Vancouver: Rainmaker Entertainment Group of Vancouver says its efforts to move beyond its post-production roots in Canada have been ‘time consuming and expensive and distracted the Company from its post-production business.’

In a news release announcing financial results for its 1999 second quarter, Rainmaker says an independent committee of its directors concluded last June the company should refocus on post-production and growth opportunities in the sector.

Management’s review of operations during its second and third quarters shows continued growth in all Vancouver operations ‘with continued losses across the l.a. services, especially in the weak digital visual effects market.’

As a result, Rainmaker is considering the sale of two of its l.a. divisions and anticipating a September sale of its production and distribution division, Vancouver’s Pacific Motion Pictures.

According to the second quarter report, Rainmaker is looking to sell or find a partner for its New Media division and to sell its Interactive division, both based in l.a. The third l.a. division, Digital Visual Effects, has struggled in the competitive market and the release says Rainmaker is looking for ways to ‘mitigate’ further losses.

* The New Media division has been unable to secure a long-term dvd contract and has been operating at break-even levels since 1998. Rainmaker is in discussions with potential buyers and hopes to conclude a sale or find a content provider partner by year end.

* The report says the Interactive division was doing well with its first significant video game contract until last July when ‘the publisher refused to make a progress payment of us$500,000’; Rainmaker says it has launched a lawsuit ‘to recover the costs.’ Negotiations are underway to sell Interactive’s assets.

* At the troubled Digital Effects division, Rainmaker managers are ‘reviewing alternatives to mitigate any further losses.’ The division has had an up-and-down history, including a return to profitability in the first quarter; but its Q2 report says, that, on a contract it won to supply visual effects for an imax film, the contract was ‘under bid by approximately $1.5 million.’

Revenue at the Vancouver Digital Pictures division is up 8% in the second quarter, compared to the same quarter last year.

A harsh second quarter (ended June 30) saw company revenues at $7.3 million (the same as Q2 in fiscal 1998), but net losses increased significantly to $7.3 million ($0.60 per share) compared to a net profit of $496,000 ($0.05 per share) in the comparable quarter in 1998.

Over the first six months, meanwhile, revenues are up 13% to $14.6 million, while accumulated net losses reach down to $8.6 million ($0.61 per share).

Rainmaker shares were trading at a 52-week low of $1.15 on the Toronto Stock Exchange the day after the second-quarter results were published. The shares have traded as high as $3 in the past year.