposition is continuously driven toward a
financial balance, to within a pre-set level. In general, a balanced pool is
achieved when the money bet on the losing outcomes of a betting proposition is
sufficient to pay off the winning outcomes of that proposition plus provide the
operator with a commission for brokering the transaction. The SportXction(TM)
System maintains a record of all wagers placed by each bettor and keeps an
account for each bettor, subtracting bet amounts and adding payouts. The
SportXction(TM) System has been developed to allow wagers to be placed
simultaneously through a variety of input devices, all interconnected to our
central system, such as interactive television set-top boxes, personal computers
communicating via the Internet and mobile telephones. We have also recently
completed the program development of a non-wagering (i.e. contest) version of
the SportXction(TM) System. The SportXction(TM) SYstem is also being readied for
use in conjunction with fixed odds betting terminals, a service which was
previously available with an earlier version of the SportXction(TM)System.

         On July 31, 2002, we acquired all of the outstanding share capital of
Global Interactive Gaming Limited ("GIG"), a British interactive gaming service
provider that markets its services to interactive television carriers which
employ satellite, cable and terrestrial programming, mobile telephone operators,
licensed bookmakers and casinos. GIG is located in London, England. GIG had been
our worldwide exclusive licensee for our technology in all business activities
for which our technology was legally usable other than wagering in Nevada and
for securities transactions and lotteries. GIG has wholly owned subsidiaries,
GIG Operations Limited, which holds a British bookmaker's agency permit, and
Brightform Limited, which holds a British bookmaker's permit, and is therefore
capable of offering its own complete betting service.

         Interactive Systems Worldwide Inc. is a Delaware corporation formed in
1995 with its principal executive offices located at Two Andrews Drive, 2nd
Floor, West Paterson, New Jersey 07424-2672. Our main telephone number is (973)
256-8181 and our main corporate Web site is www.isw.com. All of our EDGAR
filings with the Securities and Exchange Commission may be accessed through this
Web site.

                                       3
RISK FACTORS

         Investing in our securities involves risk. You should carefully
consider the following factors as well as other information included or
incorporated by reference in this prospectus before deciding to purchase our
common stock. The risks and uncertainties we have described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also affect our business
operations.

         Any of these risks could have a material adverse effect on our
business, financial condition, results of operations, cash flows or prospects,
which could in turn have a material adverse effect on the price of our common
stock. In such case, you may lose all or part of your investment.

OUR SUCCESS IS DEPENDANT ON OUR ABILITY TO MARKET, AND THE MARKET'S ACCEPTANCE
OF, A SINGLE PRODUCT.

         Our success will depend primarily on the success of a single product,
the SportXction(TM) System, and our ability and our business partners, and
customers, ability to market the SportXction(TM) System and develop a
significant number of players with interest in wagering or playing contests
utilizing the SportXction(TM) System. Previously, we pursued an aggressive
marketing and advertising campaign to introduce the SportXction(TM) System to
the gaming public in Nevada. Nonetheless, the total number of players who used
the SportXction(TM) System in NevaDa was limited, and the total amount wagered
through the SportXction(TM) System in Nevada was modest, as a result of which we
ceased our Nevada operations. To achieve commercial success, the SportXction(TM)
System, must be accepteD by a significant number of gaming patrons. There can be
no assurance that the SportXction(TM) System will be accepted by its intended
market. If the SportXction(TM) System does not achieve sufficient market
acceptance, our business, financial condition and results of operations would be
materially and adversely affected.

WE HAVE A HISTORY OF LOSSES AND THE LIKELIHOOD OF OUR SUCCESS DEPENDS ON MANY
FACTORS, INCLUDING SOME THAT ARE OUT OF OUR CONTROL.

         Until entering into license agreements with GIG, we were in the
development stage and generated limited revenues from the SportXction(TM)
System. As of March 31, 2004 and March 31, 2003, we had cumulative net losses
since inception of approximately $10.4 million and $7.6 million, respectively.
We incurred a net loss of $1.5 million during the quarter ended March 31, 2004.
As a result of the acquisition of GIG on July 31, 2002, we no longer receive the
minimum payments under the license agreements. Instead, our revenue is now based
upon our ability and the ability of our business partners to generate revenue
through the SportXction(TM) System. The likelihood of our success must be
considered in light of the problems, delays, expenses and difficulties
encountered by an enterprise in our stage of development, some of which may be
beyond our control. These include, but are not limited to, our ability to
operate our anticipated business; delays in commencement of operation of the
SportXction(TM) System by our business partners; the ability of our company and
our business partners to attract a sufficient number of players desirous of
utilizing the SportXction(TM) System; unanticipated problems relating to further
software enhancement and development; acceptance of the SportXction(TM) System
by the wagering public; gaming regulations and gaming taxes (including those in
the United States, United Kingdom and other foreign countries); the competitive
and regulatory environment in which we operate; marketing problems; and
additional costs and expenses that may exceed current estimates.

