Delaware | 000-51128 | 06-1529524 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
Item 2.02 Results of Operations and Financial Condition | ||||||||
Item 9.01 Financial Statements and Exhibits | ||||||||
Index to Exhibits | ||||||||
EX-99.1 |
Exhibit No. | Description | |
99.1 | Press Release dated June 13, 2011. |
MAJESCO ENTERTAINMENT COMPANY |
||||
Dated: June 13, 2011 |
/s/ Jesse Sutton | |||
Jesse Sutton | ||||
Chief Executive Officer | ||||
| Second quarter 2011 net revenues were $32.1 million, an increase of $21.2 million, or 195 percent, compared to the same quarter last year. Growth was driven by the continued success of Zumba® Fitness, which has now sold over 2 million copies worldwide. | ||
| Gross margin for the second quarter 2011 was 42.5 percent, compared to 28.5 percent in 2010. The expansion in gross margin was driven by the higher price points of Zumba® Fitness, compared with the Companys Wii and DS titles a year ago. | ||
| At the end of the quarter ending April 30, 2011 the Company had $18.5 million in cash and cash equivalents, compared with $8.0 million at October 31, 2010. | ||
| Zumba® Fitness has quickly become one of the Companys best-selling titles, and continues to see strong sales even 7 months after launch. During the quarter, Zumba® Fitness for Wii was introduced in Europe by Majescos licensing partner and got off to a great start as a #1 seller in the UK, consistently appearing in the top 5 bestsellers, according to Chart-Track. | ||
| Following on the heels of mega hit Zumba® Fitness, Majesco revealed plans to release Zumba® Fitness 2, the sequel to the best-selling dance-fitness video game. Developed by Zoe Mode, Zumba® Fitness 2 will launch on Wii with a vast array of new features and improvements this holiday season and on another to-be-announced platform in early 2012. | ||
| On June 6, 2011, Majesco announced that it had made several key acquisitions from Quick Hit, a developer and operator of the online free-to-play NFL licensed QUICKHIT NFL Football game, which utilizes a virtual goods model. Majesco acquired certain key operating assets as well as the Quick Hit development team to accelerate its push into the social games business. The team has the proven ability to build, deploy and monetize online games through micro-transactions and will bring this experience to Majescos expanding online business. | ||
| Underlining its focus on bringing branded entertainment experiences to market, Majesco announced a major partnership with the National Basketball Association (NBA) to develop an innovative motion-based game unlike any traditional sports video game. Details of the spring 2012 title will be announced soon. |
Console/Handheld Titles: |
| Cake Mania Main Street for the Nintendo DS brings the mania back to Bakersfield as Jill and her friends franticly work to revitalize Main Street and save their hometown. The Cake Mania series is among the most successful casual franchises of all time with more than 200 million PC downloads and more than 700,000 units sold in the handheld market worldwide. |
Digital titles |
| Greg Hastings Paintball 2 for PlayStation®Network is the most realistic paintball experience to date from the #1 name in the sport. The game introduces more than 10 single and multiplayer game modes, each staged in all-new paintball locations based on 62 actual fields around the world. Featuring three new event branchesTournament Speedball, Recball, and Tournament Woodsballplayers can build and develop their team of professional ballers to conquer the field. Support for the PlayStation®Move motion controller ensures precise targeting in online battles with up to 14 friends. | ||
