- Second Quarter Net Revenues Increased Over 60% to $20.5M -
EDISON, N.J., June 15 /PRNewswire-FirstCall/ -- Majesco
Entertainment Company (NASDAQ:COOL), an innovative provider of
video games for the mass market, today reported financial results
for the second quarter and six months ended April 30, 2009. For the
second quarter ended April 30, 2009, Majesco's net revenues
increased 60.8 percent to $20.5 million versus $12.8 million in the
same period a year ago. During this same period, the Company
reported an operating loss of $0.6 million, compared to a $0.3
million loss in the second quarter of 2008. Non-GAAP operating
income was $0.5 million versus non-GAAP operating income of $0.2
million in 2008. Net loss for the quarter was $1.7 million versus a
net loss of $0.3 million in 2008. On a non-GAAP basis, net income
for the quarter was $0.3 million compared to non-GAAP net income of
$0.1 million last year. The Company's basic and diluted net loss
per share for the quarter ended April 30, 2009 was $0.06 compared
to a net loss per basic and diluted share of $0.01 in the same
period last year. Non-GAAP basic and diluted net income per share
was $0.01 compared to $0.0 last year. For the six months ended
April 30, 2009, the Company's net revenues increased 69.8 percent
to $53.4 million versus the year ago period. During this same
period, the Company reported operating income of $3.1 million
compared to operating income of $2.1 million in the same 2008
period. Non-GAAP operating income for the six month period was $5.3
million compared to $2.9 million for the comparable 2008 period.
Net income through the first six months of fiscal 2009 was $2.5
million versus net income of $2.4 million in the comparable 2008
period. Non-GAAP net income was $4.5 million for the first six
months of fiscal 2009 compared to $2.6 million in the same 2008
period. The Company's basic and diluted earnings per share for the
six months ended April 30, 2009 and the six months ended April 30,
2008 was $0.09. The Company's non-GAAP basic and diluted earnings
per share for the six months ended April 30, 2009 was $0.16
compared to $0.09 in the comparable 2008 period. Jesse Sutton,
Chief Executive Officer of Majesco, said, "We delivered another
impressive quarter as we continued to successfully execute on our
business plan and capitalize on the strength of the family
friendly, casual game market. Our revenue growth was driven by the
continued strength of Jillian Michaels' Fitness Ultimatum 2009 and
our Cooking Mama franchise. During the quarter we launched
Gardening Mama, our first brand extension of the Mama franchise,
which delivered a solid performance and demonstrated the power of
the Mama brand and its ability to extend beyond cooking. As
expected, profitability in the quarter was dampened by our
strategic marketing campaigns as we made investments to support the
growth of our franchises and most promising titles. We believe the
benefits of these investments will continue beyond the first half
of 2009 and help drive future growth. Despite these investments,
for the first six months of fiscal 2009 we delivered improved
operating and net income on both a GAAP and non-GAAP basis. For the
first six months, our non-GAAP operating income grew $2.4 million
or 83 percent to $5.3 million, while our non-GAAP net income
reached $4.5 million, an increase of $1.9 million or 75 percent.
"As a result of our success to date this year, and the strength of
our release schedule for the rest of the fiscal year we have
increased our revenue guidance for fiscal 2009 to $80 to $85
million. We remain focused on prudently managing our costs and are
committed to delivering profitable growth. We have a proven
strategy, are executing operationally and believe we have the right
team in place to continue creating value for our shareholders over
the long-term." Financial Highlights -- Second quarter 2009 net
revenues for the U.S. were $20.3 million, an increase of $8.9
million or 78 percent compared to the same quarter last year.
Second quarter 2009 international sales were $0.3 million, a
decline of $1.1 million or 81 percent compared to the same period
of 2008. -- For the six months year-to-date, net revenues for the
U.S. were $52.0 million, an increase of $22.2 million or 74 percent
compared to the same period last year. International sales for the
same period declined $0.3 million or 17 percent compared to the
same period last year. -- Net Sales for the Wii increased $7.5
million, or 235 percent, to $10.7 million for the second quarter of
fiscal 2009. DS sales for the same period increased 3 percent, from
$9.0 million to $9.3 million. -- For the six months year-to-date,
Wii sales increased $24.8 million, or 359 percent, to $31.7
million. DS sales for the same period declined 12 percent from
$23.2 million to $20.5 million. -- The second quarter of 2009 also
includes $1.0 million in advertising expense (included in selling
and marketing) in support of the Company's strategic marketing
initiatives and a loss on impairment of development costs of $0.3
million (included in general and administrative) due to
cancellation of titles in development. -- The six months ended
April 30, 2009 also includes $2.3 million in advertising expense
(included in selling and marketing) in support of the Company's
strategic marketing initiatives and a loss on impairment of
development costs of $0.3 million (included in general and
administrative) due to cancellation of titles in development.
