RNS No 1102q
S.E.A. MULTIMEDIA LTD
9th March 1998
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
CHAIRMAN'S STATEMENT
Introduction
As stated in my quarterly reports during 1997, that year was a year of
transition and investment. The changes in the market place within which we
operate have been considerable and in some cases dramatic. For all companies in
this sector the need to be aware of developments, both in the area of technology
and the markets served by that technology, has been of the highest importance,
as has the ability to react swiftly to those developments. S.E.A. decided in
the early part of 1997 to adopt a strategy that recognised these changes and the
opportunities created by them. This has involved a high degree of investment and
a decision to sacrifice short-term income opportunities for long term growth on
a stable foundation. As a result the revenues for 1997 were only $680,390 and a
loss of $4,286,231 was recorded.
The developments during 1997 included the division of the company into three
sections, namely: Online Sport Programming. 3D Games Publishing and Manna
Network Technologies.
Online Sport Programming
1997 saw a shift in focus from developing sport content to creating sport
channels for the Internet. At the same time, S.E.A. formed strong relationships
with new sport media organizations, while continuing its relationship with the
International Olympic Committee ("I.O.C.").
The company released the Winter Games Web CD-ROM in time for the 1998 Winter
Games in Nagano, Japan. The title was released in a number of languages and is
currently in distribution both in Europe and in Japan. For this title S.E.A.
built its own "Winter Games" Internet site ("Winter Glory"), providing an
important link between the Winter Games CD-ROM and users before and during the
Olympic Winter Games, In August 1997 S.E.A. Multimedia signed an agreement with
Matsushita Electric Europe Ltd., to develop an Olympic title on DVD-Video. The
product, entitled Olympic Century, is to be launched in Europe in 5 languages in
March 1998.
S.E.A. is involved in creating the official IOC Web site, an ambitious project
that will present a rich, interactive online history of the Olympic Games and
the IOC. S.E.A. completed the first stage of development, involving the creation
of the history section of the IOC site and is now moving onto the second phase
of the site's development. The company has also entered into discussions with
major media and sports organisations with a view to developing sport channels
for the Internet and emerging platforms such as Web TV.
Games
In July 1997 the company acquired Kidum Multimedia assets, significantly
strengthening it's capabilities in game development and 3D technology. Two
games, @Range and Virus, were released towards the end of the year and two
additional games are currently in development for release in 1999.
S.E.A. signed an agreement with Mpath, a leading US game network company, in
September 1997 to release @Range, S.E.A.'s firt multiplayer online submarine
warfare game, on its Mplayer network. S.E.A. expects to see revenue from
advertising on the network as the community @Range players is strengthened. The
technology supporting the game is widely recognised as being leading edge and
S.E.A. intends to build on this strength in the market place with the
development of 'Hub-enabled' games that can be played over the Internet within a
massive digital battlefield. Virus, a sophisticated strategy game involving an
imaginary computer virus, was shipped in the fourth quarter of 1997. 70,000
units were shipped worldwide and distributed by Telstar in Europe, Sirtech in
the US and Imagineer in Japan.
Two games are currently in development utilizing S.E.A.'s proprietary 3D
software:
* The Family: A unique 3D strategy/action game set in a 1930s metropolis run by
power Mafiosi;
* SubTerra: A 3D shoot-em-up action game set in an abandoned NYC subway 11 years
after a mysterious nuclear leak.
Manna Network Technologies
During 1997 Manna Network Technologies was formed out of the company's R&D
division. It became a wholy owned subsidiary company with a focus on developing
cutting-edge server technology that enables real-time dynamic interaction
between server and the end-user. In 1997 Manna Network Technologies began
development of its flagship product, the Manna Agent-Server, which is aimed at
e-commerce retailers and companies that conduct online business-to-business
sales. The product is expected to be ready for release in September 1998.
Current Developments
S.E.A. is moving ahead with the development of all three of its divisions and
subject to the availibility of finance the company is confident that the
revenues from these developments will be significant over the next few years.
For example, in the games division, discussions are at an advanced stage with
publishers to distribute The Family and it is anticipated that significant
advances will be received during the first have of this year. Discussions with
publishers concerning SubTerra are at a preliminary stage and are expected to
continue this year. Both games would be released in 1999. In addition, S.E.A.
is in discussion with a US publisher with regard to developing the first
'Hub-enabled' battle game. Manna is aiming to identify a suitable beta site
partner with a view to launching its products by September this year. Initial
reactions to the product have been positive.
Finance
As will be clear from the accounts for the year ended 31st December 1997 S.E.A
has invested heavily in all three division in order to secure the future growth
of the company. We still have no bank debt but our cash resources are rapidly
depleting and there is no doubt that further funds will be required to achieve
our objectives. The board is examining all options to secure this additional
funding. The range of products and the technology base of the company has never
been stronger, but cash will be required very soon to avoid losing our special
advantages in the market and the opportunities that have been created.
