EDISON, N.J., March 16 /PRNewswire-FirstCall/ -- Majesco Entertainment Company (Nasdaq: COOL), an innovative provider of video games for the mass market, today reported financial results for the first quarter ended January 31, 2010.

For the first quarter ended January 31, 2010, Majesco's net revenues were $29.2 million versus $32.8 million in the same period a year ago. During this same period, the Company reported operating income of $2.5 million, compared to operating income of $3.7 million in the first quarter of 2009. Non-GAAP operating income was $3.5 million versus non-GAAP operating income of $4.8 million in 2009. Net income for the quarter was $3.8 million versus net income of $4.2 million in 2009. On a non-GAAP basis, net income for the quarter was $2.9 million compared to non-GAAP net income of $4.3 million last year.

The Company's basic and diluted net income per share for the quarter ended January 31, 2010 was $0.10 compared to net income per basic and diluted share of $0.15 in the same period last year. Non-GAAP basic and diluted net income per share was $0.08 compared to a net income per share of $0.15 last year. Please refer to Non-GAAP Financial Measures and reconciliation tables included later in this release for additional information and details on non-GAAP items.

Jesse Sutton, Chief Executive Officer of Majesco, said, "Majesco had a very solid first quarter driven by strong holiday sales of our Cooking Mama franchise, which once again delivered impressive results, and Alvin & The Chipmunks: The Squeakquel. Our results were in-line with our internal expectations and we remain on track to deliver improved profitability for 2010. We have made significant progress in fine tuning our strategy to meet the challenges of the current operating environment. We continue to focus our resources on our best opportunities and our costs remain under control. We are committed to improving our profitability and building long-term value for our shareholders."

Financial Highlights

• First quarter 2010 net revenues were $29.2 million, a decrease of $3.6 million or 11 percent compared to the same quarter last year. Last year's results included the strong performance of our first Jillian Michaels' product which was released in October 2009.
• Gross margin was 29.8 percent, compared to 36.1 percent in 2009. Gross margin for 2010 included the impact of a $0.9 million impairment charge, which impacted gross margin by approximately 300 basis points. The impairment charge relates to two titles which are new IP in development for introduction later this year.
• Total operating expenses declined $2 million or 24.2 percent compared to last year and were 21.1 percent of sales down from 24.8 percent last year.
• Selling and marketing expenditures declined $1.1 million or 25.9 percent and were 10.5 percent of sales, down from 12.6 percent last year, resulting primarily from lower marketing expenditures in the 2010 quarter.
• General & administrative expenses for the quarter declined $0.4 million or 15.2 percent and were 7.3 percent of sales compared to 7.6 percent last year.
• At the end of the first quarter, the Company had in excess of $12.7 million in cash and cash equivalents.

Announced Product Line-up

Second Quarter Fiscal 2010 Ending April 30, 2010

To date, the Company has announced the following titles that were or are expected to be released during its second quarter:

• Data East Arcade Classics for Wii(TM) lets players re-live their arcade marathons with 15 nostalgic titles including BurgerTime and its sequel, Peter Pepper's Ice Cream Factory, Bad Dudes vs. Dragon Ninja, Burnin' Rubber, Heavy Barrel, Caveman Ninja, and many others. Featuring special updates for modern gamers, all titles also support single player and 2-player head-to-head or co-operative multiplayer play.
• The Daring Game for Girls for Wii and Nintendo DS(TM) is based upon the best-selling book, The Daring Book for Girls, the ultimate can-do, how-to 'manual' that celebrates the female spirit. The games guide adventurous girls in a range of daring and practical activities from building a campfire to exploring caves, tending a garden, crafting items, playing sports and games, and making new friends.
• Pizza Delivery Boy for Wii lets players use the Wii Remote as an all-in-one kitchen utensil and driving wheel to cook and deliver pizzas to hungry customers in three bustling towns. Players must beware, though, as a number of obstacles stand between them and the coveted title of Pizza Boy of the Year.
• Dance Sensation! for Wii is the only game that lets players train and perform routines in four different styles: Hip-Hop, Jazz, Ballet, and Latin Ballroom. Players use the Wii Remote and Nunchuk to control their on-screen dancer as she perfects more than 160 real motion-captured dance moves in recitals ranging from local auditoriums to the Broadway stage.
• Let's Draw for Nintendo DS is based on the popular Japanese book series that teaches kids how to draw by combining basic shapes. With more than 100 objects to draw and fun art related mini games that let young players animate their creations, kids can learn to draw anywhere, at any time.
• Dawn of Heroes for Nintendo DS is a tactical role playing game that combines classic RPG concepts -- including character development, epic combat, quests and puzzles -- with a humorous style.

