<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT OR TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
------------- -------------
Commission File Number: 1-10916
INTERVISUAL BOOKS, INC.
(Exact name of registrant as specified in its charter)
California 95-2929217
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2716 Ocean Park Boulevard, Suite 2020
Santa Monica, California 90405
- ------------------------------------------------ -----
Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (310) 396-8708
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practical date. As of March 31, 2000, there were 5,937,283 shares of common
stock outstanding.
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INTERVISUAL BOOKS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
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Item 1. Consolidated Financial Statements
Balance Sheets - March 31,2000, and December 31, 1999 1
Statements of Operations - Three months ended
March 31, 2000 and 1999 2
Statements of Cash Flows - Three months ended March 31,
2000 and 1999 3
Notes to Financial Statements - March 31, 2000 4
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 10
</TABLE>
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INTERVISUAL BOOKS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
(unaudited)
ASSETS 3/31/00 12/31/99
--------------------------------------------- ------------ ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 227 $ 644
Accounts receivable, less allowances
of $155 and $174 4,244 6,094
Inventories 1,799 1,779
Prepaid expenses 420 354
Commission & royalty advances 429 447
Other current assets 220 209
------------ ------------
Total current assets 7,339 9,527
Production costs, net of accumulated
amortization of $17,317 and $17,153 3,597 3,417
Goodwill 1,521 1,541
Acquisition costs 292 312
Property and equipment, net of accumulated
depreciation of $1,698 and $1,668 251 265
Deferred income taxes 442 442
------------ ------------
$ 13,442 $ 15,504
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------
Current Liabilities:
Accounts payable $ 4,618 $ 6,242
Line of credit with bank 1,475 1,475
Accrued royalties 423 581
Accrued expenses 230 208
Customer deposits 52 63
------------ ------------
Total current liabilities 6,798 8,569
Long term debt 2,300 2,200
Other liabilities-long term 102 114
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TOTAL LIABILITIES 9,200 10,883
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Stockholders' Equity:
Preferred stock, shares authorized
3,000,000, none issued -- --
Common stock, no par value; shares
authorized 12,000,000, shares issued and
outstanding 5,937,283 at March 31,2000
and 5,915,617 at December 31, 1999 5,364 5,332
Additional paid in capital 380 373
Retained deficit (1,502) (1,084)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,242 4,621
------------ ------------
$ 13,442 $ 15,504
============ ============
</TABLE>
See notes to consolidated financial statements.
1
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INTERVISUAL BOOKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
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<S> <C> <C>
Net sales $ 3,730 $ 1,519
Rights income 19 2
------------ ------------
Total revenues 3,749 1,521
Cost of sales 2,811 1,069
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Gross profit 938 452
Selling, general and
administrative expenses 1,258 866
------------ ------------
Loss from operations (320) (414)
Interest expense (98) (39)
------------ ------------
Loss before income taxes (418) (453)
Income tax benefit -- (70)
------------ ------------
Net loss $ (418) $ (383)
============ ============
Loss per common share:
Basic and diluted $ (0.07) $ (0.07)
============ ============
Weighted average number of common shares
and equivalents outstanding:
Basic and diluted 5,919 5,191
============ ============
</TABLE>
2
See notes to consolidated financial statements.
<PAGE> 5
INTERVISUAL BOOKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (418) $ (383)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 234 150
Provision for losses on accounts receivable (19) 3
Provision for abandoned titles 4 5
Deferred income taxes -- (69)
Stock-based compensation expense 7 --
Increase (decrease) from changes in:
Accounts receivable 1,869 1,119
Inventories (20) (298)
Prepaid expenses (66) 11
Royalty advances 18 4
Other current assets (11) 31
Accounts payable (1,624) (1,168)
Accrued royalties (158) (184)
Accrued expenses 22 (22)
Customer deposits (11) 3
Other liabilities (12) (13)
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Net cash used in operating activities (185) (811)
---------- ----------
Cash flows from investing activities:
Additions to property and equipment (16) (2)
Additions to production costs (348) (245)
---------- ----------
Net cash used in investing activities (364) (247)
---------- ----------
Cash flows from financing activities:
Proceeds from exercise of options 32 69
Proceeds from bank line of credit -- 200
Proceeds from subordinated line of credit 100 --
---------- ----------
Net cash provided by financing activities 132 269
---------- ----------
Net decrease in cash and cash equivalents (417) (789)
Cash and cash equivalents, beginning of period 644 1,561
---------- ----------
Cash and cash equivalents, end of period $ 227 $ 772
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ -- $ --
Interest expense 98 39
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(unaudited)
Note 1 - Statement of Information Furnished
In the opinion of management the accompanying unaudited financial statements
contain all adjustments (consisting only of normal and recurring accruals)
necessary to present fairly the financial position as of March 31, 2000, and the
results of operations and cash flows for the three month period ended March 31,
2000 and 1999. These results have been determined on the basis of generally
accepted accounting principles and practices applied consistently with those
used in the preparation of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999.