                                       4
WE ANTICIPATE CONTINUED LOSSES AND NEGATIVE CASH FLOW, AND WE CAN NOT PREDICT
WHETHER OR WHEN WE WILL AGAIN BECOME PROFITABLE.

         Following the acquisition of GIG, our revenue, expenses and overall
profitability have been adversely impacted. By recovering our software license,
we now act as the primary operator of the SportXction(TM) System and are
entitled to all of the net proceeds generated by our technology, net of any
revenue sharing arrangements with our business partners, rather than the
fractional share we would have received as a licensor of our technology. We
incur and will continue to incur greater costs, including operating, marketing,
and advertising expenses, without the comfort of previous minimum license fees.
We expect to incur losses and negative cash flow at least for the fiscal year
ending September 30, 2004.

A CHANGE IN OUR BUSINESS PLAN MAY RESULT IN THE NEED TO RAISE ADDITIONAL
FINANCING, WHICH MAY NOT BE AVAILABLE ON TERMS ACCEPTABLE TO US, IF AT ALL.

         We anticipate that our existing resources, including the proceeds of
our recent financing, will be adequate to fund our capital and operating
requirements through at least the next 12 months based upon our current business
plan and longer, subject to the revenues generated by the SportXction(TM)
System. Our cash requirements may vary materially from those now planned due to
a number of factors, including the extent to which we develop the
SportXction(TM) System under our own brand, the response of competitors to the
SportXction(TM) System and our ability and the ability of our management to
satisfy applicable licensing requirements. We may need to raise additional
capital to fund our future operations. There can be no assurance that additional
financing will be available when needed on terms acceptable to us, or at all. If
additional funds are raised by issuing equity securities, further dilution to
existing stockholders will result and future investors may be granted rights
superior to those of existing stockholders. Moreover, raising additional funds
in the future may trigger the anti-dilution provisions in the debentures or
warrants issued in our recent financing, resulting in further dilution to
existing stockholders. Insufficient funds may prevent us from implementing our
business strategy or may require us to limit our operations significantly.

IF WE ARE FORCED TO REPAY THE DEBENTURES IN CASH, WE MAY NOT HAVE ENOUGH CASH TO
FUND OUR OPERATIONS AND MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING.

         Our debentures issued in November 2003 contain certain provisions and
restrictions, which if violated, could result in the full principal amount
together with interest and other amounts becoming immediately due and payable in
cash. If such an event occurred and if a holder of the debentures demanded
repayment, we might not have the cash resources to repay such indebtedness when
due. The debentures are repayable in 24 equal monthly installments beginning in
May 2004 with interest payable quarterly. Subject to certain conditions, the
monthly principal payments and the quarterly interest payments on the debentures
may be paid, at our option, in cash or additional shares of our common stock. If
we make these payments in cash rather than additional shares of common stock, it
would reduce the amount of cash available to fund operations. The debentures
contain restrictions upon incurring additional indebtedness. The existence of
debt service obligations and the terms and anti-dilution provisions of the
debentures and warrants may limit our ability to obtain additional financing on
favorable terms, or at all.

                                       5
IF THE INVESTORS IN OUR RECENT FINANCING CONVERT THEIR DEBENTURES OR EXERCISE
THEIR WARRANTS, OR IF WE ELECT TO PAY PRINCIPAL AND/OR INTEREST ON THE
DEBENTURES WITH SHARES OF OUR COMMON STOCK, OUR EXISTING STOCKHOLDERS WILL BE
SIGNIFICANTLY DILUTED. IN ADDITION, SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON
STOCK COULD CAUSE THE MARKET PRICE TO GO DOWN.

         To the extent that the debentures are converted and/or the warrants are
exercised, a significantly greater number of shares of our common stock will be
outstanding and the interests of our existing stockholders will be substantially
diluted. If these additional shares are sold into the market, it could decrease
the market price of our common stock and encourage short sales. Short sales and
other hedging transactions could place further downward pressure on the price of
our common stock. We cannot predict whether or how many additional shares of our
common stock will become issuable as a result of these provisions. Additionally,
we may elect to make payments of principal of and interest on the debentures in
shares of our common stock, which could result in increased downward pressure on
our stock price and further dilution to our existing stockholders. We made our
January 2004 and April 2004 interest payments on the debentures in shares of our
common stock. We made our May 2004 principal repayment on the debentures in
cash, deferred our June 2004 principal repayment as permitted under the
debenture, and have advised the holders of the debentures of our current
intention to make future interest and principal payments in shares of our common
stock.

