S.E.A. Multimedia Ld - 3rd Quarter & 9 Mths Results

RNS No 9620w
S.E.A MULTIMEDIA LIMITED
27th November 1997


                           S.E.A MULTIMEDIA LIMITED
                   THIRD QUARTER RESULTS FOR THE NINE MONTHS
                             TO 30 SEPTEMBER 1997
                                       
                                       
CHAIRMAN'S STATEMENT

Introduction

1997 continues to be a year of transition and investment, the necessary
strategic and operational structures are being put in place for strong growth
into the future.  In the period under review, S.E.A concentrated on continuing
to build its games and sports publishing businesses and to invest in its R&D
subsidiary.  The anticipated losses reported for this period reflect these
investments.

Current developments

Games Publishing Division

S.E.A. currently has two games in the market, @Range, the online massively
multiplayer submarine game, and Virus, the strategy/action computer game.
@Range is currently available on Mpath's Mplayer game network in the US, and
Virus has been released in Europe by Telstar and in the US by Sirtech. S.E.A.
will begin to see the first results of revenues from these two products by the
end of 1997.
                                       
S.E.A. is currently developing three new computer games, The Family, a
strategy/action mafia game, NetRiderZ, a follow-on to Virus, and Subway, an
action game set in the New York subway. All of these games use S.E.A.'s
proprietary 3D technology. S.E.A. is in discussions with publishers in Europe
and the US about distribution deals for these three products. S.E.A.
anticipates receiving advances from publishers for at least one of these games
in second quarter 1998.

On the 28th of July, S.E.A. acquired Kidum Multimedia Ltd. for shares in
S.E.A. The assets acquired totaled $759,000. S.E.A. has decided to write off
$520,000 of these assets as a current expense in this quarter in order to
adopt the most conservative accounting treatment for the acquisition. The
majority of the remaining $239,000 will be recognized by year-end as game
development costs, except for an estimated $50,000 in fixed assets.

Sport Content Division
S.E.A.'s latest Olympic CD-ROM title, Winter Games, is being released in
Japan, Germany, Norway and Finland, before the Nagano (Japan) Games in
February. S.E.A. has also released a DVD-video title, An Olympic Century,
which is being bundled with DVD-video players by Panasonic Europe. S.E.A. has
been selected by the International Olympic Committee to be part of team which
is creating the official IOC Web site, to be launched in February 1998. The
company is currently in discussion with other major media and sport
organizations for future Internet-related projects.

Manna Network Technologies
Tapware Technologies, S.E.A.'s R&D subsidiary, has been officially renamed
Manna Network Technologies, in order to focus on the company's proprietary
Manna technology. Manna Network Technologies specializes in creating high-end
server technology for the deployment of dynamic agents on networks.  In order
to avoid further impact on cash resources of S.E.A. and with a view to
creating a separately financed company, the company is currently in
discussions with venture capitalists in the US and Israel to raise financing
required to complete development of its first product, the Manna Agent-Server.
A demo of the Manna Agent-Server will be shown at the Internet World show in
New York in December.

Outlook

S.E.A. believes that all three of these businesses have made significant
progress over the past quarter and will be well-positioned for growth in 1998
and beyond.

Tal Barnoach
President & CEO

Enquiries:     Tal Barnoach, C.E.O. and Chairman
               S.E.A. Multimedia Limited
Telephone:     [phone]

               Tim Robertson/Wendy James
               Hudson Sandler Limited
Telephone:     [phone]

                            S.E.A. MULTIMEDIA LTD.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                   NINE MONTHS         THREE MONTHS
                                    ENDED              ENDED            YEAR
                                    SEPT 30            SEPT 30        DEC 31

                                1997    1996        1997    1996        1996
                                  (unaudited)       (unaudited)     (audited)

                                US$     US$         US$     US$         US$


Sales                      281,616  3,297,696   111,399  1,008,309 3,940,612

Cost of sales            1,538,598  1,797,103   862,552    528,458 2,151,312
                       
 Gross profit (loss)    (1,256,982) 1,500,593  (751,153)   479,851 1,789,300

Research and
 development expenses      259,212    126,375     90,431    30,213   150,325

Marketing and selling
 expenses                  995,447    316,289    393,419   137,374   502,448

General and
 administrative expenses   505,978    519,969    164,442   199,801   679,920
                       
  Total operating
 expenses                1,760,637    962,633    648,292   367,388 1,332,693

  Operating income
  (loss)               (3,017,619)    537,960 (1,399,445)  112,463  456,607

Financing income, net       4,216     119,006      1,811    90,104  256,459

   Net  income  (loss)
   for  the  period    (3,013,403)    656,966 (1,401,256)  202,567  713,066
                      
Earnings  income (loss)
 per 100 shares at
 Nis 0.01 each             (12.79)       3.11     (6.09)      0.88     3.30
                      
Weighted average number
 of 100 shares            235,516     211,181   230,160    231,289  215,937
                       