The results of operations for the three month period ended March 31, 2000, are
not necessarily indicative of the results to be expected for any other period or
for the entire year.
Certain information and footnote disclosures normally included in financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. The accompanying financial statements should be
read in conjunction with the Company's audited financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
Note 2 - Loss Per Common Share
The Company computes loss per common share under SFAS No. 128, "Earnings Per
Share," which requires presentation of basic and diluted earnings (loss) per
share. Basic earnings (loss) per common share is computed by dividing income or
loss available to common shareholders by the weighted average number of common
shares outstanding for the reporting period. Diluted earnings (loss) per common
share reflects the potential dilution that could occur if securities or other
contracts, such as stock options, to issue common stock were exercised or
converted into common stock. Common stock options for the three months ended
March 31, 2000 and 1999 were not included in the computation of diluted loss per
common share because the effect would be antidilutive.
Note 3 - Fast Forward Marketing Acquisition
On May 14, 1999, the Company completed the acquisition of Fast Forward
Marketing, Inc., (Fast Forward). The transaction was completed under the terms
and conditions of a definitive agreement signed March 29, 1999. Under this
agreement, the Company acquired all the outstanding shares of Fast Forward for
670,000 shares of its common stock, a contingent cash payment of up to $200,000
due May 1, 2000, and a cash payment of $150,000 due May 1, 2001 subject to
reduction for the payment by the Company of certain tax withholdings. The
contingent cash payment will not be paid as the terms of the
original agreement were not met. This transaction has been accounted for as a
purchase and resulted in goodwill of $1,587,000 which is being amortized over
the estimated useful life of 20 years.
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Note 4 - Lines of Credit
The Company has a revolving line of credit facility with a bank that provides an
asset based credit line of up to $2,500,000, subject to certain covenants. The
Company may borrow against this line, as well as issue letters of credit.
Advances under the facility bear interest at prime plus 2.5% and are secured by
the Company's assets. This facility was originally scheduled to expire on May 1,
2000. The Company has received a commitment letter from the bank to extend this
line to May 1, 2001, subject to signing of formal documentation. At March 31,
2000, the Company had an outstanding indebtedness of $1,475,000 with the bank
and was in compliance with all financial statement covenants.
In May 1999, the Company entered into a subordinated revolving line of credit
agreement with a private party that provides for a line of credit of up to
$2,300,000, originally scheduled to expire May 13, 2000. This line is
subordinated to the bank line of credit. Advances under this line bear interest
at 5% above LIBOR and are secured by the Company's assets. On March 23, 2000,
the Company exercised its option to extend the line of credit for an additional
12 months to May 13, 2001 under the same terms and conditions. To extend this
line of credit, the agreement requires that warrants for 150,000 shares of the
Company's common stock be issued. The Company valued the warrants and will
recognize the expense over the remaining term of the subordinated revolving line
of credit. The warrants are exercisable for up to two years after the issue date
at a price equal to the average trading price of the Company's stock for the 20
day period prior to May 13, 2000 (the extension date). At March 31, 2000, the
Company had an outstanding indebtedness of $2,300,000 under this line of credit
and was in compliance with all covenants.
Note 5 - Accounts Receivable and Payable
Fast Forward has an agreement with its customers and suppliers that allows for
returns of merchandise. Accordingly, a reserve for accounts receivable and
payable has been provided. The reserve accounts require the use of significant
estimates. Fast Forward believes the techniques and assumptions used in
establishing the reserve accounts are appropriate. At March 31, 2000, Fast
Forward recorded a reserve for returns against accounts receivable of $151,000
and a reserve for returns against accounts payable for $107,000.
5
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Intervisual Books, Inc. (the "Company") creates and produces interactive and
three-dimensional books designed for children and adults. These products include
picture books, playsets, board books and gift books. The Company's books
incorporate dimensional and moveable features which require hand-assembly in the
manufacturing process. Some titles require the incorporation of such materials
as plush, plastic novelty elements and electronic audio chips into the finished
books.