OUR SALES AND INTEGRATION CYCLES WITH POTENTIAL BUSINESS PARTNERS ARE LONG AND
UNPREDICTABLE, AND MAY ENCOUNTER UNANTICIPATED PROBLEMS.

         The sales and integration cycles with potential business partners for
our SportXction(TM) System are long and unpredictable. Potential business
partners typically undertake a lengthy evaluation process. As a result, we may
not recognize revenue from sales efforts for an extended period of time, if at
all. Assuming an agreement is reached, the SportXction(TM) System must then be
integrated with the business partner's technical environment. The length of time
to complete the integration process may be adversely impacted by a number of
factors, including the business partner's system infrastructure, its strategic
priorities and technical resources. Unanticipated problems during the
integration process could result in extensive delays in launching the
SportXction(TM) System or termination of an agreement, which could materially
and adversely affect our business, financial condition and results of
operations.

OUR INTERNATIONAL OPERATIONS SUBJECT US TO CURRENCY EXCHANGE RISKS.

         A significant portion of our operations and all of our current sales
are in the United Kingdom and denominated in British Pounds. As a result, our
operating results may be adversely affected by changes in exchange rates. Given
the volatility of currency exchange rates, we cannot predict the effect of
exchange rate fluctuations on our future operating results.

                                       6
OUR BUSINESS IS RELIANT ON OBTAINING AND RETAINING CERTAIN GAMING LICENSES.

         Sports wagering and wagering over the Internet is highly regulated
throughout the world. Our inability to obtain and/or retain any gaming licenses
or other approvals that may be required could have a material adverse impact on
us.

WE FACE SUBSTANTIAL COMPETITION IN THE GAMING INDUSTRY AND MAY NOT BE ABLE KEEP
UP WITH FUTURE TECHNOLOGICAL CHANGES.

         Our SportXction(TM) System and the business intended to be operated by
us competes with other forms of gambling, including, but not limited to, sports
wagering as currently conducted world-wide, casino games (such as traditional
slot machines, video slot, poker and blackjack machines, roulette, card games,
keno and craps), bingo, government-sponsored lotteries, on and off- track
betting on horses and dogs, jai alai, offshore cruise ships, riverboats, illegal
wagering of all types including that conducted over the Internet, and Native
American gaming operations. The gaming industry is also subject to shifting
consumer preferences and perceptions. A shift in consumer acceptance or interest
in gaming could adversely affect us. There can be no assurance that future
technological advances will not result in improved products or services that
could adversely affect our business or that we will be able to develop and
introduce competitive uses for our products and to bring such uses to market in
a timely manner.

OUR SUCCESS DEPENDS SIGNIFICANTLY UPON OUR ABILITY TO PROTECT OUR INTELLECTUAL
PROPERTY AND TO AVOID INFRINGING THE INTELLECTUAL PROPERTY OF THIRD PARTIES,
WHICH COULD RESULT IN COSTLY AND TIME-CONSUMING LITIGATION.

         We regard the SportXction(TM) System and related technology as
proprietary and we rely primarily on A combination of patent, trademark,
copyright and trade secret laws and employee and third party non disclosure
agreements to protect our proprietary rights. We have two United States patents
for our proprietary wagering methods and our related computer processing system.
Corresponding applications have been filed in certain foreign countries some of
which have been issued and some of which are pending. We also have a patent
pending to use our technology in the trading of financial instruments. No
assurance can be given that any of our pending domestic or foreign patent
applications will issue as patents, that any issued patents will provide us with
significant competitive advantages, or that challenges will not be instituted
against the validity or enforceability of any patent we own or, if instituted,
that such challenges will not be successful. Defense of intellectual property
rights can be difficult and costly, and there can be no assurance that we will
be able effectively to protect our technology from misappropriation by
competitors. Additionally, third party infringement claims may result in our
being required to enter into royalty arrangements or pay damages, any of which
could materially and adversely affect our business, financial condition and
results of operations.

         As the number of software products in the industry increases and the
functionality of these products further overlap, software developers and
publishers may increasingly become subject to infringement claims. Although we
have not received any claim that we are infringing any patent or trade secrets
and are not currently aware of any claim that we are infringing any such rights
of others, there can be no assurance that we will not face such claims, with or
without merit, in the future. Any such claims or litigation could be costly and
could result in a diversion of our management's attention, which could have a
material adverse effect on our business, financial condition and results of
operations. Any settlement of such claims or adverse determinations in such
litigation could also have a material adverse effect on our business, financial
condition and results of operations.

                                       7
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.

