S.E.A. Multimedia Ld - Final Results

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

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