Majesco Reports Record Second Quarter 2005 Financial Results; Launch of Psychonauts for the Xbox and PC, Continued Strong Sales of Value Games and TV Arcade Products Drive Second Quarter Sales of $20 Million.EDISON, N.J. -- Majesco Entertainment Majesco Entertainment is a video game publisher founded in 1986. It first made a name as a reissuer of old titles that had been abandoned by their original publisher. By cutting the prices dramatically and, eventually, arranging the rights to self-manufacture games for both Company (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : COOL), an innovative provider of digital entertainment products and content, today announced results for its second quarter ended April 30, 2005. The Company reported record second quarter net revenues of $19.9 million, compared to $17.0 million for the same period in 2004. Gross profit increased to $8.4 million, or 42.4% of net revenues for the second quarter, compared to $5.4 million, or 31.9% of net revenues for the same period in 2004. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $821,000 for the 2005 quarter, versus $1.1 million for the same period one year ago. The decrease in operating income is attributable to infrastructure to support the Company's growth, as well as fulfilling obligations as a NASDAQ-listed company. For the quarter, the Company generated net income of $189,000 compared to a net loss of $49.0 million for the second quarter of last year. The 2004 net loss was principally the result of a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the issuance of warrants in connection with the Company's private placement in February 2004 (see tables for further explanation). Excluding the non-cash charge the Company would have generated net income of $208,000 for the 2004 period. Net income applicable to common stockholders for the 2005 quarter was $0.01 per share compared to a net loss applicable to common stockholders of ($8.35) per share for the same period last year. For the six-month period ended April 30, 2005, the Company reported net revenues of $50.6 million, an increase of 21.4 % versus $41.7 million in the same period during 2004. Gross profit increased to $19.4 million during the six-month period, versus $12.9 million in the comparable period during 2004. For the 2005 period, operating income was $2.8 million versus $3.5 million in the comparable 2004 period. Net loss applicable to common stockholders for the 2005 six-month period was ($0.01) per share, compared to net loss applicable to common stockholders of ($9.59) per share for the same period of last year. The Company completed the second quarter with working capital of $62.1 million, representing a current ratio of 4.3, versus working capital of $8.9 million or a current ratio of 1.3 at year end October 31, 2004. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. as of April 30, 2005 was $76.1 million compared to $13.8 million as of October 31, 2004. The increase in the Company's working and capital stockholders' equity was principally due to the completion of its public stock offering in January 2005 and the related warrant exercises, which provided $60.5 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). . Jan E. Chason, Majesco's Chief Financial Officer commented, "Our record second quarter net revenues were driven by the introduction of Psychonauts for the Xbox and PC, double game packs (2 games in 1) value games, and continued strong sales of TV Arcade. Our gross margin increased to 42.4% for the quarter, underscoring the strength of our diversified product offerings. The increased expenses for the quarter were directly related to infrastructure growth to better position the Company for the future. We expect this level of expenditures to continue as we prepare to release key products in the coming quarters, implement new support functions and compliance and testing related Sarbanes-Oxley." Carl Yankowski Carl J. Yankowski (born 1949) is a United States business executive specializing in the marketing of technology and consumer products. He has held senior positions at Sony Electronics, Reebok, and Palm, Inc.. , Majesco's Chairman and Chief Executive Officer, commented, "During the second quarter we announced several new premium game titles aimed at expanding our market share, as well as positioning Majesco to benefit from the upcoming hardware transition. We are proud of the reception our diverse new products received at E3. We are entering the important second half of our fiscal year with confidence that we are well positioned to achieve our objectives for full year 2005. We remain focused on global growth, both organic and otherwise." Key Products --Advent Rising, the first title in a planned trilogy A company founded in 1979 by Gene Amdahl to commercialize wafer scale integration and build supercomputers. It raised a quarter of a billion dollars, the largest startup funding in history, but could not create its 2.5" superchip. of games, has been developed in collaboration with award-winning science fiction author Orson Scott Card Orson Scott Card (born August 24 1951)[1] is an American author, working in several genres, but primarily known for his science fiction