         We are dependent upon the continued efforts and abilities of our
executive officers and other key personnel such as Barry Mindes, our founder,
Chairman of the Board and Chief Executive Officer, and Bernard Albanese, one of
our directors and our President. The loss or unavailability of Messrs. Mindes or
Albanese for any significant period could have a material adverse effect on our
business, financial condition and results of operations. Messrs. Mindes and
Albanese have entered into employment agreements with us which terminate on
December 31, 2005 and June 30, 2005, respectively. No assurance can be given
that those agreements will be extended or renewed by us or the employees upon
expiration of their term and if not extended or renewed, whether individuals
with similar backgrounds and experience could be hired to replace them. In
addition, no assurance can be given that Mr. Mindes will not retire prior to the
expiration of his employment agreement, as permitted by such agreement, or
whether an individual with a similar background and experience could be hired to
replace him. We do not maintain and do not intend to obtain key person life
insurance on the life of either Messrs. Mindes or Albanese. Our operations will
also depend to a great extent on our ability to attract new key personnel and
retain existing key personnel in the future. Competition is intense for highly
skilled employees and there can be no assurance that we will be successful in
attracting and retaining such personnel, or that we can avoid increased costs in
order to do so. Our failure to attract additional qualified employees or to
retain the services of key personnel could have a material adverse effect on our
business, financial condition and results of operations.

CERTAIN OF OUR EXECUTIVE OFFICERS AND DIRECTORS ARE LIKELY TO HAVE THE ABILITY
TO EXERCISE EFFECTIVE CONTROL OF US AS THEY AND THEIR AFFILIATES OWN AND CONTROL
A SIGNIFICANT PERCENTAGE OF OUR OUTSTANDING COMMON STOCK.

         As of June 1, 2004, Barry Mindes, Mindes Family Limited Partnership, of
which an entity controlled by Mr. Mindes is general partner, Bernard Albanese
and the Marie Albanese Trust, a trust for the benefit of Mr. Albanese's wife,
together beneficially own approximately 37% of the outstanding shares of our
common stock (excluding any stock options held by Mr. Albanese which could, in
the future, be exercised). As a result of such ownership, such stockholders are
likely to have the ability to control the election of our directors and the
outcome of issues submitted to a vote of our stockholders.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE HIGHLY VOLATILE.

         The market price of securities of many emerging and high technology
companies has been highly volatile, experiencing wide fluctuations not
necessarily related to the operating performance of such companies. Factors such
as our operating results, announcements by us or our competitors concerning
technological innovations, new products or systems may have a significant impact
on the market price of our securities.

                                       8
IF WE FAIL TO MEET NASDAQ SMALLCAP MARKET'S CONTINUED LISTING REQUIREMENTS, OUR
SHARES MAY BE DELISTED, WHICH COULD REDUCE THE LIQUIDITY OF OUR COMMON STOCK,
MAKE IT MORE DIFFICULT TO RAISE CAPITAL AND CAUSE AN EVENT OF DEFAULT UNDER OUR
DEBENTURES.

         The trading of our common stock on NASDAQ is conditioned upon our
meeting certain asset, capital and surplus earnings and stock price tests set
forth by NASDAQ. To maintain eligibility for trading on the NASDAQ SmallCap
Market, we will be required to, among other things, (i) maintain stockholders'
equity of at least $2,500,000, have a market capitalization of $35 million, or
have net income of $500,000 in the most recently completed fiscal year or in two
out of the last three most recently completed fiscal years; (ii) maintain a
minimum bid price of $1.00 per share; and (iii) adhere to certain corporate
governance provisions.

         In two instances in the past, we have received correspondence from
NASDAQ indicating that we did not meet the requirements for continued listing on
the NASDAQ SmallCap Market. In each of those instances, we were able to overcome
these problems, achieve compliance with the requirements for continued listing
and were able to have our common stock continue to be listed on the NASDAQ
SmallCap Market.

         The effects of delisting include the limited publication of the market
prices of our securities and limited news coverage of us. Delisting will result
in an event of default under our debentures and the full principal amount
together with interest and other amounts owing will immediately become due and
payable in cash. Delisting may reduce investors' interest in our securities and
materially adversely affect the trading market and prices for our securities and
our ability to issue additional securities or to secure additional financing.

