7th Level and Pulse Cancel Merger Plans
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Separately, 7th Level said it has obtained commitments for a $4.5 million bridge loan and a $10 million private placement to finance the rollout of 7th Level's new line of technology products, including streaming animations for use in Internet advertising.
Donald Schupak, chairman of 7th Level, and Bill Woodward, CEO of game company Pulse, said the decision was mutual, friendly and in the best interest of both companies. "After thorough due diligence," they said in a joint statement, "we concluded it would be more profitable for each company to develop and market its own technology separately."
Under the originally proposed terms, 7th Level would have issued approximately 21 million common shares to Pulse shareholders and would have had to raise $15 million in a private placement.
"We have raised the funds called for by our business plan and our existing shareholders will experience substantially less dilution than they would have had the merger and related financing been completed," he said. The company did not say who is providing the financing.
Earlier this month, 7th Level, once a game company, said it had developed a new technology for preparing and streaming real-time, intelligent, interactive animations over the Internet. The company signed an agreement with AudioNet, the broadcast network on the Internet, to support and deliver the new technology and market it to Internet advertisers.
Earlier this week, 7th Level announced an agreement with WaveTop, a data broadcaster, to provide a similar technology solution for use in the creation of interactive, character-based advertisements. WaveTop broadcasts Web content via the television bandwidth to home PC users in 50 major markets.
"Remaining independent enables 7th Level to focus exclusively on its strategy of supplying tools and services directed at enabling interactive animation over the Internet, corporate intranets and other network environments," said Schupak.
A key premise for the merger was that it would combine 3D authoring applications from Pulse with 2D production and animation systems from 7th Level. But 7th Level said its technology has since leapfrogged significantly. Beta versions of the streaming animation software are expected in May.