Vancouver: A clash with the former ctcpf (now the Canadian Television Fund) resulted in a $1.4-million write-off for Mainframe Entertainment of Vancouver in the second quarter of fiscal 1999.

Mainframe’s second season of animated series Beast Wars (Beasties in Canada) was disqualified from funding this year because of rule changes regarding the nationality of source material. Beast Wars is based on a non-Canadian toy.

However, Mainframe claims the rule changes were ‘unexpected’ and the timing of the disqualification forced the company to scramble and refinance the series.

‘We will be challenging this decision, but in the meantime, we have adopted a conservative approach in the event that the decision is not overturned,’ says Mainframe cfo Brett Gannon.

For the second fiscal quarter ended Sept. 30, Mainframe posted a loss of nearly $6 million ($0.43 per share) on revenue of only $156,000. The same period in the previous fiscal year was much healthier, with a loss of $2.9 million ($0.23 per share) on revenues of $3.5 million.

In addressing the low-revenue volumes, Mainframe states that, in fiscal 1999, all of the company’s episodes are new and will be delivered in the last two quarters of the year.

During the quarter, War Planets (Shadowraiders in Canada) debuted as the top syndicated show for children in the u.s. ReBoot’s 39 episodes were sold to Cartoon Network in the u.s. and production continued on Beast Wars’ third season.

Year-to-date tallies show revenues of $284,000 compared to $4.6 million for the same period a year ago. The net loss for the six-month period is nearly $9.9 million ($0.71 per share) compared to a net loss of $5.4 million ($0.52 per share) for the same period last year.