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 September 13, 2011. |
MAJESCO ENTERTAINMENT COMPANY |
||||
Dated: September 13, 2011 |
/s/ Jesse Sutton | |||
Jesse Sutton | ||||
Chief Executive Officer | ||||
| Third quarter 2011 net revenues were $19.5 million, an increase of $7.4 million, or 61 percent, compared to the same quarter last year. Growth was driven by the continued success of Zumba® Fitness, which has now sold over 3 million units worldwide. | ||
| Gross margin for the third quarter 2011 was 40.7 percent, compared to 22.9 percent in 2010. The expansion in gross margin was driven by the premium price points of Zumba® Fitness, compared with lower priced titles a year ago. | ||
| At the end of the quarter ending July 31, 2011, the Company had $19.7 million in cash and cash equivalents, compared with $8.0 million at October 31, 2010. | ||
| Zumba® Fitness has achieved yet another sales milestone, surpassing the 3 million unit threshold worldwide as it has risen to the top of the charts in Europe. Through late August, Zumba® Fitness for Wii held the #1 spot in the UK all formats sales charts for 10 consecutive weeks, according to Chart-Track. Zumba® Fitness for Wii is distributed in Europe by a licensing partner of Majesco. The game is also the #1 Wii fitness game of 2011 in the United States based on NPD data. | ||
| In August, the Nielsen Video Game Tracking survey polled gamers and found Zumba® Fitness to be one of the industrys Top 10 Games to Buy Next, showing the continued demand that exists for this best-selling product. | ||
| The Company teamed up with industry-leading toy creator Hasbro to bring the classic board game Twister® to Kinect this November with Twister® Mania. | ||
| Based on the hit A&E series, Parking Wars 2 for Facebook® launched and adds to Majescos growing social game portfolio. | ||
| Majesco announced in June that it was selected to join the Russell Microcap® Index as part of its annual reconstitution of U.S. indexes. The Russell Microcap® Index measures the performance of the microcap segment of the U.S. equity market. It includes 1000 of the smallest securities in the small-cap Russell 2000® Index based on a combination of their market cap and current index membership and it includes the next 1,000 securities. |
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. | ||
| Motion Explosion! on Kinect for Xbox 360 lets you fire up the fun and get your body moving. Challenge your reflexes, timing, and coordination by using your entire body to dodge, jump, kick, juggle and balance. Dont hold back in this explosively entertaining family-friendly game for 4 players that throws it all at you and makes you think fast 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! | ||
| 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. | ||
| Sudoku Premier Edition for Nintendo 3DS features more than 1,000 number puzzles and 4 player support so you can compete against friends. Give your mind a work out with 8 different types of puzzle play packed into one fantastic collection! | ||
Digital titles | |||
| BloodRayne: Betrayal for PlayStation®Network and Xbox LIVE® Arcade was selected as one of four titles to be promoted worldwide as part of Sonys global PLAY promotion, its first ever global launch program for digital titles. Additionally, it has received rave reviews from some of the top gaming publications, receiving a 9/10 by IGN and a 4.5 from Joystiq, and 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. 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 A&E series and lets players build an impressive fleet of vehicles and then park them illegally across the world. Players can purchase almost every kind of imaginable vehicle (from motorcycles to monster trucks) and building storefronts (from taco stands to banks), but ticketing is the real fun. The longer players keep cars parked on their friends streets legally or illegally the more money theyll earn, but be careful. The parking signs change frequently and your friends are waiting to steal your cash with another parking violation! |
| Zumba® Fitness 2 for Wii is making an encore appearance this November! The sequel to the #1 Wii fitness game of 2011, Zumba® Fitness 2 features 32 all new electrifying routines and contagious music tracks, including hot music from Pitbull and Nicole Scherzinger. With 20 different dance styles, a calorie tracker and custom workout feature, players can party their way into shape with a proven fitness program that lets up to 4 players dance together. |