                            S.E.A. MULTIMEDIA LTD.
                          CONSOLIDATED BALANCE SHEET

                                         SEPTEMBER 30  DECEMBER 31
                                         1997      1996       1996
                                             (unaudited)  (audited)
                                          US$       US$         US$
CURRENT ASSETS
Cash and cash equivalents         1,030,495  2,798,652   2,405,851
Trade receivables                   417,177  1,026,914   1,291,332
Prepaid expenses                  1,110,360    599,712     435,638
Other current assets                 51,440     53,260      37,956
                                
Total current assets              2,609,472  4,478,538   4,170,777

FIXED ASSETS
Cost                                724,121    533,857     569,848
Less - accumulated depreciation     219,780     94,800     123,148
                                
Total fixed assets                  504,341    439,057     446,700

OTHER ASSETS
Cost                                749,117    643,074     749,117
Less - accumulated amortization     592,827    179,935     224,993
                               
Total other assets                  156,290    463,139     524,124

                               
Total assets                       3,270,103  5,380,734   5,141,601
                                
CURRENT LIABILITIES
Short-term bank credit and
 current maturities                    8,550     39,544     207,099
Advanced payments from customers     458,750        -          -
Accounts payable                     396,734    298,159     358,970
Other current liabilities            208,567    501,373     153,693
                               
Total current liabilities          1,072,601    839,076     719,762

LONG-TERM LIABILITIES
Loans, net of current maturities      -         171,886      -
Liabilities for severance pay         95,945     60,240      56,207
                               
Total long-term liabilities           95,945    232,126      56,207

SHAREHOLDERS' EQUITY
Share capital                         76,380     70,075      70,075
Share premium                      4,781,994  4,038,971   4,038,971
Retained earnings
 (Accumulated deficit)            (2,756,817)   200,486     256,586
                                
Total shareholders' equity         2,101,557  4,309,532   4,365,632

                                   3,270,103  5,380,734   5,141,601
                                   
                            S.E.A. MULTIMEDIA LTD.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                      NINE MONTHS  THREE MONTHS     YEAR ENDED
                                  ENDED SEPT 30  ENDED SEPT 30          DEC 31
                                1997       1996     1997     1996         1996
                                    (unaudited)     (unaudited)      (audited)
                                   US$      US$     US$       US$         US$

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)             (3,013,403) 656,966 (1,401,256) 202,567  713,066

Adjustments  to  reconcile
  net income (loss) to net
  cash  used  in  operating
  activities:

Expenses not affecting operating cash flows:
Increase in liabilities
 for severance pay               39,738    32,548    19,179   11,666   28,515
Depreciation and amortization 1,165,160   187,015   866,399   68,760  260,421
                              
                              1,204,898   219,563   885,578   80,426  288,936

Changes in operating assets and liabilities:
Increase (decrease) in trade
 receivables                    874,155 (783,619)  330,671(143,580)(1,048,037)
Increase in prepaid expenses   (674,722)(271,240) (477,578) (47,446) (107,166)
Increase (decrease) in other
 current assets                 (13,484) (32,398)  (18,728)  45,490   17,094)
Increase (decrease) in
 advanced payments from
 customers                      458,750 (250,000)  431,750 (233,761) (250,000)
Increase (decrease) in other
 current liabilities             37,764  276,806    24,414 (250,865)   173,619
Increase in accounts payable     54,874  213,451    43,352 (216,043)    29,769
                             
Net cash (used) in operating
 activities                  (1,071,168)  29,529  (181,797)(563,212) (216,907)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets       (105,639)(272,903)  (36,715)(121,156) (308,894)
Increase in other assets           -    (102,384)       -  (102,384) (208,427)
                              
Net cash used in investing
 activities                    (105,639)(375,287)  (36,715)(223,540) (517,321)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from share capital
 issue, net                        -   3,327,939       -     -       3,327,939
Short-term bank credit, net   (198,549) (146,947)    6,025  (480)    (141,830)
Long-tern loans received
 from related parties              -     (11,226)      - (11,226)         -
Repayment of long-term
 loans, net                        -     (28,291)      -   1,777      (48,965)
                             
Net cash provided by
 (used in) financing
 activities                   (198,549) 3,141,475    6,025 (9,929)   3,137,144

INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS (1,375,356)  2,795,717 (212,487)(796,681) 2,402,916

CASH AND CASH EQUIVALENTS
 AT BEGINNING OF THE PERIOD  2,405,851      2,935  1,242,982    -        2,935
                              
CASH AND CASH EQUIVALENTS
 AT END OF THE PERIOD        1,030,495  2,798,652  1,030,495 (796,681)2,405,851
                            

SUPPLEMENTARY INFORMATION ON FINANCIAL ACTIVITIES
NOT INVOLVING CASH FLOWS:

Purchased assets in
 consideration for shares
 issued                        740,403      -      740,403       -          -
                           
                            S.E.A. MULTIMEDIA LTD.
                 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