Generally Accepted Accounting Principles (GAAP) and Non-GAAP
Metrics To facilitate a comparison between the three and six months
ended April 30, 2009 and 2008, the Company has presented both GAAP
and Non-GAAP financial results. GAAP financial measures, including
operating income, net income, and basic and diluted earnings per
share, have been adjusted to report certain Non-GAAP financial
measures. These Non-GAAP financial measures exclude the following
items from the Company's unaudited condensed consolidated
statements of operations: -- Expenses related to non-cash
compensation -- Net proceeds from sale of income tax net operating
loss carryforwards -- Settlement charges related to the settlement
of class action litigation -- Change in fair value of warrants --
Expenses for the California studio which will be closed in the
third quarter fiscal 2009 These Non-GAAP measures are provided to
enhance investors' overall understanding of the Company's current
financial performance and the Company's prospects for the future.
These measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results. For more information on these
Non-GAAP financial measures, please see the tables in this release
captioned "Reconciliation of GAAP and Non-GAAP Financial Measures"
which includes a reconciliation of the Non-GAAP to the GAAP
results. Announced Product Line-up Third Quarter 2009 ending July
31, 2009: All of the following titles have been or are expected to
be released in North America during the Company's third quarter: --
Go Play Lumberjacks for Wii is the first game in Majesco's recently
announced Go Play line of motion-based, family friendly Wii titles
that lets players use the Wii Remote to chop, climb, saw and
logroll to victory in 5 entertaining events that include support
for the Wii Balance Board accessory. -- Go Play Circus Star for Wii
is the second game in Majesco's recently announced Go Play line
that includes a full collection of all-time favorite circus
attractions. Featuring support for the Wii Balance Board accessory,
the game lets players wow the crowd with death-defying stunts,
animal tricks and sleight of hand in 15 different events. -- Night
at the Museum: Battle of the Smithsonian for Wii/DS/360/PC follows
the storyline of Twentieth Century Fox's highly anticipated
theatrical release of the same name which debuted in theaters May
22nd. Featuring the voice and likeness of the film's star, Ben
Stiller, the game brings the movie experience directly into the
home with all of the excitement and humor from the feature film. --
Drama Queens for DS tasks players with juggling their love life,
career and friendships as they compete in a popularity contest set
within a virtual 3D board game. -- Math Blaster in the Prime
Adventure for DS is inspired by the original hit PC game from
Knowledge Adventure that makes learning fun by combining a variety
of adventure-based learning games with challenging mathematic
puzzles and the unique capabilities of Nintendo DS. -- Rollin'
Rascals for DS is an addictive puzzler that challenges players to
roll adorable pets around obstacles and into identical pairs to
clear them from the game board. -- Powerbike for DS is an intense
motorcycle racer that features death-defying stunts, intense police
chases and competitive multiplayer modes. -- Ultimate Game Room for
DS is a compilation of 3 classic recreational sports--Pool, Darts
and Bowling -- that lets players compete against friends on the go.
-- Puffins Island Adventure for DS lets players experience life as
part of a Puffin flock as they fly, dive, swim, explore and start a
family in this fun and educational experience focused on one of
nature's more unusual and endearing sea birds. -- Marker Man
Adventures for DS is a unique game based on drawing and physics
challenges in which players maneuver the charming stick figure,
Marker Man, through a myriad of scrolling world puzzles in his
attempt to find his best friend, Doodles. -- Escape the Museum for
Wii traps players in the National Museum of History after a
devastating earthquake. Players search the museum for survivors and
priceless archeological artifacts by completing 12 different hunt
and find areas and 25 action-packed adventure scenes. -- Hot and
Cold: A 3D Hidden Object Adventure for DSiWare is inspired by the
classic children's game in which players use temperature cues to
indicate proximity to an item. Players will search through 50
multi-room levels using the Hot and Cold Meter as a guide for
discovering hundreds of items with real world physics. Fourth
Quarter 2009 Ending October 31, 2009: To date, the Company has
announced the following titles that are expected to be released
during its fiscal fourth quarter 2009: -- Go Play City Sports for
Wii is the third game in Majesco's new Go Play line. This
compilation of urban sports lets players compete against the best
neighborhood athletes in six classic games, including stickball,
kickball, handball, rooftop hockey, shootout soccer and jump rope.
