Montreal: Malofilm Communications has acquired all shares of Quebec City-based Megatoon Entertainment Group, a profitable, two-year-old operation with several hits in the interactive animation and new-media markets.

The deal was announced by Malofilm ceo Rene Malo at the company’s annual shareholders meeting in Montreal in mid-March.

Megatoon has doubled its staff in the past year to 28 – average age, 24 – and is projecting sales of $2 million for 1995. The company was founded by president David Weiser, who reports to Malofilm president and coo Steven Harris, and vice-president and creative director Guy Boucher.

Harris says the acquisition serves Malofilm’s diversification strategy and gives it access to long shelf-life animation, new revenue streams, ‘and a complementary synergy with our distribution and production activities.’

‘As well as their leadership in cd-rom product, Megatoon gives us the capacity to explore new platforms like set-top games, online services and interactive television,’ says Harris.

Megatoon is the producer of Goferwinkel’s Adventures, the world’s first interactive comic book, and the Wallobee Jack children’s series, a cd-rom product Weiser refers to as ‘a video cartoon game with puzzles and actors who address children directly.’

Developed for under $250,000, Wallobee Jack is distributed internationally by Main Street Software, a division of American software giant WordPerfect, and by Gaga Communications in Japan. Weiser says 75,000 units have been sold to date at a retail price of us$29.95.

Megatoon has also signed a deal with u.s. multimedia publisher Millennium Media Group to produce Hacked!, a new cd-rom, Internet-based action-thriller game.

‘We feel great about the deal with Malofilm,’ Weiser says. ‘We started almost three years ago with nothing, but business is accelerating.’

He says multimedia is entirely export-oriented and companies in the sector require strong financial backing, in part because technical standards have yet to be established. The financial terms of the acquisition were not disclosed.

At the annual meeting, Malofilm reported revenues of $31 million for the year ending Sept. 30, 1994. Profit was $1.9 million. For the first quarter in 1995, revenue is pegged at just under $8.8 million while net earnings rose to $865,654, up from the $693,668 reported for the same period last year. The company is projecting a 20% growth in revenues for 1995/96.

Malo told Playback the company intends to export foreign films. Its export division, Malofilm International, has purchased the world rights to its first foreign film, a Mexican theatrical feature called Kissing Cousins.

As for new production, Malo is preparing to shoot two English-language features in 1995, Body Parts and Turning Blue, both budgeted in the $16 million to $20 million range. Locations for the films are undetermined, but Malo says director Christian Duguay is slated to helm Body Parts, which may go in New Orleans. Malofilm has nine feature film projects in development.

Megatoon has five interactive games in distribution on two platforms, Windows and Macintosh, translated into five languages. Three titles are in production and five additional games are in development, Hacked!, Eddy the Robot, a science adventure series, Jersey Devil, Virtual Producer and Rippin’ Time.