LEARN2 Com Inc – ‘8-K’ for 12/9/97 – EX-99.1

As of:  Tuesday, 12/9/97   ·   For:  12/9/97   ·   Accession #:  930661-97-2812   ·   File #:  0-24936

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         4      9K 
 2: EX-99.1     Press Release                                          4     18K 

EX-99.1   —   Press Release

EX-99.1
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                                                                    EXHIBIT 99.1

7TH LEVEL & PULSE TO MERGE & COMMERCIALIZE  
------------------------------------------  
New Generation of On-Line 2D & 3D Tools 
--------------------------------------- 

DALLAS, TX (November 17, 1997) -- 7th Level, Inc. (NASDAQ: SEVL) and  
privately held Pulse Entertainment, Inc. of Los Angeles have agreed to merge and
form a new company called P7 Solutions. 7th Level would acquire Pulse, the two  
companies would merge management and operations, and the merged company would   
change its name to P7 Solutions.  With a strategic and technology focus on      
Internet and other on-line applications, the company intends to become an       
important supplier of packaged tools, custom technology and new media solutions 
for the production, management and delivery of interactive digital content in   
new era commerce, communications and entertainment.  The companies are          
presenting themselves as a combined entity at Comdex, starting today, as well as
at the upcoming Internet World trade show.                                      

    "This merger is in line with 7th Level's management strategy, announced in
August, to transform the company by year-end from a self-funded games developer 
and publisher to a leading supplier of custom and packaged integrated solutions 
for a broad array of applications and platforms, including on-line, CD-ROM and  
video," said Donald Schupak, 7th Level Chairman, who will preside as Chairman of
the new company.  "The merged company combines 3D authoring applications from   
Pulse with the 2D production and animation systems from 7th Level to create a   
uniquely powerful and easy to use object oriented, next generation tool suite   
for the creation and delivery of interactive digital media, with special        
emphasis for on-line applications.  We're pleased to announce that CEO of the   
merged company will be Pulse CEO Bill Woodward."                                

Pulse is a leading developer of real-time 3D authoring tools and      
interactive entertainment software and was founded in 1994 by Woodward, founder 
of Paracomp and co-founder and former Chairman of Macromedia Inc. (NASDAQ:      
MACR); Chief Technology Officer Young Harvill, former research fellow at        
Macromedia; and other members of Macromedia's original lead engineering         
technology team.  Together, they have contributed to the creation of many       
breakthrough authoring systems of recent years, including Director for Windows, 
Authorware, Macromodel, Swivel 3-D, Smart 3D, and Extreme 3D.                   

   Pulse has developed a complete suite of tools for the creation and direct
playback of real-time 3D characters and environments over the Internet and other
on-line networks as well as game platforms and CD-ROM.  The suite is based on   
Pulse's Digi, a proprietary authoring system for creating real-time 3D          
interactive content, for both Macintosh and Windows 95.  Digi enables WYSIWYG   
authoring through a user friendly front-end that enables low cost, high-speed   
development of sophisticated, intelligent media behaviors, managed by a database
providing true interactive, non-linear playback. It also features Pulse's new   
Internet browser plug-in, which enables users to view and interact with real-   
time 3D characters and environments.  Interactive 3D characters are delivered to
the desktop via the Web or any other network and "come to life" as new behaviors
are streamed to them on the fly, updating the messages they give, and adding    
longevity to the experience.                                                    

7th level has spent five years developing Studio 7, its powerful      
production, authoring and playback system for 2D animation.  The products which 
it has created both for itself and for its strategic partners using this        
technology have won scores of awards for performance as well as                 

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content. Also, 7th Level has licensed TopGun, its proprietary playback engine to
a number of partners. 7th Level's engineering team brings years of systems level
analysis, architecture and engineering experience to the merger, and 7th Level's
content creation teams are renowned for their work in all media.                

  "The company will integrate Studio 7 into Digi to create the first fully
integrated tool set for the low cost, high speed production of 2D and 3D        
animated content for Internet, intranet and extranet as well as other digital   
media applications," said Woodward.  "The advanced state of development of Digi 
will allow the time to completion and the time to market to be very short."     

   "The integration of the two companies' technologies and expertise and the
new depth in management will enable us to position P7 Solutions as a leader for 
complete technology and content solutions in the digital age," said Bob Ezrin,  
7th Level CEO, who will become Vice Chairman and Executive Vice President of the
new company.                                                                    

The company will concentrate on the development of packaged solutions,
which are productivity tools to be marketed through VARs, direct licensing and  
retail; custom technology solutions, involving partnering with leading software 
vendors to integrate and extend their products with customized technology and   
content databases and leveraging their existing sales channels; and custom new  
media solutions, which are aimed at corporate customers and are largely         
consultative, service and maintenance oriented.                                 