The game also features four player gameplay and support for the Wii
Balance Board accessory. -- My Hero: Firefighter for DS is part of
Majesco's new aspirational line of My Hero adventure games that
lets players experience firsthand the heroic acts of the role
models they look up to. Players use the stylus as a fire hose,
ladder and ax as they complete 13 varied missions relating to fire
emergencies and courageous rescues. -- My Hero: Astronaut for DS is
the first astronaut game available and also part of Majesco's new
aspirational line of My Hero adventure games. On an expedition to
Mars, players will pilot a Space Rover, Space Shuttle, and Lunar
Lander as they blast off through over 40 different missions that
include landing on a space station, repairing satellites,
destroying meteors and more. -- Our House: Party! for Wii turns the
Wii Remote into the ultimate home renovation tool that lets up to
four players compete party style to build their own personalized
trophy home that they can then share with friends via WiiConnect24.
-- Our House for DS is a companion game to the Wii version. The
title lets players work as contractors and then use their
work-for-hire earnings to design, build and decorate their own
personalized home. -- A Boy and His Blob for Wii is IGN's Best of
E3 runner-up in the Wii Platformer category. The game is a rebirth
of the NES classic that expands upon the original platform
adventure and features groundbreaking hand drawn and painted
animation technology. By feeding the blob jelly beans, players can
activate his special abilities to transform him into tools that
help the pair solve puzzles, defeat monsters and escape danger.
First Quarter Fiscal 2010 Ending January 31, 2010 To date, the
Company has announced the following titles that are expected to be
released during its fiscal first quarter 2010, which includes the
holiday sales period: -- Jillian Michaels Fitness Ultimatum 2010
for Wii and Jillian Michaels Pocket Trainer 2010 for DS feature the
celebrity fitness trainer, life coach, and star of the popular
television series The Biggest Loser as she leads players through
high-intensity, one-on-one workouts while providing direct feedback
and motivation to help players reach their personal fitness goals.
-- My Hero: Doctor for DS is part of Majesco's new aspirational
line of My Hero adventure games. As a doctor's apprentice, players
will manage 10 major medical emergencies by utilizing the
microphone and stylus as an all-in-one medical tool. -- Dawn of
Heroes for DS is a tactical role playing game that combines classic
RPG concepts -- including character development, epic combat,
quests and puzzles -- with a humorous style. -- Flip's Twisted
World for Wii, a Gamespot E3 '09 Editor's Choice award finalist, is
a unique puzzle platformer that stars Flip, a magician's apprentice
who mistakenly gets sucked into a cubed world where up and down are
only a matter of perspective. Players will help Flip escape his
cube prison by rotating the environment 90 degrees in any direction
with a simple twist of the Wii Remote. Fiscal 2009 Outlook The
Company increased its outlook for fiscal 2009 full year net revenue
to $80 to $85 million from its previous outlook provided on March
11, 2009 of full year net revenue of $75 to $80 million. The
Company expects non-GAAP earnings per share to be between $0.10 and
$0.14 for the fiscal 2009 full year. The guidance reflects both the
success of the first half of fiscal 2009, and the costs of the
investments it is making to support and extend the Cooking Mama
franchise and to build out the new Go Play brand. The Company's
guidance assumes the release of approximately 33 titles in 2009
including 18 DS and 14 Wii. The Company's results are also impacted
by seasonality from the December holiday period and variability
based on release schedules. Conference Call At 4:30 PM ET today,
management will host an earnings conference call. To access the
call in the U.S., please dial 1-800-860-2442 and international
callers please dial 1-412-858-4600. The access code for the call is
"Majesco". Please dial in approximately 10 minutes prior to the
start of the conference call. The conference call will also be
broadcast live over the Internet and available for replay for 90
days from the "Investor Info" section of the Company's Web site at
http://www.majescoentertainment.com/. In addition, a replay of the
call will be available via telephone for seven days beginning
approximately two hours after the call. To listen to the telephone
replay in the U.S., please dial 1-877-344-7529 and for
international callers, dial 1-412-317-0088. Enter access code
431058. About Majesco Entertainment Company Majesco Entertainment
Company is a provider of video games for the mass market. Building
on more than 20 years of operating history, the company is focused
on developing and publishing a wide range of casual and family
oriented video games on leading console and portable systems.
