7th Level Reports Improved Results; Steady Progress Developing Distribution & Marketing Partners.DALLAS--(BUSINESS WIRE)--November 16, 1998-- Ahead of Schedule for Developing Complete Suite of Products Including Animated Email, Instant Messaging Exchanging text messages in real time between two or more people logged into a particular instant messaging (IM) service. Instant messaging is more interactive than e-mail because messages are sent immediately, whereas e-mail messages can be queued up in a mail server for seconds or & Desktop Applications 7th Level, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : SEVL) announced results for the third quarter ended September 30, 1998 and new product, distribution and marketing developments related to the Company's interactive Internet animated character technology. The Company announced its strategy for its new business effort late in 2Q98 and released its first product, Agent 7 1.0, late in 3Q98. For the 3Q98, net revenues increased to $251,345 compared to $72,388 in 2Q98 as a result of increased technology royalties from previous agreements and early revenues from Agent 7 1.0 and new custom character agreements. Net loss declined more than 50% to $2.3 million compared to $5.0 million in 2Q98, reflecting the lower cost structure of the Company's new business. In the year ago third quarter, net revenues of $3.3 million, which resulted in a net loss of $5.2 million, related to the Company's former multimedia CD-ROM CD-ROM: see compact disc. CD-ROM in full compact disc read-only memory Type of computer storage medium that is read optically (e.g., by a laser). content development business. 7th Level has developed new technology that enables enhanced Internet and desktop communications. The technology - called mc7 -- and the applications -- Agent 7, Present 7, Mail 7 and Instant 7 -- enable the production of high-quality, lip-synched interactive animated characters for Internet and desktop applications to the benefit of consumers, businesses and professional developers who want to expand the effectiveness and reduce the cost of media-rich websites, presentations and e-mails. Highlights during and subsequent to the quarter included: -- NEW PRODUCTS - 7th Level announced plans to introduce a comprehensive suite of interactive animated communications products. In addition to Agent 7 1.0 for the Internet and Present 7 1.0 for Windows 95/98 desktop applications, which have already been released, the Company announced Mail 7 for sending animated characters in email and Instant 7 for instant messaging. Mail 7 is expected to be released in 1Q99 and Instant 7 in 2Q99. -- EXPANDED DISTRIBUTION - 7th Level began selling Agent 7 1.0 through RealNetworks' (NASDAQ:RNWK RNWK Real Networks (stock symbol) ) www.real.com, a leading website for retailing multimedia Internet software, and through the Company's e-commerce enhanced website at www.7thlevel.com. The Company also developed a special version of Agent 7 for RealNetworks to be released, marketed and distributed by RealNetworks shortly after the soon to be released G2 update of RealNetworks' industry leading streaming technology. 7th Level anticipates a boost to Agent 7 sales following release of G2, which had been delayed beyond the time 7th Level had anticipated in the second quarter of 1998. Subsequent to the quarter, 7th Level finalized reseller agreements with other Internet e-commerce software retailers Software Buyline, the digital reseller on the Lycos (NASDAQ:LCOS (Liquid Crystal on Silicon) A technology used to make microdisplays for rear-projection TVs and head-mounted displays (HMDs). Each LCoS chip hosts a grayscale LCD shutter sandwiched between a cover glass and a mirror. ) portal; Digital River, Inc. (NASDAQ:DRIV DRIV Drive (street type) ), the world's largest online database of software products; and NETSALES, a leading software web retailer with more than 64 cyberstores. In addition, 7th Level signed agreements with value added resellers See VAR. (company) value added reseller - (VAR, or "value added retailer") A company which sells something (e.g. computers) made by another company (an OEM) with extra components added (e.g. specialist software). , Click Here, an interactive communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. ; and Planet Symphony, an Internet content development firm; and began to develop relationships with third-party creators to produce, market and distribute their own Agent 7 characters. -- CUSTOM CHARACTER AGREEMENTS - 7th Level signed custom character agreements or completed development work for seven customers and expects to see all of these characters engaged on websites in the near future. Customers included Ask Jeeves Noun 1. Ask Jeeves - a widely used search engine accepting plain English questions or phrases or terms trademark - a formally registered symbol identifying the manufacturer or distributor of a product , the user-friendly plain English Plain English (sometimes known, more broadly, as plain language) is a communication style that focuses on considering the audience's needs when writing. It recommends avoiding unnecessary words and avoiding jargon, technical terms, and long and ambiguous sentences. Internet search engine used by Compaq's (NYSE NYSE See: New York Stock Exchange : CPQ CPQ Compaq CPQ Conseil du Patronat du Québec (Canada) CPQ Configure-Price-Quote CPQ Conseil de Presse du Québec (Québec Press Council, Canada) CPQ Companion Parrot Quarterly ) Alta Vista See AltaVista. (World-Wide Web) Alta Vista - A World-Wide