         In addition to the risk of volatile stock prices and possible
delisting, low price stocks are subject to the additional risks of federal and
state regulatory requirements and the potential loss of effective trading
markets. In particular, if our common stock was delisted from trading on NASDAQ
and the trading price of our common stock was less than $5.00 per share, our
common stock could be subject to Rule 15g-9 under the Securities Exchange Act of
1934 which, among other things, requires that broker/dealers satisfy special
sales practice requirements, including making individualized written suitability
determinations and receiving purchasers' written consent, prior to any
transaction. If our securities were also deemed penny stocks under the
Securities Enforcement and Penny Stock Reform Act of 1990, additional
disclosures in connection with trades in our securities, including the delivery
of a disclosure schedule explaining the nature and risks of the penny stock
market would be required. The SEC's regulations define a "penny stock" to be any
non NASDAQ equity security that has a market price (as therein defined) of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. Such requirements could severely limit the
liquidity of our securities.

WE DO NOT INTEND TO PAY CASH DIVIDENDS FOR THE FORESEEABLE FUTURE.

         We have not paid any dividends on our outstanding preferred stock or
common stock since our inception and do not intend to pay any dividends to our
stockholders in the foreseeable future. We currently intend to reinvest
earnings, if any, in the development and expansion of our business.

                                       9
CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND DELAWARE LAW MAY HAVE
THE EFFECT OF DISCOURAGING, DELAYING OR PREVENTING A CHANGE OF CONTROL THAT OUR
STOCKHOLDERS MAY CONSIDER FAVORABLE.

         Our certificate of incorporation authorizes the issuance of 2,000,000
shares of preferred stock (of which 60,000 have been designated as Series A
Preferred Stock and are outstanding) with such designations, rights and
preferences as may be determined from time to time by our board of directors.
Accordingly, our board of directors is empowered, without obtaining stockholder
approval, to issue such preferred stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of our common stock. In the event of issuance, the
preferred stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in the control of us. Certain
provisions of Delaware law may also discourage third party attempts to acquire
control of us.

                           FORWARD LOOKING STATEMENTS

         This prospectus and the documents incorporated by reference into this
prospectus, except for the historical information contained herein and therein,
contain "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward looking statements include, without
limitation, statements regarding whether wagering using fixed odds betting
terminals will be introduced, whether we will attract adequate numbers of
players to the SportXction(TM) System for sports wagering and sports contests,
the length of time that we will incur net losses and negative cash flow, the
length of time our cash resources will last and our ability to meet our cash
requirements, whether we will be able to raise additional financing if required,
whether legal or regulatory requirements will inhibit marketing of our products
as intended by us, the likelihood that our securities will continue to be listed
on NASDAQ, whether we will enter into agreements with others for use of the
SportXction(TM) System, whether we will bring the SportXction(TM) System to
market using additional interactive mediums, whether we will complete product
extensions to the SportXction(TM) System such as a fixed-odds horseracing
product and a non-wagering version, and the ultimate dilutionary effect that our
recent issuance of debentures and warrants will have on existing stockholders,
whether the multi-currency and multi-language enhancement will be made available
in the second quarter of calendar 2004, the potential market size for
interactive wagering in conjunction with television broadcast and using mobile
telephones and the SportXction(TM) System, whether the Company will have the
interface needed to provide compatibility between the SportXction (TM) System
and BSkyB's digital television platform available for final testing in July of
this year and whether the Company will launch the SportXction (TM) System on
BSkyB's digital television platform; whether the SportXction (TM) system will be
migrated onto Sportingbet's next generation back end software; whether the
Company will launch the SportXction (TM) System on Stanley Leisure's on-line
betting business; whether the Company will deploy its mobile phone product on
additional networks in the UK; and whether the contest version of the
SportXction (TM) System will be made available to the users of Sportinglife.com
in June and July 2004; whether we will add snooker and darts to the range of
sports for which the SportXction(TM) System may be used, whether GIG will offer
live play-by-play wagering on 800 events during fiscal year 2004, the likelihood
that we will receive and maintain any needed gaming licenses or other approvals
for use of our products, Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of our company, or industry results, to be
materially different from any future results, performance, or achievements,
expressed or implied, by such forward-looking statements. Such risks and factors
include, among others, those set forth in "Risk Factors" above. When used in
this prospectus, statements that are not statements of current or historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "anticipates," "plans," "intends," "expects," "believes"
and similar expressions are intended to identify such forward-looking
statements. Readers are cautioned that these forward-looking statements are
inherently uncertain and are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. We undertake
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

                                       10
USE OF PROCEEDS

         We will not receive any proceeds from the sale of shares of our common
stock by the selling stockholders.

