Is this what you're looking for?Destroy to move on!
Basicly I did the following:
Arena (an invisible sprite covering the entire game screen)
BadGuy (the enemy you must destroy on collision. It also has multiple frames to change their color with different levels)
GoodGuy (you! control with arrow keys)
LVL=0 (this variable will tell which level you are in and will greatly help in the creation of the BadGuy in the field)
And a text box to show the value of the variable LVL.
So basicly what I did here was to place the Arena sprite on Layer 1 and the Good and Bad guys on Layer 0, this way I could create the condition "If Arena is NOT overlapsing BadGuy" since Arena will always stay on top even when new BadGuys come into play.
When the condition is true, the variable LVL will gain +1 to it's current value, and it will also set a text box with the number that LVL is holding.
The condition, when true, will also loop a number of times equal to the variable LVL, to create a BadGuy in a random position of the game screen and to change it's animation to a different frame, which holds a different color.
The reason when changing frames it's LVL-1 is because the frames have a frame numbered 0, so if you're on lvl 1 and the BadGuy has the first frame (which is 0) colored red, then it will be red.
Hope this helped!