Fiscal 2010

To date, the Company has announced the following titles that are expected to be released during the rest of fiscal 2010:

• Attack of the Movies 3-D is the first-ever 3-D shooter designed exclusively for Wii and Xbox 360®. The game transports players into six fantastic movie-themed worlds and features classic enemies culled from the annals of film history. The game also comes packaged with four pairs of 3-D glasses to support four-player multiplayer action.
• Flip's Twisted World for Wii is a unique puzzle platformer that stars Flip, a magician's apprentice who mistakenly gets sucked into an alternate universe where up and down are only a matter of perspective. Players will help Flip navigate his puzzling world by rotating the environment 180 degrees in any direction with a simple twist of the Wii Remote.
• Pirates Plundarrr for Wii is a fun and frantic beat-'em-up that lets players hunt the high seas for the renegade captain Rudebelly who has unleashed an army of cursed dead and menacing bosses. Would-be pirates will fight through 45 creature-filled levels to retrieve their stolen treasure, and four mates can even plunder together in a party style, battle royale.
• Super Speed Machines for Nintendo DS lets players kick it into high gear in this frantic arcade racer that delivers super speed and dangerous conditions at every turn.
• Tetris® Party Deluxe for Wii and Nintendo DS represents a strategic partnership with Tetris Online, Inc. to support the North American launch and distribution of the two newest additions to the Tetris franchise. Tetris Party Deluxe builds on the previously released Tetris Party for WiiWare by adding new modes and features to enrich the overall game play experience for both platforms.
• Ghostwire: Link to the Paranormal for Nintendo DSi turns your handheld into a portal to the astral plane. Coupled with the DSi camera, this detection and communication tool lets you find, summon, capture and interact with ghosts living amongst us. Ultimately you can help them find peace as you develop your own paranormal prowess within an augmented reality that promises to change your perspective forever.
• Zumba® Fitness for to be announced systems is a one-of-a-kind exercise program that pairs Latin rhythms with red-hot international dance steps so you can have a blast as you party your way into shape. Through invigorating, high calorie-burning fitness classes, Zumba Fitness has helped melt the pounds and inches off more than five million Zumba-enthusiasts in more than 75 countries.
• Boys vs Girls for Wii is a motion-based battle of the sexes where players vie for the upper hand in sports and pranks against the opposing gender, all set within a summer camp environment.
• Greg Hastings Paintball 2 for the Xbox 360 Wii, and PlayStation®3, is the most realistic paintball experience to date from the most successful name in the sport. The game introduces more than 10 single and multiplayer game modes, each staged in all-new paintball locations based on actual fields around the world. Featuring three new event branches -- Tournament Speedball, Recball, and Tournament Woodsball -- players can build and develop their team of professional ballers and even cheat to stay in the game.
• Crafting Mama for Nintendo DS is the newest brand extension of the Cooking Mama franchise that has sold more than six million units. Using the stylus as a universal crafting tool, crafters will sew, mold, glue, cut and paint under Mama's masterful direction as they create 40 different projects, from patchwork quilts to earrings, candles and kaleidoscopes.

