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January 27, 1998

VR-1 COMPLETES ROUND OF FUNDING

By CBR Staff Writer

VR-1 Inc, the Boulder, Colorado based developer of massively multiplayer online entertainment is not suffering from the slowdown in the online games market and has just closed $13.6m in private placement funding to develop further products. In addition to funding the research, development and launch of new games and technologies, the proceeds will be used for the repayment of debt from initial funding and for working capital. The placement agent was Chicago-based investment banking firm Madison Securities. The privately held company said it has not felt the effect of lackluster interest in online gaming because it is concentrating on developing content and technology. We are in the business of online content and technology not the business of aggregation, said president, Mike Moniz. Companies like Total Entertainment Network, Mpath Interactive and Engage are in the business of creating a place for people to meet rather than just building content. VR-1 still believes that the massively multiplayer online games market will take off but that companies with these destination sites will have to wait longer for their investments to pay off. Instead of destination sites, VR-1 is establishing content distribution agreements with destination sites and plans to announce additional domestic and international distribution agreements by the end of March. British Telecommuncations Plc’s Wireplay games service is likely to be one of the international outlets. The company has existing distribution agreements with two of South Korea’s internet service providers, DACOM and Samsung SDS. It also recently announced its first US online gaming agreement with the launch of Fighter Ace on Microsoft’s Internet Gaming Zone. One company with a destination games site that has suffered from the low take up of online gaming is Engage. It laid off half its staff back in August because internet game play has not taken off fast enough and has put the internet aside in the short term to concentrate on developing games on the AOL online service. VR-1 has 10 online games under and plans for the licensing of its proprietary technologies, such as the VR-1 Conductor technology suite and MM3D (Massively Multiplayer 3D) engine in the coming months. Shareholders in VR-1 include Colorado based telecoms company, Becker Capital Management.

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