| BloodRayne: Betrayal for Xbox LIVE® Arcade and PlayStation®Network recently won a Best of E3 2011 award from Electric Playground. Based on the best-selling vampire game franchise, BloodRayne: Betrayal stars the beautiful yet lethal dhampir anti-heroine as she fights and feeds in a bloody new hack n slash adventure. Developed by WayForward, the award-winning team known for bringing franchise favorites back to audiences in exciting new ways, BloodRayne: Betrayal delivers stylish 2D side-scrolling action with a deadly dose of bloodshed. Players become Rayne, the sexy and dangerous dhampir born from the union of vampire and human, blessed with extraordinary strength, speed and agility, but cursed with a thirst for blood and weakness to sunlight. BloodRayne: Betrayal stays true to the fan-favorite vampire game franchise while incorporating challenging new enemies and surprises specifically designed for mature audiences. | ||
| Parking Wars 2 for Facebook is based on the hit real-life television series Parking Wars, now in its fourth season on A&E. The game picks up where the 2008 Facebook game of the same name left off, as players ticket those cars left at expired meters while avoiding getting parking tickets from their friends. This freemium game supported by micro-transactions lets players monitor and maintain their own street, keeping track of those parking on it while developing new properties to attract patrons and generate income. |
Console/Handheld Titles: |
| Hulk Hogans Main Event is the first motion-based wrestling game on Kinect for Xbox 360 that lets players train with mentor Hulk Hogan as they build their own wrestling personalities and learn the art of showmanship to win over the crowd. In Hulk Hogans Main Event, players will learn the ropes from wrestling icon Hulk Hogan as he schools them on delivering the best show for the crowd by emulating famous Hulk poses and performing more than 50 punishing combos and over-the-top stunts. The Kinect sensor tracks players every move; the more dynamic the motion, the more high impact the wrestlers performance. | ||
| Take Shape for Kinect for Xbox 360 lets players turn game night into a hilarious interactive party! Selected as a Favorite of E3 2011 from FamilyFriendlyVideoGames.com, Take Shape challenges players to twist, stretch and shrink their body into hundreds of different shapes, animals and symbols. Shape yourself solo to beat the fastest time or team up in multiplayer mode to unite your on-screen silhouettes in fun new ways. Fit through forms, bend into shapes and animals, match a mirrored image... even clear stacked shapes lightning fast in this fun-for-all-ages experience. Be flexible; be quick; be the life of the house party in Take Shape! | ||
| Mind n Motion for Kinect for Xbox 360 requires players to think fast and stay coordinated! This fun, family-friendly experience puts your motor skills to the test with activities that keep your entire body moving as fast as your mind can trigger your next move. From juggling to dodging shapes to jumping hopscotch, Mind n Motion packs in ten levels per activity and mixes it up throughout with additional gameplay elements like inverse controls, faster pace and new tricks to make you think quick on your feet! | ||
| Camping Mama: Outdoor Adventures for Nintendo DS was chosen as a Favorite of E3 2011 by FamilyFriendlyVideoGames.com, and is the latest brand extension of the Mama franchise which has sold more than 8.5 million units in North America. Both girls and boys can enjoy fun outdoor activities like rock climbing, spelunking, rowing and tree climbing as they navigate 38 different levels that span forests, mountains and seas. Would-be campers can choose to play as either the son or daughter with Mama or Papa providing guidance depending on the challenge. With customization options and collectible play, Camping Mama lets everyone go wild in the great outdoors! | ||
