Intervisual Books, which has been looking for fresh funding for about one year (News, Nov. 27, 2000), announced last week that it has entered into a nonbinding letter of intent with a potential investor who will provide an unspecified amount of capital. As part of the deal, Intervisual's two largest shareholders are being asked to sign an agreement that will give the new investor the right to elect a majority of the company's board of directors and the right to appoint a new CEO.
The company's two largest shareholders are founder, chairman and CEO Waldo Hunt, who owns 49.9% of Intervisual's stock, and Steven Ades, president of the company's video and new media division, who acquired his 11% stake when Intervisual bought Ades's Fast Forward Marketing company in 1999.
Intervisual has not made money in a number of years, and despite hopes that the company might move into the black in 2001, it appears likely that there will be still more red ink this year. Given its long string of losses, company chief financial officer Dan Reavis said that if the pending transaction is not completed and the company cannot find alternative financing in a timely fashion, its "business and current operations will be adversely affected."
For the nine-month period ended September 30, 2001, sales rose 5.5%, to $15.2 million, and its net loss was reduced to $576,316 from $1.2 million. The company's two book units reported gains in the period with packaging sales up 45.6% to $6.7 million due to Harry Potter products, and sales at Piggie Toes Press jumping 66.6% to $4.5 million. Those gains, however, were offset by a 44.8% decline, to $3.9 million, in its video distribution business. The company attributed the decline to the closing of Intervisual's two largest video accounts, and president Norm Sheinman said he expects further declines in the division for the rest of the year.