| Twister Mania! on Kinect for Xbox 360 combines the colorful, expressive and cooperative gameplay of the original Twister® board game and updates it for the digital generation. Twist into fun with friends and family in this light-hearted, fast-paced game that supports up to eight players with deep gameplay across three game modes with 16 variations and over 1800 shapes to play! This outrageous party game provides over-the-top hilarity so dont hold back as you duck, squeeze, contort and move your body |
to match your opponents silhouette, knock down blocks against the clock and fill in thousands of crazy shapes of all sizes and themes! | |||
| Alvin and the Chipmunks: Chipwrecked on Kinect for Xbox 360, Wii and Nintendo DS is based upon the third installment of the blockbuster animated feature film franchise. The video game lets you sing and dance along with the films stars Alvin, Simon, Theodore and The Chipettes (Brittany, Eleanor and Jeanette), in an immersive motion-based experience. The KinectTM for Xbox 360® version tracks full body dance moves as players control their Chipmunk on stage, and plays back their Alvin-ized voice as they sing along. | ||
| 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 60 recipes including new additions like designer cupcakes and cherry pie, the iconic kitchen cutie has some tricks up her sleeve that will magically transform kitchen newbies into master culinary artists! . | ||
| 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. | ||
| Jillian Michaels Fitness Adventure on Kinect for Xbox 360 lets you work out in a bold new way with the renowned health and wellness expert herself. Take your fitness routine beyond the basic workout and turn it into a real adventure through a mission-based, thrill-seeking journey set in a lush jungle temple environment. | ||
| Winter Stars on Kinect for Xbox 360, PlayStation®Move and Wii lets you gather your team and face the challenge with a motion-based, wintry sports collection that includes 11 exhilarating events. | ||
| 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 | BloodRayne: Betrayal, XBLA, PSN, $14.99, (9/6) | |||
Zumba® Fitness for Kinect, Wii and Move, $49.99 Kinect, $39.99 Wii and Move | Zumba® Fitness, Wii, Move (Europe) | Spy Kids: All the Time in the World, DS, $19.99 | Camping Mama Outdoor Adventures, DS, $29.99, (9/13) | |||
Zumba® Fitness for Kinect (Europe) | Left Brain Right Brain iPhone, $0.99 | Greg Hastings Paintball 2 PSN, $19.99 | Hulk Hogans Main Event; Kinect, $49.99 (10/11) | |||
Cooking Mama Friends Café Facebook; freemium | Parking Wars 2, Facebook; freemium | The Hidden, 3DS, $39.99 (10/11) | ||||
Pet Zombies, 3DS, $29.99 (10/18) | ||||||
Motion Explosion, Kinect, $39.99 (October) | ||||||
Face Racers: Photo Finish, 3DS, $29.99 (October) | ||||||
Sudoku Premier Edition, 3DS (October) |
| 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 July 31, | Nine Months Ended July 31, | |||||||||||||||||||||||||||||||
2011 | % | 2010 | % | 2011 | % | 2010 | % | |||||||||||||||||||||||||
Nintendo Wii |
$ | 14,036 | 72 | % | $ | 4,624 | 38 | % | $ | 59,794 | 60 | % | $ | 15,275 | 29 | % | ||||||||||||||||
Microsoft Xbox 360 |
2,306 | 12 | % | 218 | 2 | % | 20,334 | 20 | % | 395 | 1 | % | ||||||||||||||||||||
Nintendo DS |
2,249 | 11 | % | 7,139 | 59 | % | 14,610 | 15 | % | 35,396 | 68 | % | ||||||||||||||||||||
Sony Playstation 3 |
637 | 3 | % | | | % | 4,438 | 4 | % | | | % | ||||||||||||||||||||
Other |
317 | 2 | % | 172 | 1 | % | 978 | 1 | % | 1,199 | 2 | % | ||||||||||||||||||||
TOTAL |
$ | 19,545 | 100 | % | $ | 12,153 | 100 | % | $ | 100,154 | 100 | % | $ | 52,265 | 100 | % | ||||||||||||||||
July 31, | October 31, | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 19,674 | $ | 8,004 | ||||
Due from factor |
1,409 | 1,015 | ||||||
Accounts and other receivables, net |
2,788 | 725 | ||||||
Inventory, net |
4,607 | 8,418 | ||||||
Advance payments for inventory |
566 | 5,454 | ||||||
Capitalized software development costs and license fees |
9,417 | 4,903 | ||||||
Prepaid expenses and other current assets |
896 | 921 | ||||||
Total current assets |
39,357 | 29,440 | ||||||
Property and equipment, net |
1,289 | 520 | ||||||
Other assets |
232 | 69 | ||||||
Total assets |