Product highlights include Cooking Mama(TM) and Cake Mania(R)2 for
Nintendo DS(TM), and Cooking Mama World Kitchen and Jillian
Michaels' Fitness Ultimatum 2009 for Wii(TM). The company's shares
are traded on the Nasdaq Stock Market under the symbol: COOL.
Majesco is headquartered in Edison, NJ and has an international
office in Bristol, UK. More information about Majesco can be found
online at http://www.majescoentertainment.com/. @Majesco is on
twitter or at http://www.twitter.com/majesco. Safe Harbor Some
statements set forth in this release, including the estimates under
the headings "Outlook" contain forward-looking statements that are
subject to change. Statements including words such as "anticipate",
"believe", "estimate" or "expect" and statements in the future
tense are forward-looking statements. These forward-looking
statements are subject to risks and uncertainties that could cause
actual events or actual future results to differ materially from
the expectations set forth in the forward-looking statements. Some
of the factors which could cause our results to differ materially
from our expectations include the following: consumer demand for
our products, the availability of an adequate supply of
current-generation and next-generation gaming hardware, including
but not limited to Nintendo's DS and Wii(TM) platforms; our ability
to predict consumer preferences among competing hardware platforms;
consumer spending trends; the seasonal and cyclical nature of the
interactive game segment; timely development and release of our
products; competition in the interactive entertainment industry;
developments in the law regarding protection of our products; our
ability to secure licenses to valuable entertainment properties on
favorable terms; our ability to manage expenses; our ability to
attract and retain key personnel; adoption of new accounting
regulations and standards; adverse changes in the securities
markets; our ability to comply with continued listing requirements
of the Nasdaq stock exchange; the availability of and costs
associated with sources of liquidity; and other factors described
in our filings with the SEC, including our Annual Report on Form
10-K for the year ended October 31, 2008. We do not undertake, and
specifically disclaim any obligation, to release publicly the
results of any revisions that may be made to any forward-looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements. MAJESCO ENTERTAINMENT FISCAL 2009 & 2010 RELEASE
SCHEDULE* 2009 GAMES Quarter 1 Quarter 2 Cooking Mama World Kitchen
Wii, KarmaStar iPhone, Price $49.99 Varies Orchard PC, Price Varies
Major Minor's Majestic March Wii, $39.99 FusionFall: Cartoon
Network Gardening Mama DS, $29.99 Universe PC, $19.99 Left Brain
Right Brain 2 DS, Escape the Museum Wii, $19.99 $19.99 Wonder World
Amusement Park DS, Math Blaster in the Prime $19.99 Adventure DS,
$19.99 Cake Mania: In the Mix! Wii, $29.99 Bananagrams Facebook,
Free Quarter 3 Quarter 4 Go Play Lumberjacks Wii, $29.99 Our House:
Party! Wii, $39.99 Go Play Circus Star Wii, $29.99 Our House DS,
$19.99 Ultimate Game Room DS, $19.99 A Boy and His Blob Wii, Price
TBA Hot -n- Cold DSiWare, Price TBA Go Play City Sports Wii, $29.99
Marker Man Adventures DS, $19.99 My Hero: Astronaut DS, $19.99
Drama Queens DS, $19.99 My Hero: Firefighter DS, $19.99 Powerbike
DS, $19.99 Puffins Island Adventure DS, $19.99 Rollin' Rascals DS,
$19.99 Night at the Museum: Battle of the Smithsonian Wii and Xbox
360 ($39.99), DS ($29.99) PC ($19.99) 2010 GAMES Quarter 1 Jillian
Michaels Fitness Ultimatum 2010 Wii, Price TBA Jillian Michaels
Pocket Trainer 2010 DS, Price TBA Flip's Twisted World Wii, Price
TBA My Hero: Doctor DS, $19.99 Dawn of Heroes DS, Price TBA
*Includes all released and announced titles to date. Prices subject
to change for unreleased titles. MAJESCO ENTERTAINMENT COMPANY
UNAUDITED SUPPLEMENTARY PRODUCT DATA Net Revenue by Platform -
Yearly FY09 FY08 FY07 FY06 Estimate Actual Actual Actual CONSOLE:
Wii 56.5% 34.0% 19.6% 0.0% PS2 0.0% 1.0% 6.8% 18.7% Xbox 1.4% 0.2%
3.3% 15.7% 57.9% 35.2% 29.7% 34.4% HANDHELD: DS 40.1% 61.7% 53.7%
24.4% GBA 0.0% 0.1% 5.6% 28.0% PSP 0.1% 1.1% 3.0% 3.4% 40.2% 62.9%