The majority of the Company's concepts and ideas for projects are generated
internally by the in house creative and editorial departments. Additional ideas
and concepts are conceived by the illustrators and designers with whom the
Company has been associated for many years. After the Company conceives an idea
and makes a dummy book, key US and foreign publishers are consulted to determine
if they are interested in publishing and marketing the book. If an agreement is
reached, the Company and the publisher sign a co-publishing contract which
stipulates that the publisher will purchase the title with exclusive rights to
sell books in the English language to the book trade for generally a two to four
year period.
The Company also self-publishes titles and offers the books directly to
retailers. The recent acquisition of Fast Forward Marketing, Inc. (see Note 3)
brings to the Company a trained sales force which will enhance the Company's
ability to sell and service retailers. As a result of the Fast Forward
acquisition, the Company also distributes video and audio products for major
motion picture studios, including Walt Disney, Warner Bros., Universal,
Paramount, 20th Century Fox, and many independent producers. Since its founding
in 1987, Fast Forward has built an account base of more than 4,000 retailers,
including national chains such as Toys R Us, Blockbuster, Target, Borders,
Musicland and Best Buy, as well as specialty retailers such as Zany Brainy,
Store of Knowledge, Noodle Kidoodle, Books A Million and other children's
bookstores, gift shops, museums, zoos and Internet retailers such as E-Toys. The
Fast Forward Marketing sales force started selling the Company's self-published
titles effective June 1, 1999. Prior to this, the Company marketed its products
to retailers using the services of Andrews McMeel, a leading US
publisher/distributor located in Kansas City. Andrews McMeel handled sales,
collection, billing, warehousing and order fulfillment functions. Effective
January 1, 2000, this arrangement ended and all sales, collections, and billing
was brought in house, while warehousing and order fulfillment is being handled
by an independent company located in University Park, Illinois.
The market for packaged books has gone through recent changes which has made it
more difficult for the Company to generate co-editions. In the past five years,
there has been a consolidation trend in the US publishing industry that has
reduced the number of the Company's customers. Many of the surviving children's
imprints are still consolidating, which is continuing to have a negative impact
on the size and frequency of their orders. The need to offset this decline is
the main reason behind the Company's decision to self-publish certain of its
titles. The Company's self-publishing program is in its third year and the
results continue to improve.
The Company does not engage in any of its own printing, binding, hand assembly,
or manufacturing. These services are contracted for with independent printers in
Colombia, Singapore, Hong Kong and
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Thailand. The Company supplies its printers with artwork, color-separated
materials and complete sample materials to serve as guides for hand-assembly.
On May 14, 1999, the Company completed the acquisition of Fast Forward
Marketing, Inc., (Fast Forward). The transaction was completed under the terms
and conditions of a definitive agreement signed March 29, 1999. Under this
agreement, the Company acquired all the outstanding shares of Fast Forward for
670,000 shares of its common stock, a contingent cash payment of up to $200,000
due May 1, 2000, and a cash payment of $150,000 due May 1, 2001 subject to
reduction for the payment by the Company of certain tax withholdings. The
contingent cash payment will not be paid as the terms of the original agreement
were not met. This transaction was accounted for as a purchase and resulted in
goodwill of $1,587,000 which is being amortized over the estimated useful life
of 20 years.
RESULTS OF OPERATIONS
Net sales for the three month period ended March 31, 2000 were $3,730,000 as
compared to $1,519,000 for the prior year. The sales increase of $2,211,000 was
primarily attributable to the inclusion of $2,147,000 in video sales which were
not in last year, while domestic sales of book products were up $491,000 and
foreign sales were down $427,000 for the quarter. The decrease in foreign sales
is due mainly to the inclusion of certain large orders on new product in the
first quarter of 1999 which were not duplicated in the first quarter of this
year.
Gross profit margin for the three month period ended March 31, 2000 was 25% as
compared to 29.7% for the same period of the prior year. This overall decline
was due mainly to including video sales in the first quarter of this year which
have a lower gross profit margin that were not in last year for the same period.
The Company is a distributor of video products that for the most part are the
properties of its suppliers. As a distributor, the Company's risk for unsold
inventory is limited and sales are made at lower margins than on its book
products. The gross margin on sales of video products for the first quarter of
2000 was 20.9%. This compares with Fast Forward Marketing's traditional margins
on video sales that ranged between 16% to 19%. The decline in the overall gross
margin caused by including video sales was offset by higher margins on the sale
of book titles which increased from 40.8% last to 43.7% this year. Cost of sales
consists primarily of manufacturing, book development amortization and
royalties.
Selling, general and administrative expenses for the three month period ended
March 31, 2000 were $1,258,000 as compared to $866,000 for the comparable period
of the prior year, an increase of $392,000. Included in the 2000 figures were
$472,000 of overhead expenses from Fast Forward Marketing. Excluding the Fast
Forward Marketing expenses, selling, general and administrative
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expenses, which include personnel costs, decreased $80,000 from the prior year.