Fiscal 2010 Outlook

The Company reiterated its fiscal 2010 full year outlook for net revenue of approximately $80 million and non-GAAP earnings per share of approximately $0.05. The Company's guidance assumes the release of approximately 37 SKUs in 2010, including 14 DS and 16 Wii, with 9 titles released in the second quarter, 8 titles released in the third quarter and 12 titles released in the fourth quarter. We also expect that roughly 62% of our revenue will come from DS titles; 31% from Wii titles and 7% from all other platforms. 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 please dial 412-858-4600. The access code for the call is "Majesco Call". 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 877-344-7529 and for international callers, dial 412-317-0088. Enter access code 438599.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics

To facilitate a comparison between the three months ended January 31, 2010 and 2009, 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 condensed consolidated statements of operations:

• Expenses related to non-cash compensation
• Net proceeds from sale of certain state 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 was closed in the fourth quarter fiscal 2009
• Severance costs

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".

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 Wii(TM), Nintendo DS(TM) and other leading systems. Product highlights include Cooking Mama(TM), TETRIS® Party Deluxe, Alvin and the Chipmunks: The Squeakquel and Jillian Michaels' Fitness Ultimatum. 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 www.majescoentertainment.com. @Majesco is on twitter or at 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 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, 2009. 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 2010 RELEASE SCHEDULE

    2010 Games


     Quarter 1          Quarter 2          Quarter 3             Quarter 4

    Alvin and the    Data East Arcade    Tetris Party         Zumba Fitness,
     Chipmunks:       Classics Wii,       Deluxe Wii           Systems and 
     The Squeakquel   $19.99              and DS, $29.99       Price TBA
     Wii ($39.99)
     and DS ($29.99)          

    My Hero:         Dawn of Heroes DS,  Attack of the Movies   Ghostwire DSi,
     Firefighter      $29.99              3-D Wii and Xbox 360,   Price TBA
     DS, $19.99                           $29.99


    My Hero:         The Daring Game     Super Speed          Greg Hastings
     Doctor DS,       for Girls Wii       Machines DS,         Paintball 2
     $19.99           and DS, $19.99      $19.99               Wii, Xbox 360 
                                                               and PS3; $49.99
                                                               (360 and PS3),
                                                               $39.99 Wii

    Hot and Cold:     Pizza Delivery     Pirates PlundArrr   Crafting Mama DS,
     A 3D Hidden       Boy                Wii, $29.99         $29.99
     Object Adventure  Wii, $29.99
     DSiWare, 800 
     points                     


    A Boy and His      Dance Sensation!  Boys vs Girls Wii, 
     Blob: Trouble on   Wii, $29.99       $19.99
     Blobolonia, 
     Virtual
     Console, 500
     Wii Points             

    Hello Kitty        Let's Draw DS,    Flip's Twisted World
     Party, DS,         $19.99            Wii, $29.99
     $29.99                   

    Serious Sam HD: 
     The First Encounter
     XBLA, 1200 Points


    * Includes all released and announced titles to date. Prices subject to
      change for unreleased titles.



                  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
                     Unaudited Supplemental Product Data

                     NET REVENUE BY PLATFORM - YEARLY
                     --------------------------------
                         FY10       FY09       FY08
                         EST       ACTUAL     ACTUAL
                         ---       ------     ------

    Nintendo Wii         30.9%      53.0%      34.0%
    Nintendo DS          62.3%      42.8%      61.7%
    Other                 6.8%       4.1%       4.3%
    Total               100.0%     100.0%     100.0%



                        Net sales by Platform for three months
                              (Unaudited, in thousands)

                   Three Months Ended  Three Months Ended  Three Months Ended
                    January 31, 2010    January 31, 2009    January 31, 2008
                    Net Sales    %      Net Sales    %      Net Sales    %
                    ---------   ---     ---------   ---     ---------   ---

    Nintendo Wii        7,973   27.3%     21,003   64.0%       3,704   19.8%
    Nintendo DS        20,254   69.4%     11,158   34.0%      14,220   76.2%
    Other                 978    3.4%        659    2.0%         740    4.0%
    Total              29,206  100.0%     32,820  100.0%      18,664  100.0%



                 MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (Unaudited, in thousands, except share amounts)

                                                         Three Months Ended
                                                             January 31,
                                                         -------------------
                                                            2010        2009
                                                            ----        ----