| Cooking Mama 4: Kitchen Magic for Nintendo 3DS lets players cook in brand new ways with the Nintendo 3DS gyroscope: crack eggs, flip pans, balance plates and much more by moving the 3DS itself. The game also features brand new kitchen activities like setting the table, washing dishes, organizing and more as surprising 3D events unfold during meal preparation. With |
| Pet Zombies for Nintendo 3DS lets players reanimate their very own zombies with a range of customizations and then care for (or torment!) their pets as they play with them in creepy 3D environments. | ||
| The Hidden for Nintendo 3DS is an augmented reality ghost hunting adventure that turns your handheld into a portal to the astral plane. Players will become paranormal investigators as they hunt through real-world environments with the Nintendo 3DS camera, searching, capturing and destroying supernatural entities hidden within their own surroundings. In addition, this location-based adventure lets players reveal the full game storyline by bringing their Nintendo 3DS with them as they travel in the real world, finding hidden spirits in new locations. | ||
| Face Racers: Photo Finish for Nintendo 3DS literally puts YOU in the drivers seat of an arcade style kart racer; players take photos of their face with their Nintendo 3DS camera and use them as avatars for their custom 3D racers, billboards and power-ups. |
| Zumba® Fitness 2 for Wii is making an encore appearance this November! Featuring more than 30 hot new music tracks, electrifying choreography, a huge variety of new dance styles and brand new arenas, Zumba® Fitness 2 invites players to dance their way into shape with a fun and proven dance-fitness program that brings the party into their living rooms. | ||
| Jaws: Ultimate Predator for Nintendo 3DS and Wii puts you in control of Natures deadliest predatorthe great white shark. Thirty-five years after the events of the iconic movie, JAWS: Ultimate Predator is an action-packed experience that lets players relive scenarios in environments straight from the classic film. | ||
| Nano Assault for Nintendo 3DS is a fast-paced shooter that leaps off the screen with stunning 3D graphics that resemble electron microscope imagery. Its within this dangerous microscopic world that players will navigate a Nanite ship through a cellular system, maneuvering through alien cell clusters, fighting off infections, and analyzing and destroying the virus core to ultimately save humanity. |
Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |||
Babysitting Mama
Wii, $49.99
|
Monster Tale DS, $29.99 | Cake Mania Main Street DS, $19.99 | Hulk Hogans Main Event; Kinect | |||
Zumba® Fitness for
Kinect, Wii and
Move, $49.99
Kinect, $39.99 Wii
and Move
|
Zumba® Fitness, Wii, Move (Europe) |
Greg Hastings Paintball 2 PSN, $19.99 | Take Shape, Kinect | |||
Zumba® Fitness for Kinect (Europe) |
Left Brain Right Brain iPhone, $0.99 | Parking Wars 2, Facebook; freemium | Mind n Motion, Kinect | |||
Cooking Mama
Friends Café
|
BloodRayne: | Cooking Mama 4: | ||||
Facebook; freemium
|
Betrayal, XBLA, PSN | Kitchen Magic, 3DS | ||||
Camping Mama Outdoor Adventures, DS |
||||||
The Hidden, 3DS | ||||||
Face Racers: Photo Finish 3DS |
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Pet Zombies 3DS |
| Expenses related to non-cash compensation | ||
| Net proceeds from sale of certain state income tax net operating loss carryforwards | ||
| Change in fair value of warrants | ||
| Severance costs for workforce reduction |
Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||||||||||||||||||
2011 | % | 2010 | % | 2011 | % | 2010 | % | |||||||||||||||||||||||||
Nintendo Wii |
$ | 17,242 | 54 | % | $ | 2,678 | 25 | % | $ | 43,141 | 54 | % | $ | 10,651 | 27 | % | ||||||||||||||||
Microsoft Xbox 360 |
6,779 | 21 | % | 1 | | % | 17,563 | 22 | % | 177 | | % | ||||||||||||||||||||