work. His Ender's Game and its sequel Speaker for the Dead . This title shipped on May 31st for the Xbox and PC. --Psychonauts, the critically acclaimed title developed by award-winning game designer Tim Schafer Tim Schafer (born July 26, 1967) is an American computer game designer of Norwegian descent. He founded Double Fine Productions in January 2000, having spent over a decade at LucasArts. , will ship for the PlayStation(R)2 computer entertainment system this June. Psychonauts also shipped for the Xbox (R) video game system from Microsoft and PC on April 19, 2005. --JAWS(TM) Unleashed, based on one of the most enduring action-suspense films of all time, is being developed by Appaloosa Interactive Appaloosa Interactive (formerly Novotrade International) is a corporation, founded in 1983 in Hungary, that produced numerous console games during the 1980's and 90's. . The game features an innovative twist where players assume the role of the shark shark, member of a group of almost exclusively marine and predaceous fishes. There are about 250 species of sharks, ranging from the 2-ft (60-cm) pygmy shark to 50-ft (15-m) giants. They are found in all seas, but are most abundant in warm waters. . JAWS Unleashed is planned for release late this summer for the PlayStation(R) 2, Xbox(R) and PC. --Infected, a thrilling new run-and-gun shooter that allows players' avatars to invade in·vade v. in·vad·ed, in·vad·ing, in·vades v.tr. 1. To enter by force in order to conquer or pillage. 2. opponents' PSP (PlayStation Portable) See PlayStation. (TM) systems via multiplayer victories. Infected in·fect tr.v. in·fect·ed, in·fect·ing, in·fects 1. To contaminate with a pathogenic microorganism or agent. 2. To communicate a pathogen or disease to. 3. To invade and produce infection in. is scheduled to ship for the 2005 holiday season and is the first release in an exclusive three-game PSP deal between Majesco and Planet Moon Studios Planet Moon Studios is a game development studio based in San Francisco, California founded by ex-Shiny Entertainment developers Nick Bruty (President) and Bob Stevenson (CEO) in 1997. . --Aeon Flux, scheduled to coincide with the theatrical release starring Oscar(R)-winning actress Charlize Theron as Aeon Flux, is based on Peter Chung's popular futuristic fu·tur·is·tic adj. 1. Of or relating to the future. 2. a. Of, characterized by, or expressing a vision of the future: futuristic decor. b. MTV MTV in full Music Television U.S. cable television network, established in 1980 to present videos of musicians and singers performing new rock music. MTV won a wide following among rock-music fans worldwide and greatly affected the popular-music business. animated series and features a palpitating pal·pi·tate intr.v. pal·pi·tat·ed, pal·pi·tat·ing, pal·pi·tates 1. To move with a slight tremulous motion; tremble, shake, or quiver. 2. To beat with excessive rapidity; throb. blend of stealth stealth Any military technology intended to make vehicles or missiles nearly invisible to enemy radar or other electronic detection. Research in antidetection technology began soon after radar was invented. , speed and acrobatic combat. --Demonik, developed by Terminal Reality in conjunction with Tiger Hill Tiger Hill may mean
--The Darkness, based on the best-selling best·sell·er also best seller n. A product, such as a book, that is among those sold in the largest numbers. best Top Cow comic book comic book Bound collection of comic strips, usually in chronological sequence, typically telling a single story or a series of different stories. The first true comic books were marketed in 1933 as giveaway advertising premiums. , is a seamless and unique blend of modern crime drama and supernatural horror through first and third person, non linear game play. The Darkness is being developed for the next generation consoles by Starbreeze Studios “Starbreeze” redirects here. For the character from Dragonlance, see Alhana Starbreeze. Starbreeze Studios is a computer game development studio in Uppsala, Sweden. The company was founded in 1998, under the name O3 Games. . --Taxi Driver(TM)based on the classic Martin Scorsese Noun 1. Martin Scorsese - United States filmmaker (born in 1942) Scorsese directed film from Columbia Pictures, is being developed by Papaya Studio __NOEDITSECTION__ Papaya Studio is an independent American video game developer founded by Lin Shen in 1999, and based in Irvine, California. The team consists of highly experienced industry veterans from Squaresoft, Electronic Arts, and Looking Glass Studios who have worked on and is scheduled to ship in spring 2006. --Paintball, Texas Hold'em, Strawberry Shortcake