62.3% 55.8% OTHER 1.9% 1.9% 8.0% 9.8% TOTAL 100.0% 100.0% 100.0%
100.0% Net sales by Platform for three and six months Three Months
Ended April 30, 2009 % 2008 % Nintendo Wii 10,734 52.2% 3,204 25.1%
Nintendo DS 9,305 45.3% 9,010 70.5% Other 509 2.5% 561 4.4% TOTAL
20,548 100.0% 12,775 100.0% Six Months Ended April 30, 2009 % 2008
% Nintendo Wii 31,737 59.5% 6,908 22.0% Nintendo DS 20,463 38.3%
23,230 73.9% Other 1,168 2.2% 1,301 4.1% TOTAL 53,368 100.0% 31,439
100.0% MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited, in thousands, except share
amounts) Three Months Ended Six Months Ended April 30, April 30,
2009 2008 2009 2008 Net revenues $20,548 $12,775 $53,368 $31,439
Cost of sales Product costs 7,816 5,765 19,647 13,697 Software
development costs and license fees 6,016 2,577 15,146 5,797 13,832
8,342 34,793 19,494 Gross profit 6,716 4,433 18,575 11,945
Operating costs and expenses Product research and development 1,411
708 2,704 1,609 Selling and marketing 3,198 1,915 7,322 4,220
General and administrative 2,369 2,020 4,874 4,128 Depreciation and
amortization 69 86 138 163 Settlement of litigation and related
charges, net 264 - 404 (322) 7,311 4,729 15,442 9,798 Operating
(loss) income (595) (296) 3,133 2,147 Other expenses (income)
Interest and financing costs, net 221 97 679 296 Change in fair
value of warrants 880 (136) 1,015 (594) (Loss) income before income
taxes (1,696) (257) 1,439 2,445 Income taxes - - (1,027) - Net
(loss) income $(1,696) $(257) $2,466 $2,445 Net (loss) income per
share: Basic $(0.06) $(0.01) $0.09 $0.09 Diluted $(0.06) $(0.01)
$0.09 $0.09 Weighted average shares outstanding: Basic 28,494,960
27,416,230 28,206,927 27,384,035 Diluted 28,494,960 27,416,230
28,420,121 27,384,035 MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)
April 30, October 31, 2009 2008 (unaudited) ASSETS Current assets:
Cash and cash equivalents $10,262 $5,505 Accounts and other
receivables 2,396 3,032 Inventory 2,926 5,619 Capitalized software
development costs and license fees 8,578 6,812 Prepaid expenses
4,267 1,956 Total current assets 28,429 22,924 Property and
equipment - net 507 563 Other assets 93 83 Total assets $29,029
$23,570 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued expenses $13,671 $10,697 Accrued
litigation settlement 233 1,250 Due to factor 746 983 Customer
billings due under distribution agreement 203 1,487 Inventory
financing payable - 1,540 Deferred income and advances from
customers 1,293 265 Total current liabilities 16,146 16,222 Warrant
liability 1,225 211 Stockholders' equity: Common stock - $.001 par
value; 250,000,000 shares authorized; 31,420,104 and 30,127,950
issued and outstanding at April 30, 2009 and October 31, 2008,
respectively 31 30 Additional paid-in capital 103,939 101,722
Accumulated deficit (91,706) (94,172) Accumulated other
comprehensive loss (606) (443) Total stockholders' equity 11,658
7,137 Total liabilities and stockholders' equity $29,029 $23,570
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Six Months Ended
April 30, 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Net income
$2,466 $2,445 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization 138
163 Change in fair value of warrants 1,015 (594) Share-based
litigation settlement 404 (322) Fair value of common stock purchase
warrants issued for services - 77 Non-cash compensation expense 805
749 Provision for price protection and customer allowances 1,145
1,696 Amortization of software development costs and prepaid
license fees 5,230 2,441 Changes in operating assets and
liabilities: Due to factor (1,382) (3,741) Other receivables 515
216 Inventory 2,693 1,943 Capitalized software development costs
and prepaid license fees (7,019) (4,329) Prepaid expenses and other
(2,341) 299 Accounts payable and accrued expenses 3,014 (54)
Advances from customers and deferred revenue (237) 105 Net cash
provided by operating activities 6,446 1,094 CASH FLOWS FROM
INVESTING ACTIVITIES Purchases of property and equipment (82) (208)
Net cash used in investing activities (82) (208) CASH FLOWS FROM
FINANCING ACTIVITIES Issuance cost on equity financing - (40)
