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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 9, 1998.
7TH LEVEL, INC.
(Exact name of registrant as specified in its charter)
Commission file number 0-24936
DELAWARE 75-2480669
(State of incorporation) (I.R.S. Employer Identification No.)
1110 EAST COLLINS BOULEVARD
SUITE 122
RICHARDSON, TEXAS 75081
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 498-8100
NOT APPLICABLE
(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On July 9, 1998, the stockholders of the Registrant voted to approve an
amendment to the Certificate of Incorporation to (i) increase the number of the
Registrant's authorized shares of common stock, par value $.01 per share, from
20,000,000 to 100,000,000 and (ii) amend the terms of the Registrant's "blank
check" preferred stock to provide that the Board of Directors of the Registrant
may designate shares of preferred stock with voting rights other than one vote
per share (the "Amendment"). The Amendment was filed with the Secretary of
State of the State of Delaware on July 10, 1998. As required by the terms of
the $10,000,000 private placement announced in April, 1998, all of the issued
and outstanding shares of the Registrant's Series A Preferred Stock
automatically converted to Series B Convertible Preferred Stock ("Convertible
Preferred Stock"). Additionally, in accordance with the terms of the
financing, the purchasers of the Registrant's Senior Secured Promissory Notes
(the "Notes") issued in May, 1998 exchanged all of the Notes beneficially owned
by them for shares of Convertible Preferred Stock and warrants. Based on the
foregoing, the Registrant has attached hereto a condensed pro forma balance
sheet as of May 31, 1998 reflecting the financing. The Unaudited Pro Forma
Condensed Balance Sheet of 7th Level, Inc. as of May 31, 1998 is attached hereto
as Exhibit 99.1 and incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
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99.1 Unaudited Pro Forma Condensed Balance Sheet of 7th Level,
Inc. as of May 31, 1998.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
7TH LEVEL, INC.
(Registrant)
Date: July 14, 1998
/s/ RICHARD S. MERRICK
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Richard S. Merrick
Chief Executive Officer and Director
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Index to Exhibits
99.1 Unaudited Pro Forma Condensed Balance Sheet of 7th Level, Inc. as of May
31, 1998.
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EXHIBIT 99.1
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
The following unaudited pro forma condensed financial information presents
7th Level, Inc.'s (the "Corporation") balance sheet as of May 31, 1998 as if, at
such date, 10,000 shares of Series B Convertible Preferred Stock ("Convertible
Preferred Stock") with a $10,000,000 aggregate liquidation preference, were
issued and outstanding in accordance with the terms of the Corporation's
financing announced in April.
The accompanying pro forma condensed balance sheet should be read in
conjunction with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
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7th Level, Inc.
Unaudited Proforma Condensed Balance Sheet
May 31, 1998
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 9,400,860 $ 9,400,860
Accounts receivable, net 434,452 434,452
Other current assets 631,223 631,223
----------- ----------- -----------
Total current assets 10,466,535 - 10,466,535
Fixed assets, net 3,900,210 3,900,210
Intangible assets, net 10,601 10,601
Other assets 507,820 (274,947) (1) 232,873
----------- ----------- -----------
Total assets $14,885,166 $ (274,947) $14,610,219
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 709,041 $ 709,041
Accrued expenses and other current liabilities 4,258,611 4,258,611
Notes payable, current portion 564,453 564,453
Other current liabilities 241,583 241,583
----------- ----------- -----------
Total current liabilities 5,773,688 - 5,773,688
Notes payable:
$ 4,500,000 face value
less $ 772,577 unamortized discount 3,727,423 772,577 (1)
(4,500,000) (2)
Other 272,854 272,854
----------- ----------- -----------
Total liabilities 9,773,965 (3,727,423) 6,046,542
Commitments and contingencies
Stockholders' equity 5,111,201 (1,047,524) (1)
4,500,000 (2) 8,563,677
----------- ----------- -----------
Total liabilities & stockholders' equity $14,885,166 $ (274,947) $14,610,219
=========== =========== ===========
</TABLE>
See accompanying notes.
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NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(1) Reflects amortization of debt issuance costs and accretion of debt discount
for the period from June 1, 1998 to July 13, 1998.
(2) Reflects the exchange of Notes for Convertible Preferred Stock.
