Variety Asia reports that Chinese film distributor Mei Ah, which dumped wads of cash into John Woo’s historical foray Battle for Red Cliff, has suffered stunning financial losses in the last year, going from +$2.8 million to - $10.7 million as of March, 2008.

Much of the financial damage was done by a revaluation of convertible loan notes, but by other measures too the company slipped.

Revenue fell 25% to HK$103 million ($13.2 million) and net profits after exceptional items was down from HK$17.1 million ($2.2 million) to HK$2.96 million ($380,000.)

Although Mei Ah is an investor in “Red Cliff” and recent “Empress and the Warriors” it described the film market for Hong Kong movies as “relatively stagnant.” Piracy is eating into its video business. “Following the increasing popularity of copyright infringement behavior the business of sale and distribution of video discs has become difficult, it said.