Inventory financing (1,540) - Net cash used in financing activities
(1,540) (40) Effect of exchange rates on cash and cash equivalents
(67) (49) Net increase in cash and cash equivalents 4,757 797 Cash
and cash equivalents - beginning of period 5,505 7,277 Cash and
cash equivalents - end of period $10,262 $8,074 SUPPLEMENTAL
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Cash paid
for interest $680 $304 Litigation settlement costs paid in stock
$1,412 $- MAJESCO ENTERTAINMENT COMPANY RECONCILIATION OF GAAP to
NON-GAAP FINANCIAL MEASURES (in thousands, except share amounts)
(Unaudited) Three Months Ended Six Months Ended April 30 April 30
2009 2008 2009 2008 GAAP operating (loss) income $(595) $(296)
$3,133 $2,147 Settlement of litigation and related charges, net (1)
264 - 404 (322) Non-Cash Compensation (3) 394 351 806 749
California studio (4) 421 96 960 320 Non-GAAP operating income $484
$151 $5,303 $2,894 GAAP net (loss) income $(1,696) $(257) $2,466
$2,445 Settlement of litigation and related charges, net (1) 264 -
404 (322) Change in fair value of warrants (2) 880 (136) 1,015
(594) Non-Cash Compensation (3) 394 351 806 749 California studio
(4) 421 96 960 320 Net proceeds from sale of NJ state operating
loss carryforwards (5) - - (1,115) - Non-GAAP net income $263 $54
$4,536 $2,598 GAAP net (loss) income per diluted share $(0.06)
(0.01) $0.09 $0.09 Settlement of litigation and related charges,
net (1) 0.01 - 0.01 (0.01) Change in fair value of warrants (2)
0.03 (0.00) 0.03 (0.02) Non-Cash Compensation (3) 0.01 0.01 0.03
0.03 California studio (4) 0.01 0.00 0.03 0.01 Net proceeds from
sale of NJ state operating loss carryforwards (5) - - (0.04) -
Non-GAAP net income per diluted share $0.01 $0.00 $0.16 $0.09
Shares used in GAAP and Non-GAAP per diluted share amounts
28,494,960 27,416,230 28,420,121 27,384,035 (1) Represents charges
to settle certain litigations pending in the United States District
Court, District of New Jersey: (i) a securities class action
brought on behalf of a purported class of purchasers of the
Company's securities; (ii) a private securities action filed by
Trinad Capital Master Fund, Ltd.; and (iii) a second action filed
by Trinad purportedly on behalf of the Company. All three actions
are now concluded. (2) Represents the change in the fair value of
warrants, classified as a liability. The fair value of the warrants
is calculated at each balance sheet date with a corresponding
charge or credit to earnings for the amount of the change in fair
value. (3) Represents expenses recorded for stock compensation
expense in accordance with SFAS 123R. The Company does not consider
stock-based compensation charges when evaluating business
performance and management does not consider stock-based
compensation expense in evaluating its short and long-term
operating plans. (4) Represents operating expenses related to our
internal development studio in California, which were not allocated
to capitalizable projects. After evaluation of the studio's
performance, and changes in the availability and cost of
development with our third party partners, we now believe that
closing the studio and taking advantage of these external
opportunities represents a better value for the Company. (5) In
November 2008, the Company received net proceeds of approximately
$1.1 million from the sale of the rights to approximately $14.2
million of New Jersey state income tax operating loss
carryforwards, under the Technology Business Tax Certificate
Program administered by the New Jersey Economic Development
Authority. The amount represents utilization of approximately 34%
of the $41.0 million of net operating loss carryforwards available
to the company in the state of New Jersey, prior to the transfer.
The amount has been recorded as an income tax benefit during the
six months ended April 30, 2009. DATASOURCE: Majesco Entertainment
Company CONTACT: John Gross, Chief Financial Officer of Majesco
Entertainment Company, +1-732-225-8910; or Mike Smargiassi or
Denise Roche, both of Brainerd Communicators, Inc.,
+1-212-986-6667, for Majesco Entertainment Company Web Site:
http://www.majescoentertainment.com/
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