   The merged company will combine 3D authoring applications from Pulse with
the 2D production and animation systems from 7th Level to create a uniquely     
powerful and easy to use object oriented tool suite for the creation and        
delivery of interactive digital media.  Woodward will direct 7th Level's        
experienced sales and marketing team in the development of the packaged         
solutions business. The team includes Jeff Croson, Sr. Vice President of Sales, 
who has had years of retail channel experience with technology leaders including
Micrografx, Lotus Development Corporation and IBM; Paul Bodnoff, Vice President 
of Marketing, whose previous experience was with Corel Corporation where he     
served in various investor relations and marketing capacities including         
Marketing Director for the multi-award winning CorelDRAW!; and Gary Griggs, Vice
President of Strategic Alliances, whose OEM and VAR development experience spans
years with companies such as Micrografx and Lotus Development Corporation.      

   P7 Solutions intends to market a high-end digital character creation tool
which is expected to be launched in less than 6 months followed by the complete 
suite of tools and technologies which are slated for commercial release within  
12 months. Also, a new corporate solutions marketing team is being formed from  
executives from both companies and will include some key external hires. The    
company intends to leverage 7th Level's and Pulse's existing strategic          
relationships to facilitate entry into the corporate arena where the company    
intends to market to large corporate clients to help them create and grow       
on-line strategies and businesses by consulting to them and/or producing and    
managing their content through a combination of proprietary and industry        
standard technologies.                                                          

 Officers of P7 Solutions will include Woodward as CEO; Harvill as Chief
Technology Officer; Schupak as Chairman; Ezrin as Vice Chairman; Dave Craig as  
Chief Financial Officer; and Tim Cahill as COO.  Craig is currently CFO of 7th  
Level.  Cahill is currently VP of Business Development, General Manager and     
General Counsel of Pulse.  Pulse will integrate its Los Angeles-based operations
into 7th Level's Glendale, Calif. facility.  Members of the Board of Directors  
will include current 7th Level directors Schupak; Ezrin; James Cannavino, former
President, CEO and director of Perot Systems, and former Sr. Vice President of  
Strategy and                                                                    

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Development, and Sr. Vice President and General Manager of the Personal Systems 
Group at IBM; and Merv Adelson, who is also a director of Time Warner, Inc.; as 
well as Woodward, Harvill and Tom Peterson, a current director of Pulse.        

"This merger makes perfect sense," said Schupak.  "Both companies'    
technologies work perfectly with and complement each other and create an even   
stronger marketing position when they are sold together as solutions or tools.  
At the same time, each company's management offers unique strengths that, when  
combined, create exactly the team we need to move this investment forward in    
order to create superior value."                                                

     7th Level has made rapid progress in implementing its new strategy since it
was announced in August:                                                        

 .  The company has affected this merger which will accelerate and substantially
strengthen the company's entry into the solutions and tools market.       

.  The company has moved out of self-funded game publishing, selling Dominion 
and distribution rights for $1.8 million; reaching agreement with Take-Two
  Interactive Software, Inc. (NASDAQ: TTWO) for the master distribution of 7th
Level's Monty Python titles; and is in advanced negotiations to sell its  
PyroTechnix, Inc. division, which is developing games such as Return to   
Krondor by best-selling science-fiction fantasy author Raymond E. Feist.  

.  The company has closed international game distribution and localization    
  offices in Germany, Japan and California, and is reducing costs to less than
half the run rate in the first half of 1997.                              

.  7th Level has licensed its Top Gun(TM) development technology to Ion Storm,
  L.P., for the completion of Dominion and sequel titles, and to another large
software company; and 7th Level has announced a series of digital content 
solution projects as part of other, significant strategic alliances.      

  Under terms of the agreement, shareholders of Pulse would receive 60% of
the outstanding shares of the new entity.  Shareholders of 7th Level would      
receive 40% of the shares of the new company and the agreement also allows 7th  
Level to issue warrants to its shareholders to acquire 10% at a market valuation
of $110 million.  7th Level currently has approximately 13.7 million shares     
outstanding, and this transaction will require the approval of a majority of 7th
Level stockholders.                                                             

    The merger is subject to a number of conditions.  It must be approved by a
majority of the shareholders of both companies; it requires a fairness opinion; 
and it is subject to raising $15 million in private securities to support       
completion of its tools and to provide working capital to market those tools and
to staff up for the solutions business.  To that end, 7th Level has retained a  
nationally known investment banking firm to act as the placement agent to secure
the capital.  In addition, the company intends to make the requisite SEC filings
as soon as possible to obtain the necessary shareholder approval.               

     As previously announced, 7th Level is currently in discussions with several
companies, including those engaged in the broadcast business, with respect to   
integrated on-line solutions and other possible partnerships and strategic      
alliances.                                                                      

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7th Level, Inc. is repositioning itself as a leading supplier of both 
custom integrated solutions and packaged technology solutions to a broad array  
of  entertainment, consumer and commercial customers.                           

# # # 

Contact:  Gary Fishman or Susan Romeo at 212-527-4808.                          

--------------------------------------------------------------------------------
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 generate cash income in 
the fourth quarter of 1997, the success of the company's cost reduction         
strategy, 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.                                 
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Dates Referenced Herein

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
Filed on / For Period End:		12/9/97							None on these Dates
		11/17/97		1
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