Strawberry Shortcake is a licensed character owned by American Greetings, originally used in greeting cards and expanded to include dolls, posters, and other products. and Frogger highlight our Wireless Plug and Play TV Arcade product line-up for Holiday 2005. 2005 Outlook Management reiterated its expectations for fiscal 2005 of net revenues of $175 - $185 million and operating income of approximately $16 to $18 million. This guidance includes consideration for planned increased investment in marketing as well as increased infrastructure to support the Company's anticipated growth and to meet the requirements of being a NASDAQ traded company and to comply with Sarbanes-Oxley requirements. Conference Call At 5:00 PM EST EST electroshock therapy. EST abbr. electroshock therapy (2:00 PM PST PST Paroxysmal supraventricular tachycardia, see there ) today, management will host a conference call to discuss the results. To listen to the call, please dial 888-694-4676, approximately five minutes prior to the start of the call. International participants can access the call by dialing 973-935-8512. For those who cannot listen to the live conference call, a replay will be available until midnight on June 14, 2005. The access number for the replay is 877-519-4471 for U.S. participants and 973-341-3080 for international participants. The conference identification code is 6120440. Additionally, the call will be web cast by ViaVid Broadcasting and can be accessed at Majesco's website at www.majescoentertainment.com. The web cast may also be accessed at ViaVid's website at www.viavid.net. To access the web cast, you will need to have the Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. on your desktop. For the free download of the Media Player please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp. About Majesco Entertainment Company Headquartered in Edison, NJ, Majesco Entertainment Company (NASDAQ: COOL) is an innovative provider of digital entertainment products and content. The Company's three product lines include Games, which includes the recently released Advent Rising, and highly anticipated titles such as JAWS(TM) Unleashed and Aeon Flux; Videos, which highlights the Company's platform-independent video compression Encoding digital video to take up less storage space and transmission bandwidth. See video codec and data compression. video compression - Compression of sequences of images. technology; and Gadgets, which includes innovative digital entertainment products like Frogger(R) TV Arcade. More information about the Company can be found online at www.majescoentertainment.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Certain statements contained herein are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by reference to a future period(s) or by the use of forward-looking terminology, such as "may," "will," "intend," "should," "expect," "anticipate," "estimate" or "continue" or the negatives thereof or other comparable terminology. The Company's actual results could differ materially from those anticipated in such forward-looking statements due to a variety of factors. These factors include but are not limited to, the demand for our products; timely development and release of our products; the ability to secure licenses to valuable entertainment properties on favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms; continued consumer acceptance of the gaming platforms on which our products operate and our products; competitive factors in the businesses in which we compete; fulfillment of orders preliminarily made by customers; the ability to attract and retain key personnel; adverse changes in the securities markets; and the availability of and costs associated with sources of liquidity. The Company does not undertake, and specifically disclaims 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. Published by Majesco Entertainment Company (C) 2005. All Rights Reserved. "Frogger" is a registered trademark of KONAMI CORPORATION. (C)1981 2005 KONAMI (C) ARC SYSTEM WORKS Co., Ltd. Licensed from TAITO CORP. JAWS is a registered trademark and copyright of Universal Studios Licensing LLLP LLLP Limited Liability Limited Partnership . All Rights Reserved. Developed by Appaloosa Interactive. "Frogger" is a registered trademark of KONAMI CORPORATION. (C)1981 2005 KONAMI The Darkness(R) and (C) 2004 Top Cow Productions Top Cow Productions (TCP) is an American comics publisher, a partner studio of Image Comics founded by Marc Silvestri in 1992. History During initial stages of Image Comics, Marc Silvestri shared a studio with Jim Lee, where he created his first creator-owned , Inc. All rights reserved. Developed by Starbreeze Studios AB. Taxi Driver taxi driver n → taxista m/f taxi driver taxi n → chauffeur m de taxi taxi driver taxi n → (TM) & (C)1976, 2005 Columbia Pictures Industries, Inc. All Rights Reserved. (C) 2005 Paramount Pictures, a division of Viacom International Viacom International, Inc. is a current subsidiary of Viacom (as was the case with Viacom's predecessor). It is the holding company for copyrights associated with Viacom's corporate website and its cable networks. Inc. All Rights Reserved. "AEON FLUX" and all related titles and logos are trademarks of MTV Networks MTV Networks is a division of media conglomerate Viacom that oversees the operation of many TV network and Internet brands, including the first MTV channel. The company was established in 1984 after Warner Communications and American Express decided to divest the basic cable , a division of Viacom International Inc. Golden Nugget Casinos:
