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Merit Studios Inc. Announces: WormHole Technology Compression and Encryption Software Ready For Customer Implementation.

Business Editors

LAS VEGAS--(BUSINESS WIRE)--Sept. 10, 2001

Merit Studios Inc. (OTCBB:MRIT) announced that it has solidly tested the WormHole Technology Software and is ready to release WormHole Technology for consumer use.

The company states that WormHole Technology is now being offered to individual customers and businesses for the purpose of drastically reducing transmission times of large data files and/or data archiving and storage.

Merit Studios Inc. will build, for each specific file format, the needed "FAVOS," which are the backbone of their WormHole Technology Compression software. The customer must provide approximately 200 GB of data, within specified file format, which will then be processed by WormHole. Once the "FAVOS" are completed for this file format the customer can process any quantity of files, within that given file format. Merit Studios Inc. claims its compression software will reduce files by 70% and greater, regardless of the type of data structure.

On another subject, Merit Studios Inc. received a fax from Videolocity Direct, Inc. announcing a Special Shareholders Meeting of Videolocity Direct Inc. and inviting the Merit shareholders to attend the meeting as they hold 33% of Videolocity Direct Inc.

The Notice reads as follows:



Please accept this notice as a call for a special shareholders meeting to be held at The Shriners Hospital for Children, Fairfax Road at Virginia Street, Salt Lake City, UT, on Tuesday, September 18, 2001 at 3:00 PM in the auditorium.

The following issues will be presented at that time:

1. Election of Directors

2. Funding opportunities for Videolocity Direct, Inc.

3. Filing of 10KSB-2 by Leonard Neilson, Esq., on behalf of

Videolocity Direct, Inc.

4. Discuss the possible acquisition of a License Agreement from

IKADEGA, Chicago, Ill., and certain other opportunities.

5. Discuss existing situation with Merit Studios, Inc. and its

non-performance under the two License Agreements held by

Videolocity Direct, Inc., from Merit Studios, Inc., and the

source code verification by DSI Technology Escrow Services.

6. Discuss employment of new CEO, Technical Director and staff

together with leasing of office space.

By Order of The Board of Directors

Michael John, CEO of Merit Studios Inc., stated: "The 2.5 million shares of Videolocity Direct Inc., which are held in trust for its shareholders, have not been distributed due to Videolocity's argument that this can only be completed 90 days after the 10KSB-2 by Videolocity Direct Inc. is filed. With this, Videolocity Direct Inc. refused to give their transfer agent the necessary opinion letter to execute the distribution. Merit Studios Inc. firmly believes that it would be absolutely no problem and inside the rules of the SEC to distribute these 2.5 million shares restricted under rule 144 and we will bring up this issue at the special meeting. We requested that the stock certificate be returned to us and it was received. After the 9.18.01 meeting, we will inform our shareholders entitled to the stock as of the record date, by press release, what has transpired. I will attend the meeting on behalf of Merit Studios Inc. and would very much welcome the attendance by some of our shareholders to absolutely clarify the alleged 'NON-PERFORMANCE,' as well as other issues.

"On a happier note, I am very pleased that we have completed WormHole, at least for the individual customer, after some delays, many of which were due to no fault of our own. It will take a few more months to get the FAVOS for the general use built, but we now can see a bright light at the end of the proverbial tunnel. I am negotiating with several entities interested in implementing WormHole for international file transfer over satellite and data archiving. Once the first customer is using WormHole on a daily basis the general skepticism surrounding this innovative software will be overcome."


Investing in stock of development stage companies is sometimes risky and every investor must understand that a large part of his investment or all of his investment can be lost. Merit Studios Inc. advises investors to make their decision carefully and to understand that they invest under their own risk.

Merit Studios, Inc. is a development stage company.

For more information visit Merit Studios Inc. online at

To go to WormHole Technology enter

This release contains statements that constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act and Section 27A of the Securities Act. Readers are cautioned not to put undue reliance on such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including but not limited to: the number and timing of sales Merit Studios Inc. advertising spots and software, the development and/or acceptance of new products, the impact of competition on the company's products and/or pricing, and the success of the company's software.
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Publication:Business Wire
Date:Sep 10, 2001
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