    Net revenues                                         $29,206     $32,820
                                                         -------     -------
    Cost of sales
      Product costs                                       11,728      11,831
      Software development costs and license fees          7,867       8,960
      Loss on impairment of software development costs
       and license fees - future releases                    905         170
                                                             ---         ---
                                                          20,500      20,961
                                                          ------      ------
    Gross profit                                           8,706      11,859
                                                           -----      ------
    Operating costs and expenses
      Product research and development                       934       1,293
      Selling and marketing                                3,056       4,124
      General and administrative                           2,124       2,505
      Depreciation and amortization                           53          69
      Settlement of litigation and related charges, net        -         140
                                                             ---         ---

                                                           6,167       8,131
                                                           -----       -----
    Operating income                                       2,539       3,728
    Other expenses (income)
      Interest and financing costs, net                      497         458
      Change in fair value of warrant liability             (202)        135
                                                            ----         ---
    Income before income taxes                             2,244       3,135
      Income taxes                                        (1,563)     (1,027)
                                                          ------      ------
    Net income                                            $3,807      $4,162
                                                          ======      ======
    Net income per share:
      Basic                                                $0.10       $0.15
                                                           =====       =====
      Diluted                                              $0.10       $0.15
                                                           =====       =====
    Weighted-average shares outstanding:
      Basic                                           36,808,062  27,944,958
                                                      ==========  ==========
      Diluted                                         36,829,239  27,944,958
                                                      ==========  ==========





                  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
                         CONSOLIDATED BALANCE SHEETS
                     (In thousands, except share amounts)

                                                     January 31, October 31,
                                                         2010       2009
                                                         ----       ----
                                                      (unaudited)
    ASSETS
    Current assets:
      Cash and cash equivalents                         $12,703    $11,839
      Due from factor                                     6,810      1,172
      Accounts and other receivables, net                 1,632      1,145
      Inventory, net                                      3,583      6,190
      Advance payments for inventory                        654      3,126
      Capitalized software development costs and
       license fees                                       2,543      3,678
      Prepaid expenses                                      539        847
                                                            ---        ---

        Total current assets                             28,464     27,997
    Property and equipment, net                             378        447
    Other assets                                             83         83
                                                             --         --

        Total assets                                    $28,925    $28,527
                                                        =======    =======
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued expenses             $12,089     $9,356
      Customer billings due to distribution
       partner                                                7        230
      Inventory financing payables                            -      6,053
      Advances from customers                               393        543
                                                            ---        ---

        Total current liabilities                        12,489     16,182
    Warrant liability                                       424        626
    Commitments and contingencies
    Stockholders' equity:
      Common stock - $.001 par value;
       250,000,000 share authorized; 38,589,044
       and 38,553,740 issued and outstanding at
       January 31, 2010 and October 31, 2009,
       respectively                                          38         38
      Additional paid-in capital                        114,006    113,484
      Accumulated deficit                               (97,554)  (101,361)

      Accumulated other comprehensive loss                 (478)      (442)
                                                           ----       ----
        Net stockholders' equity                         16,012     11,719
                                                         ------     ------
        Total liabilities and stockholders' equity      $28,925    $28,527
                                                        =======    =======