Web site provided by Digital which features a very fast Web and Usenet search engine. As of April 1996 its word index is 33GB in size. portal; and Road Runner road runner: see cuckoo. Road Runner thrives on outwitting Wile E. Coyote. [Comics: “Beep Beep the Road Runner” in Horn, 105] See : Cunning Road Runner , a broadband cable Internet Internet access via the cable companies. There are two kinds of service. One uses a cable modem to connect to a computer, and the other uses an enhanced cable box that provides Internet access directly at the TV. service jointly owned by Time Warner (NYSE: TWX (TeletypeWriter eXchange Service) A U.S. and Canadian dial-up communications service that became part of Telex. In 1971, the Bell System sold TWX to Western Union. TWX transmitted 5-bit Murray code or 7-bit ASCII code at up to 150 bps. See Telex. ), MediaOne (NYSE: UMG UMG Universal Music Group UMG Universidad Mariano Gálvez de Guatemala (Mariano Galvez University of Guatemala) UMG Upgraded Metallurgical Grade (silicon) UMG Unlicensed Medical Graduate ), Microsoft (NASDAQ: MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ), and Compaq. "Our Internet communications suite, including e-mail, web publishing Creating a Web site and placing it on the Web server. A Web site is a collection of HTML pages with the home page typically named INDEX.HTML. Web sites are designed using Web authoring software which provides a graphical layout capability or by hand coding in HTML or both. and instant messaging, is directed at the heart of the Internet's growth - effective and enhanced communications within web communities," said Donald Schupak, Chairman. "Together with our recently announced desktop presentation applications, enhanced communication through Interactive media rich animation will become a differentiator that no self-respecting user can ignore. In the future, communications that lack the expressiveness enabled by 7th Level's technology will pale in comparison to those that do." As previously reported in the Company's 10Q for the 2Q98, loss per common share was impacted by a non-recurring, non-cash accounting adjustment of $15 million or $0.86 per share. In the view of the Company's accountants, this adjustment was required in accordance with the SEC's current position and recent discussions of the Financial Accounting Standards Board's Emerging Issues Task Force on Topic D-60 (Accounting for the Issuance of Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". and Debt Securities with a Non-detachable Conversion Feature). As advised by the Company's accountants, Topic D-60 requires an adjustment to loss per common share based on the difference between the conversion price of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. related to the Company's $10 million financing earlier this year and the price of the underlying common stock on the date the preferred was actually issued -- even though the conversion price was higher than the price of the common at the time the financing was committed. The adjustment did not affect 7th Level's cash position, net equity or operating results prior to the adjustment. About 7th Level 7th Level, Inc. is developing a full line of Internet software products for both the webtop and the desktop based on its Media Control 7, or "mc7", technology. mc7 can control, publish and manipulate multiple streams of data and media on the Internet, other narrow and broadband networks  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. , and standalone PCs. 7th Level's first application of mc7 is Agent 7 1.0, a new kind of software for producing Interactive animated characters for the Internet, and Present 7 1.0 for standalone Windows 95/98 desktop applications. Visit www.7thlevel.com for more information, demos and product downloads. -0- Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : 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 maintain a sufficient level of financing for its new business strategy, the market acceptance of the Company's products, 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 adoption of the Internet as a medium of commerce and communications. 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. -0-
7th Level, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------ ------ ------ ------
Net revenues $251,345 $3,271,245 $785,486 $8,432,817
Cost of revenues 40,867 558,691 164,210 4,261,839
------ ------ ------ ------
Gross profit 210,478 2,712,554 621,276 4,170,978
Operating expenses:
Research & product
development 1,028,766 4,370,096 3,197,739 12,991,379
Sales & marketing 231,317 1,808,237 773,627 5,532,830
General &
administrative 1,000,710 1,743,087 4,829,296 4,736,832
------ ------ ------ ------
Operating loss (2,050,315) (5,208,866) (8,179,386) (19,090,063)
Interest & other, net (220,198) 30,433 (1,643,225) 311,226
------ ------ ------ ------
Net loss ($2,270,513)($5,178,433) ($9,822,611)($18,778,837)
====== ====== ====== ======
Dividends on
preferred stock 173,151 -- 173,151 --
Beneficial conversion
feature in association
with preferred stock 14,970,862 -- 14,970,862 --
------ ------ ------ ------
Net loss attributable to
common shareholders ($17,414,526)($5,178,433)($24,966,624)($18,778,837)
====== ====== ====== ======
Basic and diluted loss
per common share ($1.00) ($0.38) ($1.62) ($1.38)
====== ====== ====== ======
Basic and diluted
weighted average
shares outstanding 17,462,159 13,679,239 15,439,185 13,635,203
====== ====== ====== ======
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion