Kaon Interactive Acquires 3D Construction Company to Deliver Turn-Key 3D Solutions for the Web.

Business/Technology Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 12, 2000

Acquisition Integrates Photo Realism and Collaboration

for E-commerce and Service Applications

Kaon Interactive Inc., a privately held company in Cambridge, MA, today announced it has acquired 3D Construction Company of Elizabethton, Tennessee. It is a nine-year old, privately held firm that specializes in Microsoft Windows-based software that converts photographs to 3D images. The employees of 3D Construction have joined Kaon. Terms of the transaction were not disclosed.

The 3D Construction acquisition addresses a market requirement for photo realistic 3D objects over the Internet that complements Kaon's advanced visualization and collaboration technologies. The combined companies' technologies and expertise create a "virtual trial" experience over the Web including live discussions with customer service to speed purchase decisions or resolve a problem. Kaon's technology for 3D manipulation and collaboration integrated with 3D Construction's software that converts 2D photographs to photo realistic 3D models will deliver a "virtual trial" experience today.

3D Construction's 3D Builder Pro and 3D Builder PowerLite software products will become a part of Kaon's "Turn-Key 3D Solutions for the Web(SM)" giving existing customers the option to convert images for e-commerce and Web-based collaboration.

Effective immediately, 3D Builder Pro and 3D Builder PowerLite will no longer be sold as standalone products either directly or through distributors. Support services for existing 3D Construction clients will continue until July 7, 2000. 3D Construction customers include Microsoft, Intel, Kubota, Toyota, Ford, BMW, Sony, Toshiba, Subaru, Canon Research, and the U.S. military.

"As more technologies and applications move to the Web it made sense for us to join an Internet-focused company that shares our understanding of the importance of computer graphics," said Lyn Merritt, President, 3D Construction Company. Richard Silton, President and CEO, Kaon Interactive said: "Our combined companies will define and deliver a new level of vendor-customer interaction and offer collaboration within and between companies over the Web. Through the use of our technologies, organizations can shorten the product sales cycle, improve customer service, or add real time collaboration for graphics-oriented projects."

Product visualization and manipulation is just one application. Other applications include:

--Help desk personnel can work with a customer to troubleshoot a problem with 3D images and chat reducing the need for on-site service.

--Collaboration and development is facilitated with text and voice interaction.

--3D games and entertainment can be created for people of all ages. Earlier this year, Kaon announced a joint venture with NewKidCo International to launch a Web site that will include interactive, 3D video games based on well-known characters for children 12 and under.

--Distance training and education can be conducted with multimedia content for many students around the world.

The HyperActive and HyperReality Treatment: 2D to 3D Content Creation and Interaction

The process begins with digital 2D images of a product or object. Those images are converted to 3D models with Kaon's--formerly 3D Construction's--HyperReality(TM) technology.

By incorporating HyperReality with HyperActive(SM) technology, Kaon applications can be customized and animated using Kaon's XML-compliant scripting language. The resulting models can be posted to a client's web site, Kaon's web server, or an application service provider's (ASP) facility. Those models can be accessed and manipulated within a Web browser over a standard Internet connection.

Kaon: Backed by Successful High-tech Executives

Privately held Kaon Interactive was formed in 1996 by Stephen Levy, former Chairman and CEO of BBN and former BBN colleagues, Albert Stevens, who is Senior Vice President of Development and Engineering, and Joshua Smith, who serves as Kaon's Chief Technologist. Stevens and Smith developed HyperActive software based on their years of work on simulation technologies for the U.S. military. From the initial applications for interactive, 3D games on the Internet, Kaon has evolved the technologies for commercial applications to deliver "Turn-Key 3D Solutions for the Web."

The Board of Directors includes: Levy as Chairman, Gary Bowen formerly Chairman of New Oak Communications (acquired by Nortel) and a former executive at Wellfleet/Bay Networks; David Solomont, former Chairman and CEO of Utopia and co-founder of Common Angels, a Boston-based high-technology venture network; and David Teplow, who founded Database Technologies, recognized the past two years by Deloitte & Touche as one of New England's fastest growing technology companies.

Kaon Interactive demonstrations and information are available at www.kaon.com.

NOTE: Kaon and HyperActive are trademarks of Kaon Interactive Inc. HyperReality and "Turn-Key Solutions for the Web" are servicemarks of Kaon. All other company names are trademarks of their respective companies.