                              SELLING STOCKHOLDERS

         This prospectus relates to the resale of shares of our common stock
that have been or may be acquired by the selling stockholders pursuant to grants
under our 1995 Stock Option Plan and our 1996 Stock Option Plan. The following
table sets forth for each selling stockholder (i) the number of shares of common
stock and the percentage of common stock outstanding that are beneficially owned
by such selling stockholder prior to the offering as of the date of this
prospectus, (ii) the number of shares of common stock that may be offered by
such selling stockholder under this prospectus and (iii) the number of shares of
common stock that will be owned by such selling stockholder and the percentage
of common stock outstanding that such remaining shares will represent assuming
the sale of all the shares of common stock upon completion of the offering. The
number of shares offered for sale by such individuals, or by individuals not
named herein, may be updated or added, as the case may be, in supplements to
this prospectus.

         Because the selling stockholders may sell all, some or none of the
shares of common stock that they hold and because the number of shares of common
stock outstanding may increase or decrease, we have estimated the amounts and
percentages of shares of common stock that they will hold after completion of
the offering by assuming that (i) the selling stockholders will not acquire
beneficial ownership of any additional shares of common stock, (ii) they will
dispose of only shares offered under this prospectus prior to completion of the
offering, (iii) all options to acquire common stock that they beneficially own
have become fully vested and have been exercised, and (iv) they will sell all of
the shares offered by this prospectus.

                                       11
--------------------------------- ------------------------------- ---------------- ------------------------------
                                                                  MAXIMUM NUMBER
                                    SHARES BENEFICIALLY OWNED     OF SHARES BEING    SHARES BENEFICIALLY OWNED
      NAME OF STOCKHOLDER               BEFORE OFFERING(1)          OFFERED(3)        AFTER OFFERING(1)(3)(4)
--------------------------------- ------------------------------- ---------------- ------------------------------
                                     NUMBER        PERCENTAGE(2)                     NUMBER     PERCENTAGE (2)
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Bernard Albanese                   517,419(5)          5.5%            15,000       502,419          5.4%
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
James McDade                        30,000(6)             *            60,000             0             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Andrew Harbison                    219,990(7)          2.4%             6,000       213,990          2.3%
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Bruce Feldman                       40,000(8)             *            20,000        40,000             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Fredric Kupersmith                  98,696(9)          1.1%            36,000        62,696             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
Harold Rapaport                    96,368(10)          1.0%            36,000        60,368             *
--------------------------------- ------------- ----------------- ---------------- ---------- -------------------
------------------
*  Represents less than 1% of the outstanding common stock.

(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC under the Securities Exchange Act of 1934, as amended.
They may include securities owned by or for, among others, the spouse and/or
minor children of an individual and any other relative who has the same home as
such individual, as well as, other securities as to which the individual has or
shares voting or investment power. The number of shares beneficially owned by
the selling stockholders includes options to purchase shares of our common stock
exercisable as of, or within 60 days of, the date of this prospectus. Beneficial
ownership may be disclaimed as to certain of the securities.

(2) The percentage of beneficial ownership shown in the table is based on
9,355,665 shares of common stock issued and outstanding as of June 1, 2004.

(3) The amounts for each selling shareholder assume full vesting and exercise of
all outstanding options to purchase common stock held by that selling
stockholder.

(4) Assuming the sale of all shares covered by this prospectus and that the
number of shares of common stock issued and outstanding upon the completion of
the offering will include only such shares together with all other shares issued
and outstanding on the date hereof.

(5) Includes 366,267 shares of common stock issuable upon exercise of vested
options. Does not include 302,304 shares held by The Marie Albanese Trust, Marie
Albanese and Christine Albanese, trustees. Marie Albanese and Christine Albanese
are the wife and daughter, respectively of Mr. Albanese. Mr. Albanese disclaims
beneficial interest in the shares held in such Trust. Mr. Albanese is our
President.

(6) Includes 30,000 shares of common stock issuable upon exercise of vested
options. Does not include 30,000 shares of common stock issuable pursuant to
options not presently exercisable and not exercisable within 60 days of the date
of this prospectus. Mr. McDade is our Chief Financial Officer.

(7) Includes 183,714 shares of common stock issuable upon exercise of vested
options. Mr. Harbison is our Vice President - Software Development.

(8) Does not include 20,000 shares of common stock issuable pursuant to options
not presently exercisable and not exercisable within 60 days of the date of this
prospectus. Mr. Feldman is a member of our board of directors.

(9) Includes 79,500 shares of common stock issuable upon exercise of vested
options. Mr. Kupersmith is a member of our board of directors.

(10) Includes 88,604 shares of common stock issuable upon exercise of vested
options. Mr. Rapaport is a member of our board of directors.

