Balthaser Studios and Pixelon Announce Exclusive Agreement and Equity Investment.

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 15, 1999--

Balthaser Studios has been selected by Pixelon, Inc., to design and develop their Internet destination Web site and online video network. The multi-year agreement calls for Balthaser Studios to be the exclusive creative studio for the design, development and support for Pixelon's Internet presence. Pixelon is scheduled to launch its new network on Halloween weekend in Las Vegas.

Balthaser Studios was chosen exclusively because of its cutting edge, rich media productions. Balthaser Studios will create the new Pixelon site using Macromedia's Flash 4 and Generator 2 technologies. Pixelon's founder and chairman, Michael Fenne, said, "Teaming with Balthaser enables us to entertain and interact with our customers in an exciting and revolutionary new online environment that is far ahead of standard HTML as is our video delivered above ordinary streaming video technologies."

Commenting on the agreement, Neil Balthaser, president of Balthaser Studios said, "The Pixelon/Balthaser partnership will set a new standard in online entertainment. We are building an incredible online experience around Pixelon's amazing content. We are pushing the limits of the technologies to create a fully alive and dynamic entertainment destination. When completed, the Pixelon site will be the first of its kind. It will blow people away. We are proud to be associated with such an important milestone in the history of the Internet."

As part of the agreement, Pixelon has also pledged a $1 million investment in Balthaser Online to help launch a new division of Balthaser focused on rich media product development for distribution over the Internet. This division, currently in research and development, is expected to launch in January 2000.

About Balthaser Online

Balthaser Online is an Internet production studio - a new breed of online production company that creates rich media experiences combining technology, media, creativity and interactivity. The studio is targeting companies that need high production value, TV-like exposure on the Internet. Since launching in February, Balthaser Online has received over a million unique visitors to its site, and receives over three million click through's monthly. Visit http://www.balthaser.com.

About Pixelon, Inc.

Founded in 1998 and based in San Juan Capistrano, Calif., Pixelon, Inc.(www.pixelon.com) has developed the industry's first and most advanced proprietary system for compressing analog media sources into digital multimedia files viewable by personal computers worldwide. Currently, the company holds eight patents surrounding its technology, which allows for full-screen, broadcast-quality video and CD-quality audio and stereo sound to be experienced over the Internet. Pixelon has an array of specialized delivery systems of software, hardware and environmental capture cards for its clients in the entertainment, advertising, sports, and corporate and live broadcast industries.

Flash and Shockwave are trademarks of Macromedia.