Nintendo DS |
3,343 | 10 | % | 8,002 | 73 | % | 12,361 | 15 | % | 28,257 | 70 | % | ||||||||||||||||||||
Sony Playstation 3 |
1,158 | 4 | % | | | % | 3,490 | 4 | % | | | % | ||||||||||||||||||||
Other |
3,620 | 11 | % | 225 | 2 | % | 4,053 | 5 | % | 1,027 | 3 | % | ||||||||||||||||||||
TOTAL |
$ | 32,142 | 100 | % | $ | 10,906 | 100 | % | $ | 80,608 | 100 | % | $ | 40,112 | 100 | % | ||||||||||||||||
April 30, | October 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 18,478 | $ | 8,004 | ||||
Due from factor |
6,357 | 1,015 | ||||||
Accounts and other receivables, net |
1,219 | 725 | ||||||
Inventory, net |
7,626 | 8,418 | ||||||
Advance payments for inventory |
203 | 5,454 | ||||||
Capitalized software development costs and license fees |
5,557 | 4,903 | ||||||
Prepaid expenses |
698 | 921 | ||||||
Total current assets |
40,138 | 29,440 | ||||||
Property and equipment, net |
906 | 520 | ||||||
Other assets |
88 | 69 | ||||||
Total assets |
$ | 41,132 | $ | 30,029 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 13,863 | $ | 11,375 | ||||
Inventory financing payables |
| 5,557 | ||||||
Advances from customers and deferred revenue |
560 | 945 | ||||||
Total current liabilities |
14,423 | 17,877 | ||||||
Warrant liability |
2,551 | 144 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common stock $.001 par value; 250,000,000 shares
authorized; 40,588,964 and 39,326,376 shares issued
and outstanding at April 30, 2011 and October 31,
2010, respectively |
40 | 39 | ||||||
Additional paid-in capital |
118,138 | 114,824 | ||||||
Accumulated deficit |
(93,496 | ) | (102,333 | ) | ||||
Accumulated other comprehensive loss |
(524 | ) | (522 | ) | ||||
Net stockholders equity |
24,158 | 12,008 | ||||||
Total liabilities and stockholders equity |
$ | 41,132 | $ | 30,029 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
April 30 | April 30 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenues |
$ | 32,142 | $ | 10,906 | $ | 80,608 | $ | 40,112 | ||||||||
Cost of sales |
||||||||||||||||
Product costs |
13,280 | 5,447 | 34,104 | 17,175 | ||||||||||||
Software development costs and license fees |
5,210 | 2,232 | 13,222 | 10,099 | ||||||||||||
Loss on impairment of software development
costs and license fees future releases |
| 116 | | 1,021 | ||||||||||||
18,490 | 7,795 | 47,326 | 28,295 | |||||||||||||
Gross profit |
13,652 | 3,111 | 33,282 | 11,817 | ||||||||||||
Operating costs and expenses |
||||||||||||||||
Product research and development |
1,973 | 707 | 3,203 | 1,641 | ||||||||||||
Selling and marketing |
2,630 | 1,527 | 9,639 | 4,584 | ||||||||||||
General and administrative |
2,321 | 2,266 | 5,603 | 4,390 | ||||||||||||
Loss on impairment of software development
costs and license fees cancelled games |
1,337 | 160 | 1,362 | 160 | ||||||||||||
Depreciation and amortization |
57 | 44 | 102 | 97 | ||||||||||||
8,318 | 4,704 | 19,909 | 10,872 | |||||||||||||
Operating income (loss) |
5,334 | (1,593 | ) | 13,373 | 945 | |||||||||||
Other expenses (income) |
||||||||||||||||
Interest and financing costs, net |
245 | 125 | 955 | 621 | ||||||||||||
Change in fair value of warrant liability |
2,928 | (27 | ) | 3,344 | (229 | ) | ||||||||||
Income (loss) before income taxes |
2,161 | (1,691 | ) | 9,074 | 553 | |||||||||||
Income taxes |
86 | (84 | ) | 237 | (1,647 | ) | ||||||||||
Net income (loss) |
$ | 2,075 | $ | (1,607 | ) | $ | 8,837 | $ | 2,200 | |||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 0.05 | $ | (0.04 | ) | $ | 0.23 | $ | 0.06 | |||||||
Diluted |
$ | 0.05 | $ | (0.04 | ) | $ | 0.22 | $ | 0.06 | |||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
38,051,035 | 36,874,270 | 37,841,453 | 36,789,337 | ||||||||||||
Diluted |
40,426,306 | 36,874,270 | 39,322,894 | 36,793,821 | ||||||||||||
Six Months Ended | ||||||||
