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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): April 23, 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 April 22, 1998, 7th Level, Inc. (the "Company") issued the press
release (the "Press Release") annexed as an exhibit hereto. The Press Release
is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
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99.1 Press Release of 7/th/ Level, Inc. dated April 22, 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: April 23, 1998
/s/ ROBERT ALAN EZRIN
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Robert Alan Ezrin
President, Chief Executive Officer
and Director
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Index to Exhibits
99.1 Press Release of 7th Level, Inc. dated April 22, 1998
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EXHIBIT 99.1
7th Level & Pulse Cancel Merger Plans; 7th Level Announces Commitments and Terms
for $4.5 Million Bridge Loan and $10 Million Private Placement
DALLAS, TX, (April 22, 1998) -- 7th Level, Inc. (NASDAQ: SEVL) announced
that the Company and privately-held Pulse Entertainment, Inc. of Los Angeles
have decided not to proceed with their proposed merger. Separately, 7th Level
announced it has obtained commitments for a $4.5 million bridge loan and a $10
million private placement to finance the ramp up and rollout of 7/th/ Level's
revolutionary new line of technology products.
Donald Schupak, Chairman of 7th Level, and Bill Woodward, CEO of Pulse,
said the decision was mutual, friendly and in the best interest of both
companies. "After thorough due diligence," they said in a joint statement, "we
concluded it would be more profitable for each company to develop and market its
own technology separately." Under the originally proposed terms, 7th Level
would have issued approximately 21 million common shares to Pulse shareholders
and would have had to raise $15 million financing in a private placement.
"As an independent 7th Level," Mr. Schupak said, "we have accepted
subscriptions for a $10 million private placement of preferred stock including a
$4.5 million bridge loan. Under the terms of the placement, the Company may be
obligated to issue up to 8.275 million shares of common stock on conversion of
preferred stock and exercise of any $0.01 warrants." Mr. Schupak noted that all
of the commitments, terms and conditions of the bridge loan and the private
placement were agreed upon privately on Monday. "We have raised the funds
called for by our business plan and our existing shareholders will experience
substantially less dilution than they would have had the merger and related
financing been completed."
Earlier this month, 7th Level announced it had developed a new technology,
the first of its kind, for preparing and streaming, or broadcasting, real-time,
intelligent, interactive animation over the Internet and other networked
delivery systems. The Company announced that it had signed an agreement with
AudioNet, the largest broadcast network on the Internet, to support and deliver
the new technology and market it to Internet advertisers. Earlier this week,
7th Level announced an agreement with WaveTop, the leading data broadcaster, to
provide a similar technology solution for use in the creation of interactive,
character-based advertisements. WaveTop broadcasts Web content via the
television bandwidth to home PC users in 50 major markets.
"Remaining independent enables 7th Level to focus exclusively on its
strategy of supplying tools and services directed at enabling interactive
animation over the Internet, corporate intranets and other network
environments," said Mr. Schupak. "7th Level's interactive animation tools,
designed to bring network advertising and content to life, are derived from the
Company's award-winning Studio 7 Suite, developed at a cost of tens of millions
of dollars," he said. "The unique approach underlying the technology is destined
to make 7th Level's tools the standard for preparing and delivering interactive
animation. With our low fixed cost, enabled by a 90% reduction in staff over
the past several months, and control of a developing standard, for which we see
substantial demand, we now are confident that 7th Level is on the cusp of
establishing a very profitable and sustainable business."
As part of its plan to exit CD-ROM content development and leverage its
software technologies, 7th Level announced plans in November to acquire Pulse
and merge the two operations into a new company to be called P7 Solutions.
Under proposed terms, Pulse shareholders would have owned 60% of the outstanding
shares of P7 and 7th Level shareholders, who own a total of approximately 13.8
million shares outstanding, would have owned 40% of the outstanding shares of
P7. The transaction required, among other things, the approval of a majority of
7th Level stockholders as well as Pulse's stockholders.
A key premise was that the merger would combine 3D authoring applications
from Pulse with 2D production and animation systems from 7th Level to create a
powerful, easy to use, object-oriented tool suite for the creation and delivery
of interactive digital media, according to Richard Merrick, 7/th/ Level's Chief
Strategist and general manager of its technology team.
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"Since then," said Mr. Merrick, "our engineers have made terrific progress
in demonstrating our technology's ability to stream and control animation over
the Internet. Our new line of products are designed to support our own reusable
animation as well as rich media produced by commonly used software packages.
This enables our technology, standing on its own and not connected to a
particular or proprietary suite of development tools, to rapidly emerge as the
standard for preparing and delivering interactive content."
"We will be ready to begin marketing our first commercial technology
product this summer and we expect to ship beta versions in May," he continued.
"In addition to our recent marketing collaborations with AudioNet and WaveTop,
we expect to conclude other key strategic relationships in the very near
future."
In a separate statement, Young Harvill, Chief Technology Officer of Pulse,
indicated that Pulse intends to pursue its proprietary, next generation 3D
authoring technology for the Internet.
7th Level, Inc. (NASDAQ: SEVL) is a developer of leading-edge technologies
which can be used by anyone to quickly and easily create rich media content for
use in advertising, e-commerce, training, customer support and other e-business
applications. Additional information on 7th Level is available via the Internet
at www.7thlevel.com.
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Forward-Looking Statements: This news release contains forward-looking
statements, which involve risks and uncertainties. Accordingly, no assurance
can be given that the actual events and results will not be materially different
than the anticipated results described in the forward-looking statement. There
are a number of important factors that could cause actual results to differ
materially from those expressed in any forward-looking statements made by the
company. These factors include the company's ability to secure financing for its
new business strategy, the success of the Company's cost reduction actions, the
ability to attract and retain strategic partners, the ability to leverage
intangible assets in its technology, the ability to complete new projects at
planned costs and on planned schedules and the market acceptance of the
Company's products. Investors are also directed to consider other risks and
uncertainties discussed in documents filed by the company with the Securities
and Exchange Commission. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements, which
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
Contact: Gary Fishman/Susan Romeo 212/527-4808