S.E.A. has evolved from a multimedia publisher to developer of interactive
entertainment products and programming, encompassing games and online sport
channels. With a focus on short-term investment and long-term growth and
stablity, S.E.A. is well positioned to become a leader in the media business.
Tal Barnoach
C.E.O. and Chairman
SEA MULTIMEDIA LTD
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
PROFIT & LOSS ACCOUNT FOR THE YEAR TO 31 DECEMBER 1997
CONSOLIDATED COMPANY
Note 1997 1997 1996 1995
US$ US$ US$ US$
Sales 13 680,390 680,390 3,940,612 729,653
Cost of sales 14 2,774,884 2,774,884 2,151,312 474,373
Gross profit (loss) (2,094,494) (2,094,494) 1,789,300 255,280
Research and development
expenses 15 431,644 138,470 150,325 137,866
Marketing and selling
expenses, net 16 1,103,111 1,048,507 502,448 157,981
General and administrative
expenses, net 17 656,171 564,171 679,920 287,709
Total operating expenses 2,190,926 1,751,148 1,332,693 583,556
Operating income (loss) (4,285,420) (3,845,642) 456,607 (328,276)
Financial expenses (income)
net 811 (601) (256,459) 14,612
Operating income (loss) after
financial expenses (4,286,231) (3,845,041) 713,066 (342,888)
Losses of subsidiary - 441,190 - -
Net income (loss) for the
year (4,286,231) (4,286,231) 713,066 (342,888)
Earnings (loss) per 100
shares at NIS 0.01 each (17.86) (17.86) 3.30 (1.86)
Weighted average number of
100 shares 239,946 239,946 215,937 184,724
S.E.A. MULTIMEDIA LTD
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
GROUP BALANCE SHEET AT 31 DECEMBER 1997
CONSOLIDATED COMPANY
1997 1997 1996
Note U.S.$ U.S.$ U.S.$
CURRENT ASSETS
Cash and cash equivalents 680,931 680,886 2,405,851
Trade receivables 3 - - 1,291,332
Prepaid expenses 350,292 350,292 435,638
Other current assets 4 49,282 48,362 37,956
Total current assets 1,080,505 1,079,540 4,170,777
FIXED ASSETS 5
Cost 746,905 741,551 569,848
Less - accumulated depreciation 257,813 257,265 123,148
Total fixed assets 489,092 484,286 446,700
OTHER ASSETS 6
Cost 749,117 749,117 749,117
Less - accumulated amortization 749,117 749,117 224,893
Total other assets - - 524,124
1,569,597 1,563,826 5,141,601
CONSOLIDATED COMPANY
1997 1997 1996
Note U.S.$ U.S.$ U.S.$
CURRENT LIABILITIES
Short-term bank credit 5,080 5,080 207,099
Advance payments from customers 60,000 60,000 -
Accounts payable 7 337,046 324,530 358,970
Other current liabilities 8 238,827 216,903 153,693
Total current liabilities 640,953 606,513 719,762
LONG-TERM LIABILITIES
Provision for losses of subsidiary, net 9 - 36,265 -
Liabilities for severance pay 10 99,915 92,319 56,207
Total long-term liabilities 99,915 128,584 56,207
COMMITMENTS AND CONTINGENT LIABILITIES 11
SHAREHOLDERS' EQUITY 12
Share capital 76,380 76,380 70,075
Share premium 4,781,994 4,781,994 4,038,971
Retained earnings (accumulated deficit) (4,029,645) (4,029,645) 258,586
Total shareholders' equity 828,729 828,729 4,365,632
1,569,597 1,563,826 5,141,601
S.E.A. MULTIMEDIA LTD
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
NOTES TO THE FINANCIAL STATEMENTS
- RESEARCH AND DEVELOPMENT EXPENSES
CONSOLIDATED COMPANY
FOR THE YEAR ENDED DECEMBER 31
1997 1997 1996 1995
US$ US$ US$ US$
Payroll and related expenses 338,054 95,381 121,191 95,138
Other 93,590 43,089 29,134 42,728
------- ------- ------- -------
431,644 138,470 150,325 137,866
- MARKETING AND SELLING EXPENSES, NET
CONSOLIDATED COMPANY
FOR THE YEAR ENDED DECEMBER 31
1997 1997 1996 1995
US$ US$ US$ US$
Payroll and related expenses 110,448 78,048 91,649 19,513
Purchase of distribution rights 604,418 604,418 - -
Other 388,245 398,441 410,799 138,468
Less subsidiary's participation
in joint expenses - 32,400 - -
--------- --------- ------- -------
1,103,111 1,048,507 502,448 157,981
GENERAL AND ADMINISTRATIVE EXPENSES, NET
CONSOLIDATED COMPANY
FOR THE YEAR ENDED DECEMBER 31
1997 1997 1996 1995
U.S.$ U.S.$ U.S.$ U.S.$
Payroll and related expenses 257,583 257,583 241,382 125,863
Depreciation and amortisation 33,695 33,695 10,306 7,003
Bad debt 4,945 4,945 - -
Other 359,948 357,948 428,232 154,843
Less - subsidiary's
participation in joint
expenses - 90,000 - -
656,171 564,171 679,920 287,709
S.E.A. MULITMEDIA LTD
PREMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - GENERAL
A. S.E.A. MULTIMEDIA LTD (hereinafter - the Company) is a public company
incorporated in Israel whose shares are traded on the Alternative Investment
Market of the Stock Exchange in London ("AIM"). The Company, an electronic
publisher of multimedia products, was established in 1993 and commenced
operation in 1994.