Lionhead started as a breakaway from the developer Bullfrog, which was also founded by Molyneux. Ltd. All rights reserved. Infected (C) 2005 Planet Moon Studios. All rights reserved. Strawberry Shortcake(TM) (c) 2004 Those Characters From Cleveland, Inc. All trademarks are properties of their respective owners. Tables To Follow
Table 1
MAJESCO ENTERTAINMENT COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share amounts)
Three Months Ended Six Months Ended
April 30 April 30
-------------------------------------------------
2005 2004 2005 2004
------------ ---------- ----------- ----------
(unaudited)
Net revenues $ 19,855 $ 17,049 $ 50,574 $ 41,668
Cost of sales
Product costs 8,633 10,021 25,357 25,212
Software development
costs and license
fees 2,808 1,592 5,838 3,524
----------- ---------- ----------- ----------
11,441 11,613 31,195 28,736
Gross profit 8,414 5,436 19,379 12,932
Operating expenses
Research and development 982 689 1,796 1,263
Selling and marketing 3,839 2,239 9,115 5,037
General and
administrative 2,017 1,280 4,170 2,965
Non-cash compensation 465 - 930 -
Depreciation and
amortization 290 97 577 187
----------- ---------- ----------- ----------
7,593 4,305 16,588 9,452
Operating income 821 1,131 2,791 3,480
Other costs and
expenses
Interest expense and
financing costs 527 667 1,261 1,302
(Gain) loss on foreign
exchange contract (21) (233) 48 82
Merger costs - - - 342
Change in fair value
of warrants (1) - 49,205 - 49,205
----------- ---------- ----------- ----------
Income (loss) before
income taxes 315 (48,508) 1,482 (47,451)
Provision for
income taxes 126 489 593 489
----------- ---------- ----------- ----------
Net income (loss) 189 (48,997) 889 (47,940)
Fair value charge for
warrants exercised at
a discount - - 1,100 -
Deemed dividend to
preferred
stockholders (2) - 759 759
Preferred stock
dividend - 339 339
----------- ---------- ----------- ----------
Net income (loss)
attributable to
common stockholders $ 189 $ (50,095) $ (211) $ (49,038)
=========== ========== =========== ==========
Net income (loss) attributable
to common stockholders per
share
Basic $ 0.01 $ (8.35) $ (0.01) $ (9.59)
----------- ---------- ----------- ----------
Diluted $ 0.01 $ (8.35) $ (0.01) $ (9.59)
----------- ---------- ----------- ----------
Weighted average
shares outstanding
Basic 22,146,616 5,995,961 19,111,443 5,112,129
----------- ---------- ----------- ----------
Diluted 22,957,439 5,995,961 19,111,443 5,112,129
----------- ---------- ----------- ----------
Notes:
(1) In accordance with Emerging Issues Task Force Issue 00-19,
referred to as EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed To, and Potentially Settled in, a Company's Own
Stock," we initially accounted for the fair value of $21 million for
the warrants issued in connection with our February 2004 private
placement as a liability since we would have incurred substantial
penalties if we had not compiled on a timely basis with the
warrantholders' registration rights. We subsequently recorded changes
in the fair value of the warrants as non-cash charges or gains on a
quarterly basis through Oct. 29, 2004, the effective date of the
resale registration statement. The fair value of the warrants was
calculated utilizing the Black-Scholes option-pricing model. As a
result of the changes in the market value of our common stock from the
closing date through April 30, 2005, we recorded a non-cash charge of
$49.2 million to reflect the associated change in fair value of the
warrants during this period.
(2) The Company recorded a deemed dividend of $759,000 in the
quarter ended April 30, 2004, relating to the beneficial conversion
feature attributable to then outstanding 7% preferred stock, after
taking into account the value of the warrants issued. The deemed
dividend increases the loss applicable to common stockholders in the
calculation of basic and diluted net loss per common share.
Table 2
MAJESCO ENTERTAINMENT COMPANY
CONSOLIDATED BALANCE SHEET
(in thousands, except share amounts)
April 30, Oct. 31,
2005 2004
----------- --------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $16,038 $4,170
Due from factor 23,402 9,491
Inventory 13,311 12,755
Capitalized software development costs and
prepaid license fees - current
portion 21,637 10,574
Prepaid expenses 6,353 831
----------- --------
Total current assets 80,741 37,821
Property and equipment - net 834 798
Capitalized software development costs and
prepaid license fees 12,507 4,952
Other assets 691 381
----------- --------
Total assets $94,773 $43,952
=========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $15,319 $19,985
Inventory financing payable 3,107 6,750
Advances from customers 198 2,171
----------- --------
Total current liabilities 18,624 28,906
Dividend payable in common stock - 1,261
Commitments and contingencies
Stockholders' equity:
Common stock - $.001 par value; 250,000,000 shares
authorized; 22,226,230 and 15,403,704 issued and
outstanding at April 30, 2005 and October 31, 2004,
respectively 22 15
Additional paid in capital 91,758 29,194
Accumulated deficit (15,599) (15,388)
Accumulated other comprehensive loss (32) (36)
----------- --------
Total stockholders' equity 76,149 13,785
----------- --------
Total liabilities and stockholders'
equity $94,773 $43,952
=========== ========
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