                                       12
PLAN OF DISTRIBUTION

         The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:

         o   ordinary brokerage transactions and transactions in which the
             broker dealer solicits purchasers;

         o   block trades in which the broker dealer will attempt to sell the
             shares as agent but may position and resell a portion of the block
             as principal to facilitate the transaction;

         o   purchases by a broker dealer as principal and resale by the broker
             dealer for its account;

         o   an exchange distribution in accordance with the rules of the
             applicable exchange;

         o   privately negotiated transactions;

         o   broker dealers may agree with the selling stockholders to sell a
             specified number of such shares at a stipulated price per share;

         o   a combination of any such methods of sale; and

         o   any other method permitted pursuant to applicable law.

         The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker dealers
engaged by the selling stockholders may arrange for other brokers dealers to
participate in sales. Broker dealers may receive commissions or discounts from
the selling stockholders (or, if any broker dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved. Broker dealers may
agree to sell a specified number of such shares at a stipulated price per share,
and, to the extent such broker dealer is unable to do so acting as agent for us
or a selling stockholder, to purchase as principal any unsold shares at the
price required to fulfill the broker-dealer commitment. Broker dealers who
acquire shares as principal may thereafter resell such shares from time to time
in transactions, which may involve block transactions and sales to and through
other broker dealers, including transactions of the nature described above, in
the over the counter markets or otherwise at prices and on terms then prevailing
at the time of sale, at prices other than related to the then-current market
price or in negotiated transactions. In connection with such resales,
broker-dealers may pay to or receive from the purchasers such shares commissions
as described above.

         The selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.

                                       13
The selling stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.

         The selling stockholders and any broker dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.

                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

         The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. The prospectus incorporates by
reference the documents set forth below that we have previously filed with the
SEC. The documents contain important information about Interactive Systems
Worldwide Inc. and its finances.

         We incorporate by reference:

         o   our Annual Report on Form 10-KSB for the year ended September 30,
             2003, as filed on December 24, 2003;

         o   our Quarterly Reports on Form 10-QSB for the quarters ended
             December 31, 2003 and March 31, 2004, as filed on February 13, 2004
             and May 17, 2004, respectively; and

         o   the description of the our common stock contained in our
             Registration Statement on Form SB-2 filed October 26, 1996, as
             amended.

         We also incorporate by reference additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and prior to the completion of the offering of the
shares of common stock offered hereby. These documents include periodic reports,
such as Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and proxy statements.

         Information furnished under Items 9 and 12 of any of our Current
Reports on Form 8-K is not incorporated by reference in this prospectus or the
registration statement of which this prospectus is a part.

         When reading this prospectus, you should consider that any statement
contained in this prospectus may be modified or superseded by any other
statement made in this prospectus to the extent that the second statement
modifies or supersedes the first statement. This would also apply to any
statement that is incorporated by reference, or deemed to be incorporated by
reference, in any document filed by us after the date of this prospectus,
including any supplement to this prospectus. Any statement which is modified or
superseded as described in the previous sentence is not a part of this
prospectus, except as such statement is modified or superseded.

                                       14
WHERE YOU CAN FIND MORE INFORMATION

         We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's Web site at http://www.sec.gov.

         You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

                  INTERACTIVE SYSTEMS WORLDWIDE INC.
                  Investor Relations
                  Two Andrews Drive
                  West Paterson, New Jersey 07424
                  (973) 256-8181

         You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than on the front of this document.

                                  LEGAL MATTERS

         Certain matters with respect to the validity of the shares of common
stock offered by this prospectus will be passed upon for us by Friedman Kaplan
Seiler & Adelman LLP. Certain members of Friedman Kaplan Seiler & Adelman LLP
own shares and options to purchase shares of our common stock.

                                     EXPERTS

         The consolidated financial statements of Interactive Systems Worldwide
Inc. as of September 30, 2003 and for the year then ended, incorporated by
reference in this prospectus and in the registration statement of which this
prospectus is part, have been audited by Eisner LLP, independent certified
public accountants, as indicated in their report with respect to such
consolidated financial statements. The incorporation by reference in this
prospectus and in the registration statement of which it is part, is in reliance
upon such report given upon the authority of Eisner LLP, as experts in
accounting and auditing.

                                       15
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         We incorporate by reference:

         o   our Annual Report on Form 10-KSB for the year ended September 30,
             2003, as filed on December 24, 2003;

         o   our Quarterly Reports on Form 10-QSB for the quarters ended
             December 31, 2003 and March 31, 2004, as filed on February 13, 2004
             and May 17, 2004, respectively; and

         o   the description of the our common stock contained in our
             Registration Statement on Form SB-2 filed October 26, 1996, as
             amended.

         We also incorporate by reference additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and prior to the completion of the offering of the
shares of common stock offered hereby. These documents include periodic reports,
such as Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB, Current
Reports on Form 8-K and proxy statements.

         Information furnished under Items 9 and 12 of any of our Current
Reports on Form 8-K is not incorporated by reference in this prospectus or the
registration statement of which this prospectus is a part.