Personnel expenses, excluding Fast Forward, were $284,000 for the three months
ended March 31, 2000 as compared to $437,000 for the comparable period of 1999.
This decrease of $153,000 can be attributed primarily to salary and staff
reductions and the expiration of a consulting agreement. Personnel expenses,
including Fast Forward, were $640,000 for the first quarter of 2000. Selling
expenses, excluding Fast Forward, were $238,000 for the three month period ended
March 31, 2000 versus $170,000 in 1999 for an increase of $68,000. This increase
was primarily related to increases in distribution related costs due to higher
sales offset by decreases in delivery and travel and entertainment. Selling
expenses, including Fast Forward, were $322,000 for the first quarter of 2000.
Administrative expenses, excluding Fast Forward, were $264,000 for the three
months ended March 31, 2000 as compared to $259,000 for the same period of 1999
for an increase of $5,000. Administrative expenses, including Fast Forward, were
$296,000 for the first quarter of 2000.
Interest expense for the three month period ended March 31, 2000 was $98,000 as
compared to $39,000 for the comparable period of 1999. The increase of $59,000
was a result of higher average borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents decreased by $417,000 to $227,000 at
March 31, 2000 from $644,000 at December 31, 1999. At March 31, 2000, working
capital was $541,000 compared to $958,000 at December 31, 1999. The primary use
of cash during the three months ended March 31, 2000 was from investing
activities.
Net cash used in operations was $185,000 for the first quarter of 2000 as
compared to $811,000 for the corresponding period of the previous year. The
$626,000 change in cash from operations compared to the corresponding period was
primarily attributable to increases in net operating loss and accounts
receivable offset by a decrease in accounts payable. Net cash used in investing
activities amounted to $364,000 as compared $247,000 during the same period in
1999. This increase in cash used is primarily from an increase in production
costs in the first quarter of 2000 versus the same period of 1999. Net cash
provided by financing activities was $132,000 in 2000 as compared to $269,000
for the same period in 1999. This decrease in cash provided is primarily from
lower borrowings on the Company's lines of credit.
The Company has a revolving line of credit facility with a bank that provides an
asset based credit line of up to $2,500,000, subject to certain covenants. The
Company may borrow against this line, as well as issue letters of credit.
Advances under the facility bear interest at prime plus 2.5% and are secured by
the Company's assets. This facility was originally scheduled to expire on May 1,
2000. The Company has received a commitment letter from the bank to extend this
line to May 1, 2001, subject to signing of formal documentation. At March 31,
2000, the Company had an outstanding indebtedness with the bank of $1,475,000
and was in compliance of all financial statement covenants.
In May 1999, the Company entered into a subordinated revolving line of credit
agreement with a private party that provides for a line of credit of up to
$2,300,000, originally scheduled to expire May 13, 2000. This line is
subordinated to the bank line of credit. Advances under this line bear interest
at 5% above LIBOR and are secured by the Company's assets. On March 23, 2000,
the Company exercised its option to extend the line of credit for an additional
12 months to May 13, 2001 under the same terms and conditions. To extend this
line of credit, the agreement requires that warrants for 150,000 shares of the
Company's common stock be issued. The Company valued the warrants and will
recognize the expense over the remaining term of the subordinated revolving line
of credit. The warrants are exercisable for up to two years after the issue date
at a price equal to the average trading price of the Company's stock for the 20
day period prior to May 13, 2000 (the extension date). At March 31, 2000, the
Company had an outstanding indebtedness of $2,300,000 under this line of credit
and was in compliance with all covenants.
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As of May 1, 2000, the Company did not have any commitments for any material
capital expenditures for the remainder of 2000 or beyond. The Company's business
tends to be seasonal, as is the publishing business as a whole, with the major
volume of sales occurring in the last six months of the year. As a result, the
Company's cash position is at its lowest during the months of May through
October. In response, the Company has commenced cash and inventory management
strategies and is investigating the possibility of seeking additional equity or
debt financing. Management of the Company believes that the existing levels of
funds and its ability to receive additional funding and borrow on its lines of
credit, combined with the Company's ability to generate cash, are adequate to
finance current and expected levels of activity as well as anticipated capital
expenditures of the Company for at least the next twelve months.