                                                RETAINED
                                                EARNINGS
                               SHARE   SHARE     (ACCUMULATED
                              CAPITAL  PREMIUM   DEFICIT)  TOTAL
Audited:                        US$     US$      US$       US$

Balance at December 31, 1995    832  780,275  (456,480)   324,627

Distribution of bonus
 shares                      58,176  (58,176)     -         -

Shares issued                11,067 3,316,872     -     3,327,939

Net profit the year            -        -     713,066     713,066
                           
Balance at December 31,
 1996                       70,075 4,038,971  256,586   4,365,632
                          
Unaudited:

Balance at December 31,
 1995                          832   780,275 (456,480)    324,627

Distribution of bonus share 58,176   (58,176)    -           -

Share issued                11,067 3,316,872     -      3,327,939

net income for period         -        -      656,966     656,966
                          
Balance at September 30,
 1996                       70,075 4,038,971  200,486   4,309,532
                          

Balance at December 31,
 1996                       70,075 4,038,971  256,586   4,365,632

Shares issued (see note 4)   6,305   743,023     -        749,328

Net loss for the period        -        -   (3,013,403) (3,013,403)
                          
Balance at September 30,
 1997                      76,380  4,781,99 (2,756,817)  2,101,557
                          

Balance at July 1, 1996    70,075 4,038,971     (2,081)  4,106,965

Net profit for the period    -        -        202,567     202,567
                           
Balance at September 30,
 1996                      70,075 4,038,971    200,486   4,309,532
                          
Balance at July 1, 1997    70,075 4,038,971 (1,355,561)  2,753,485

Shares issued (see note 4)  6,305   743,023        -       749,328

Net loss for the period      -         -    (1,401,256) (1,401,256)
                           
Balance at September 30,
 1997                      76,380  4,781,994 (2,756,817)  2,101,557
                          
                   S.E.A. MULTIMEDIA LTD.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     AT SEPTEMBER 30, 1997

NOTE 1 - GENERAL

A.   The  interim financial statements for the nine month period  and  three
months  period ended September 30, 1997 (hereinafter -"the interim financial
statements") are presented in accordance with generally accepted  accounting
principles  for  interim  financial  statements.  In  the  opinion  of   the
management,   the  interim  financial  statements  reflect  all  adjustments
(consisting  solely  of normal recurring accruals) necessary  for  the  fair
presentation  of  the  results  for  the  period.  The  generally   accepted
accounting  principles applied in the preparation of the  interim  financial
statement are consistent with those applied in the preparation of the annual
financial statements. Operating results for the three and nine month  period
ended  September 30, 1997 are not necessarily representative of the  results
of operations for the full year.

B.  These financial statements should be read in conjunction with the audited
financial  statements  of  the  Company as of  December  31,  1996  and  the
accompanying notes. Copies of the audited financial statements are available
from  the Company's registered office at 4 harechev Street, Tel Aviv, Israel
and  at  the offices of the Company's nominated adviser and broker,  Raphael
Zorn Hemsley Limited, Cheapade House, 138 Oheapside, London EC2V 6BJ.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The  significant  accounting  policies applied in  the  preparation  of  these
interim  financial statements are consistent with those applied in the audited
annual financial statements as of December 31, 1996.

NOTE 3 - PRINCIPLES OF CONSOLIDATION

The  consolidated financial statements include the accounts of the Company and
MANNA NETWORK TECHNOLOGIES LTD. a subsidiary company wholly-owned.
Intercompany balances and transactions have been eliminated.

NOTE 4 - SHARES ISSUED

On July 28th 1997, the Company purchased from KIDUM MULTIMEDIA (1995) LTD. all
of its assets, products and rights in consideration for 2,235,165 newly issued
shares of the Company.

THE BOARD OF DIRECTORS OF
S.E.A. MULTIMEDIA LTD.

Re: Review of the unaudited interim consolidated financial statements as  at
September 30, 1997

At  your  request,  we  have reviewed the accompanying consolidated  balance
sheet  of  S.E.A. MULTIMEDIA LTD. as at September 30, 1997, and the  related
consolidated statements of operations the consolidated statement of  changes
in  shareholders equity and cash flows for the three month period  and  nine
month  period three ended. Our review was performed in accordance  with  the
procedures  prescribed by the Institute of Certified Public  Accountants  in
Israel.  Inter-alia, these procedures include: reading the  above  mentioned
financial  statements, reading minutes of meetings of the board of directors
and its committees, and making inquiries of company officers responsible for
financial and accounting matters.

Since  our review was limited in scope and does not constitute an  audit  in
accordance with generally accepted auditing  standards, we do not express an
opinion on the above mentioned condensed consolidated financial statements.

During  our  review,  nothing  came to our  attention  that  indicated  that
significant  adjustments  should be made in the aforementioned  consolidated
financial  statements  in  order for them to be considered  as  having  been
prepared in accordance with generally accepted accounting principles.

From:

                                R. GOLDBERG & Co.
                         Certified Public Accountants (Isr.)

Tel Aviv, November, 1997


END

QRTPBGUAGBGMGRQ