                  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited, in thousands)
                                                               Three Months
                                                                   Ended
                                                                January 31,
                                                               -------------
                                                               2010     2009
                                                               ----     ----
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                               $3,807   $4,162
    Adjustments to reconcile net income to net cash used
     in operating activities:
      Change in fair value of warrant liability                (202)     135
      Depreciation and amortization                              53       69
      Write off of fixed assets                                  19        -
      Provision for price protection                          1,169      600
        Amortization of capitalized software development
         costs and prepaid license fees                       2,186    2,997
      Non-cash compensation expense                             522      411
      Share-based litigation settlement                           -      140
      Loss on impairment of software development costs and
       license fees                                             905      170
      Changes in operating assets and liabilities
        Due from factor -- net                               (6,671)  (6,477)
        Accounts and other receivables                         (645)   2,173
        Inventory                                             2,599    3,463
        Capitalized software development costs and prepaid
         license fees                                        (1,957)  (2,836)
        Prepaid expenses and advance payments for inventory   2,776     (240)
        Accounts payable and accrued expenses                 2,741    2,550
            Customer billings due to distribution partner      (223)    (534)
        Advances from customers                                (151)    (161)
                                                               ----     ----
          Net cash provided by operating activities           6,928    6,622
                                                              -----    -----
    CASH FLOWS FROM INVESTING ACTIVITIES
    Purchases of property and equipment                          (4)     (56)
                                                                 --      ---
          Net cash used in investing activities                  (4)     (56)
                                                                 --      ---
    CASH FLOWS FROM FINANCING ACTIVITIES
    Inventory financing                                      (6,053) (1,540)
                                                             ------   ------
          Net cash used in financing activities              (6,053) (1,540)
                                                             ------   ------
    Effect of exchange rates on cash and cash
     equivalents                                                 (7)     (41)
                                                                ---      ---
    Net increase in cash and cash equivalents                   864    4,985
    Cash and cash equivalents -- beginning of period         11,839    5,505
                                                             ------    -----
    Cash and cash equivalents -- end of period              $12,703  $10,490
                                                            =======  =======
    SUPPLEMENTAL CASH FLOW INFORMATION
    Cash paid during the period for interest                   $497     $459
                                                               ====     ====
    Cash received during the period for income taxes         $1,656   $1,115
                                                             ======   ======





                     MAJESCO ENTERTAINMENT COMPANY
            RECONCILIATION OF GAAP to NON-GAAP FINANCIAL MEASURES
                    (in thousands, except share amounts)
                                 (Unaudited)

                                          Three Months Ended
                                             January 31,
                                         ---------------------
                                         2010             2009
                                         ----             ----

      GAAP operating income            $2,539           $3,728
      Settlement of litigation and
      related charges, net(1)               -              140
      Non-Cash Compensation(3)            544              411
      Severance(4)                        403                -
      California studio(5)                  -              539
                                          ---              ---
      Non-GAAP operating income        $3,486           $4,818
                                       ======           ======

      GAAP net income                  $3,807           $4,162
      Settlement of litigation
      and related charges, net(1)           -              140
      Change in fair value of 
       warrants(2)                       (202)             135
      Non-Cash Compensation(3)            544              411
      Severance(4)                        403                -
      California studio(5)                  -              539
     Net proceeds from sale of NJ
      state operating loss
      carryforwards(6)                 (1,656)          (1,115)
                                       ------           ------
      Non-GAAP net income              $2,896           $4,272
                                       ======           ======

     GAAP net income per diluted
      share                             $0.10            $0.15
      Settlement of litigation
      and related charges, net(1)           -             0.01
      Change in fair value of
      warrants(2)                       (0.01)               -
      Non-Cash Compensation(3)           0.01             0.01
      Severance(4)                       0.01                -
      California studio(5)                  -             0.02
     Net proceeds from sale of NJ
      state operating loss
      carryforwards(6)                  (0.04)           (0.04)
                                        -----            -----
     Non-GAAP net income
      per diluted share                 $0.08            $0.15
                                        =====            =====
     Shares used in GAAP and 
      Non-GAAP per diluted share
      amounts                      36,829,239       27,944,958
                                   ----------       ----------


    (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. 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 one time severance costs related to a workforce reduction.
    During January 2010, Company management initiated a plan of restructuring
    to better align its workforce to its revised operating plans. As part of
    the plan, the Company reduced its personnel count by 16 employees,
    representing 17% of its workforce.

    (5)  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.

    (6) In December 2009 and November 2008, we received proceeds of
    approximately $1.6 million and $1.1 million, respectively, from the sale
    of the rights to approximately $21.2 million and $25.9 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. Net proceeds have been recorded as an income tax
    benefit during each of the three months ended January 31, 2010 and 2009.

SOURCE Majesco Entertainment Company