YEAR 2000 MODIFICATIONS
The Company has reviewed its computer systems to evaluate the extent to which
modifications are necessary to insure year 2000 compliance. The Company has
upgraded its accounting software for year 2000 compliance, as well as other
software programs. All other computer upgrades and modifications needed for year
2000 compliance have been completed. The total expenditures to date have been
minimal and are not estimated to have exceeded $20,000. Given the nature of the
Company's products, the Company believes that its products do not pose year 2000
compliance issues. As with virtually all companies, the Company relies to some
degree, directly and indirectly, on external computer systems utilized by the
Company's suppliers, and the Company does not anticipate any significant impact
by these third parties on the business of the Company.
This Report on Form 10-Q contains forward-looking statements and includes
assumptions concerning the Company's operations, future results and prospects.
These forward-looking statements are based on current expectations and are
subject to a number of risks, uncertainties and other factors. In connection
with the Private Securities Litigation Reform Act of 1995, the Company provides
the following cautionary statements identifying important factors which, among
other things, could cause the actual results and events to differ materially
from those set forth in or implied by the forward-looking statements and related
assumptions contained in this Section and in this entire Report. Such factors
include, but are not limited to: product demand and market acceptance risks; the
effect of economic conditions; the impact of competitive products and pricing;
changes in foreign exchange rates; product development and commercialization
difficulties; capacity and supply constraints or difficulties; availability of
capital resources; general business and economic conditions; and changes in
government laws and regulations, including taxes.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
All sales by the Company are denominated in US dollars and, accordingly, the
Company does not enter into hedging transactions with regard to any foreign
currencies. Currency fluctuations can, however, increase the price of the
Company's products to its foreign customers which can adversely impact the level
of the Company's export sales from time to time. The majority of the Company's
cash equivalents are bank accounts and money markets, and the Company does not
believe it has significant market risk exposure with regard to its investments.
9
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
10.1 Commitment Letter to Extend Bank Line of Credit
27. Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERVISUAL BOOKS, INC.
BY: /s/ Nathan N. Sheinman
--------------------------------------
Nathan N. Sheinman, President
Chief Operating Officer
BY: /s/ Dan P. Reavis
--------------------------------------
Dan P. Reavis
Executive Vice President
Chief Financial Officer
Date: May 15, 2000
10
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Exhibit 10.1
May 12, 2000
Intervisual Books, Inc.
FFM Acquisition Corp.
2716 Ocean Park Boulevard, Suite 2020
Santa Monica, California 90405
Re: Intervisual Books, Inc. ("IBI")
FFM Acquisition Corp. ("FFM")
U.S. Bank National Association, as successor in interest to Santa Monica
Bank ("USB")
Gentlemen:
Reference is hereby made to that certain Loan and Security Agreement, dated May
12, 1999 as subsequently amended, between IBI and FFM (collectively
"Borrowers"), on the one hand, and USB, on the other hand (the "Loan
Agreement"). Whereas the Loan Agreement matured on May 1, 2000, USB has agreed
to extend the maturity of the Loan Agreement to May 1, 2001. The purpose of
this letter is to confirm said extension of maturity until such time as formal
documentation between USB and Borrowers can be executed.
The Loan Agreement, as extended, will be on substantially the same terms and
conditions as currently contained in the Loan Agreement. The financial
covenants, however, will be subject to revision based upon Borrowers' financial
projections.
If you have any questions regarding the foregoing, please do not hesitate to
contact the undersigned.
Very truly yours,
U.S. BANK NATIONAL ASSOCIATION
By:___________________ Mark Mitchell_________________
Title:____________ Vice President____________________
Acknowledged this 12th day of May, 2000
INTERVISUAL BOOKS, INC. FFM ACQUISITION CORP.
a California Corporation a California Corporation
By:__Dan P. Reavis________________ By:__ Dan P. Reavis________________
By:__CFO/EVP______________________ By:_________ President_____________
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AS OF MARCH 31, 2000, AND STATEMENTS OF OPERATIONS FOR
THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS REPORTED ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 227
<SECURITIES> 0
<RECEIVABLES> 4,399
<ALLOWANCES> (155)
<INVENTORY> 1,799
<CURRENT-ASSETS> 7,339
<PP&E> 1,949
<DEPRECIATION> (1,698)
<TOTAL-ASSETS> 13,442
<CURRENT-LIABILITIES> 6,798
<BONDS> 0
0
0
<COMMON> 5,364
<OTHER-SE> (1,122)
<TOTAL-LIABILITY-AND-EQUITY> 13,442
<SALES> 3,730
<TOTAL-REVENUES> 3,749
<CGS> 2,811
<TOTAL-COSTS> 2,811
<OTHER-EXPENSES> 1,258
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> (418)
<INCOME-TAX> 0
<INCOME-CONTINUING> (418)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (418)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