ITEM 4.  DESCRIPTION OF SECURITIES

         Not Applicable.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL

         Certain matters with respect to the validity of the shares of common
stock offered by this prospectus will be passed upon for us by Friedman Kaplan
Seiler & Adelman LLP. Certain members of Friedman Kaplan Seiler & Adelman LLP
own shares and options to purchase shares of our common stock.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
The Registrant's Bylaws include provisions to require the Registrant to
indemnify its directors and officers to the fullest extent permitted by Section
145, including circumstances in which indemnification is otherwise
discretionary. Section 145 also empowers the Registrant to purchase and maintain
insurance that protects its officers, directors, employees and agents against
any liabilities incurred in connection with their service in such positions. 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.

                                       16
ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED

         Not Applicable.

ITEM 8.  EXHIBITS

         The following is a complete list of exhibits filed as part of this
registration statement.

        EXHIBIT NO.    DOCUMENT
        -----------    --------
        4.1            Interactive Systems Worldwide Inc. 1995 Stock Option
                       Plan, as amended January 7, 1999 (incorporated by
                       reference to Exhibit 10.11 to the Registrant's Annual
                       Report on Form 10-KSB, filed on December 22, 2000).

        4.2            Interactive Systems Worldwide Inc. 1996 Stock Option
                       Plan, as amended January 2, 2003 (incorporated by
                       reference to Exhibit 10.8 to the Registrant's Annual
                       Report on Form 10-KSB, filed on December 24, 2003).

        5.1            Opinion of Friedman Kaplan Seiler & Adelman LLP.

        23.1           Consent of Friedman Kaplan Seiler & Adelman LLP
                       (included in Exhibit 5.1).

        23.2           Consent of Eisner LLP.

        24.1           Powers of Attorney (included on the signature page of
                       this Registration Statement).

ITEM 9. UNDERTAKINGS

         (a) 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 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;

                                       17
(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 paragraphs (a)(1)(i) and (a)(1)(ii) of this section 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.

             (2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such 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.

             (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.

         (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.

         (c) 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
Securities Act of 1933 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 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 of 1933 and will be governed by the final adjudication of such issue.

                                       18
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-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in West Paterson, State of New Jersey, on June 24, 2004.

INTERACTIVE SYSTEMS WORLDWIDE INC.

By:           /s/ Barry Mindes
    -----------------------------------
    Barry Mindes, Chairman of the Board
    and Chief Executive Officer

                                       19
POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Barry Mindes and Bernard Albanese, and
each of them, his true and lawful attorneys -in-fact and agent, with full power
of substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all amendments to this registration
statement (including post-effective amendments), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and to make any and all state securities law
or blue sky filings, granting unto said attorney-in-fact and agents, each acting
alone, 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 for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, each acting alone, 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, as amended,
this Registration Statement has been signed by the following persons in the
capacities on the dates indicated.

     SIGNATURE                            TITLE                      DATE
-------------------------   ---------------------------------    -------------

    /s/ Barry Mindes        Chairman of the Board and Director   June 24, 2004
-------------------------   (Principal Executive Officer)
      Barry Mindes

  /s/ Bernard Albanese      President and Director               June 24, 2004
-------------------------
    Bernard Albanese

    /s/ James McDade        Chief Financial Officer (Principal   June 24, 2004
-------------------------   Financial and Accounting Officer)
      James McDade

    /s/ Bruce Feldman       Director                             June 24, 2004
-------------------------
      Bruce Feldman

 /s/ Fredric Kupersmith     Director                             June 24, 2004
-------------------------
   Fredric Kupersmith

   /s/ Harold Rapaport      Director                             June 24, 2004
-------------------------
     Harold Rapaport

                                       20
EXHIBIT INDEX

EXHIBIT NO.   DOCUMENT
-----------   --------
4.1           Interactive Systems Worldwide Inc. 1995 Stock Option Plan, as
              amended January 7, 1999 (incorporated by reference to Exhibit
              10.11 to the Registrant's Annual Report on Form 10-KSB, filed
              on December 22, 2000).

4.2           Interactive Systems Worldwide Inc. 1996 Stock Option Plan, as
              amended January 2, 2003 (incorporated by reference to Exhibit
              10.8 to the Registrant's Annual Report on Form 10-KSB, filed
              on December 24, 2003).

5.1           Opinion of Friedman Kaplan Seiler & Adelman LLP.

23.1          Consent of Friedman Kaplan Seiler & Adelman LLP (included in
              Exhibit 5.1).

23.2          Consent of Eisner LLP.

24.1          Powers of Attorney (included on the signature page of this
              Registration Statement).

                                       21