B. On July 18, 1997 the Company purchased from KIDUM MULTIMEDIA (1995) LTD
(herein after - KIDUM) all of its assets, products and rights in
consideration for 2,235,165 newly issued shares of the Company.
C. On March 31, 1997, MANNA NETWORK TECHNOLOGIES LTD (hereinafter- MANNA), a
100% subsidiary, was incorporated in Israel, and commenced its activities on
that date. MANNA develops manufactures and
D. The accompanying financial statements have been prepared in U.S. dollars, as
the currency of the primary economic environment in which the operations of
the Company are conducted is the U.S. dollars. Thus, the functional currency
of the Company is the U.S. dollar.
Transactions and balances originaly denominated in U.S. dollars are presented at
their original amounts. Transactions and balances in other currencies are
remeasured into U.S. dollars in accordance with principles identical to those
set forth in Statement No 52 of the Financial Accounting Standards Board of the
United States ("FASB") and with opinions of the Institute of Certified Public
Accountants in Israel. Accordingly, items have been remeasured as follows:
- Monetary items - at the current exchange rate at the balance sheet date.
- Nonmonetary items - at historical exchange rate.
- Income and expenditure items - at exchange rates current as of date of
recognition of those items (excluding depreciation and other items deriving
from nonmonetary items).
- Exchange gains and losses from the aforementioned remeasurement are reflected
in the statement of operations,
The representative rate of exchange at December 31, 1997 was U.S. $ 1 = New
Israel Shekels, ("NIS") 3.536 (December 31, 1996 - NIS 3.251).
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
NOTES TO THE FINANCIAL STATEMENTS
SALES CONSOLIDATED COMPANY
FOR THE YEAR ENDED DECEMBER 31
1997 1997 1996 1995
A. Includes: U.S.$ U.S.$ U.S.$ U.S.$
CD-ROM nad software sales 468,160 468,160 38,018,934 668,874
Software development 210,000 210,000 138,678 60,779
Other 2,230 2,230 - -
680,390 680,390 38,157,612 729,653
B. The Company's income geographic
areas are as follows:
Israel 3,722 3,722 45,099 60,616
North America 95,040 95,040 972,021 474,030
Europe 325,151 325,151 1,926,929 195,007
Japan 240,000 240,000 653,039 -
Rest of the World 16,477 16,477 343,524 -
680,390 680,390 3,940,612 729,653
C. Sales to a single customer
exceeding 10% % % % %
Customer A 31 31 - -
Customer B 22 22 - -
Customer C 13 13 - -
Customer D - - 30 -
Customer E - - 25 20
Customer F - - 14 -
Customer G - - 10 58
COST OF SALES CONSOLIDATED COMPANY
FOR THE YEAR ENDED DECEMBER 31
1997 1997 1996 1995
U.S.$ U.S.$ U.S.$ U.S.$
Materials 110,645 110,645 246,065 63,752
Payroll and
related expenses 427,712 427,712 354,700 142,472
Depreciation and
amortisation 529,227 529,227 250,115 54,499
Commissions 69,714 69,714 717,073 169,605
Products purchased
from KIDUM 717,312 717,312 - -
Other 920,274 920,274 583,359 44,045
2,774,884 2,774,884 2,151,312 474,373
S.E.A. MULTIMEDIA LTD
PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 1997
NOTES TO THE FINANCIAL STATEMENTS
The results for the years 31/12/95, 31/12/96 and 31/12/97 respectively are
extracted from the financial statements for those periods. The 1997 Report &
Accounts, including an unqualified report of the auditors, will be posted
shortly.
END
FR SSWFFUUAUFID
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