April 30, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income |
$ | 8,837 | $ | 2,200 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
102 | 97 | ||||||
Change in fair value of warrant liability |
3,344 | (229 | ) | |||||
Non-cash compensation expense |
627 | 911 | ||||||
Loss on disposal of assets |
| 19 | ||||||
Provision for price protection and customer allowances |
2,202 | 2,331 | ||||||
Amortization of software development costs and license fees |
3,220 | 2,839 | ||||||
Loss on impairment of software development costs and license fees |
1,362 | 1,181 | ||||||
Provisions for excess inventory |
848 | 16 | ||||||
Changes in operating assets and liabilities: |
||||||||
Due from factor |
(6,833 | ) | (2,314 | ) | ||||
Accounts and other receivables |
(1,205 | ) | 157 | |||||
Inventory |
(55 | ) | 1,974 | |||||
Capitalized software development costs and license fees |
(5,178 | ) | (3,895 | ) | ||||
Advance payments for inventory |
5,251 | 1,936 | ||||||
Prepaid expenses and other assets |
203 | 39 | ||||||
Accounts payable and accrued expenses |
2,326 | (1,943 | ) | |||||
Advances from customers and other liabilities |
(385 | ) | (680 | ) | ||||
Net cash provided by operating activities |
14,666 | 4,639 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Purchases of property and equipment |
(325 | ) | (104 | ) | ||||
Net cash used in investing activities |
(325 | ) | (104 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Inventory financing |
(5,557 | ) | (4,844 | ) | ||||
Proceeds from exercise of warrants |
1,691 | | ||||||
Net cash used in financing activities |
(3,866 | ) | (4,844 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
(1 | ) | (27 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
10,474 | (336 | ) | |||||
Cash and cash equivalents beginning of period |
8,004 | 11,839 | ||||||
Cash and cash equivalents end of period |
$ | 18,478 | $ | 11,503 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
April 30, | April 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
GAAP operating income (loss) |
$ | 5,334 | $ | (1,593 | ) | $ | 13,373 | $ | 945 | |||||||
Non-cash compensation (1) |
352 | 389 | 627 | 933 | ||||||||||||
Severance (2) |
| | | 403 | ||||||||||||
Non-GAAP operating income |
$ | 5,686 | $ | (1,204 | ) | $ | 14,000 | $ | 2,281 | |||||||
GAAP net income (loss) |
$ | 2,075 | $ | (1,607 | ) | $ | 8,837 | $ | 2,200 | |||||||
Non-cash compensation (1) |
352 | 389 | 627 | 933 | ||||||||||||
Severance (2) |
| | | 403 | ||||||||||||
Change in fair value of warrants (3) |
2,928 | (27 | ) | 3,344 | (229 | ) | ||||||||||
Sale of NJ state operating loss carryforwards (4) |
| | | (1,656 | ) | |||||||||||
Non-GAAP net income |
$ | 5,355 | $ | (1,245 | ) | $ | 12,808 | $ | 1,651 | |||||||
GAAP net income (loss) per diluted share |
$ | 0.05 | $ | (0.04 | ) | $ | 0.22 | $ | 0.06 | |||||||
Non-cash compensation (1) |
0.01 | 0.01 | 0.02 | 0.03 | ||||||||||||
Severance (2) |
| | | 0.01 | ||||||||||||
Change in fair value of warrants (3) |
0.07 | | 0.09 | (0.01 | ) | |||||||||||
Sale of NJ state operating loss carryforwards (4) |
| | | (0.05 | ) | |||||||||||
Non-GAAP net income per diluted share |
$ | 0.13 | $ | (0.03 | ) | $ | 0.33 | $ | 0.04 | |||||||
Shares used in GAAP and Non-GAAP per diluted share
amounts |
40,426,306 | 36,874,270 | 39,322,894 | 36,793,821 | ||||||||||||
(1) | 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. | |
(2) | 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. | |
(3) | 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. | |
(4) | In December 2009, we received proceeds of approximately $1.6 million from the sale of the rights to approximately $21.2 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. Net proceeds were recorded as an income tax benefit during the six months ended April 30, 2010. |