$ | 40,878 | $ | 30,029 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 12,351 | $ | 11,375 | ||||
Inventory financing payables |
| 5,557 | ||||||
Advances from customers and deferred revenue |
622 | 945 | ||||||
Total current liabilities |
12,973 | 17,877 | ||||||
Warrant liability |
1,187 | 144 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Common stock $.001 par value; 250,000,000 shares
authorized; 40,952,586 and 39,326,376 shares issued
and outstanding at July 31, 2011 and October 31, 2010,
respectively |
41 | 39 | ||||||
Additional paid-in capital |
118,811 | 114,824 | ||||||
Accumulated deficit |
(91,607 | ) | (102,333 | ) | ||||
Accumulated other comprehensive loss |
(527 | ) | (522 | ) | ||||
Net stockholders equity |
26,718 | 12,008 | ||||||
Total liabilities and stockholders equity |
$ | 40,878 | $ | 30,029 | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31 | July 31 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net revenues |
$ | 19,545 | $ | 12,153 | $ | 100,154 | $ | 52,265 | ||||||||
Cost of sales |
||||||||||||||||
Product costs |
8,577 | 7,398 | 42,681 | 24,573 | ||||||||||||
Software development costs and license fees |
3,015 | 1,975 | 16,237 | 12,074 | ||||||||||||
Loss on impairment of software development
costs and license fees-future releases |
| | | 1,021 | ||||||||||||
11,592 | 9,373 | 58,918 | 37,668 | |||||||||||||
Gross profit |
7,953 | 2,780 | 41,236 | 14,597 | ||||||||||||
Operating costs and expenses |
||||||||||||||||
Product research and development |
1,947 | 720 | 5,150 | 2,361 | ||||||||||||
Selling and marketing |
2,313 | 1,641 | 11,952 | 6,225 | ||||||||||||
General and administrative |
2,484 | 2,004 | 8,089 | 6,394 | ||||||||||||
Loss on impairment of software development
costs and license fees cancelled games |
150 | 116 | 1,512 | 276 | ||||||||||||
Depreciation and amortization |
121 | 43 | 223 | 140 | ||||||||||||
7,015 | 4,524 | 26,926 | 15,396 | |||||||||||||
Operating income (loss) |
938 | (1,744 | ) | 14,310 | (799 | ) | ||||||||||
Other expenses (income) |
||||||||||||||||
Interest and financing costs, net |
123 | 82 | 1,077 | 703 | ||||||||||||
Change in fair value of warrant liability |
(1,258 | ) | (183 | ) | 2,085 | (412 | ) | |||||||||
Income (loss) before income taxes |
2,073 | (1,643 | ) | 11,148 | (1,090 | ) | ||||||||||
Income taxes |
184 | | 421 | (1,647 | ) | |||||||||||
Net income (loss) |
$ | 1,889 | $ | (1,643 | ) | $ | 10,727 | $ | 557 | |||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 0.05 | $ | (0.04 | ) | $ | 0.28 | $ | 0.02 | |||||||
Diluted |
$ | 0.05 | $ | (0.04 | ) | $ | 0.27 | $ | 0.01 | |||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
38,803,090 | 36,934,987 | 38,165,521 | 36,838,981 | ||||||||||||
Diluted |
41,318,806 | 36,934,987 | 39,827,022 | 37,142,649 | ||||||||||||
Nine Months Ended | ||||||||
July 31, | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income |
$ | 10,727 | $ | 557 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
223 | 140 | ||||||
Change in fair value of warrant liability |
2,085 | (412 | ) | |||||
Non-cash compensation expense |
1,064 | 1,324 | ||||||
Loss on disposal of assets |
| 19 | ||||||
Provision for price protection and customer allowances |
2,380 | 3,073 | ||||||
Amortization of software development costs and license fees |
3,467 | 3,629 | ||||||
Loss on impairment of software development costs and license fees |
1,512 | 1,297 | ||||||
Inventory write-downs |
1,612 | | ||||||
Changes in operating assets and liabilities, net of acquisition: |
||||||||
Due from factor |
(2,786 | ) | (940 | ) | ||||
Accounts and other receivables |
(1,987 | ) | 475 | |||||
Inventory |
2,199 | 2,672 | ||||||
Capitalized software development costs and license fees |
(9,420 | ) | (6,705 | ) | ||||
Advance payments for inventory |
4,888 | | ||||||
Prepaid expenses and other assets |
261 | 2,270 | ||||||
Accounts payable and accrued expenses |
753 | (2,115 | ) | |||||
Advances from customers and other liabilities |
(376 | ) | (676 | ) | ||||
Net cash provided by operating activities |
16,602 | 4,608 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Purchases of property and equipment |
(396 | ) | (192 | ) | ||||
Purchase of assets of Quick Hit, Inc., net of acquired cash |
(800 | ) | | |||||
Net cash used in investing activities |
(1,196 | ) | (192 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Inventory financing |
(5,557 | ) | (5,684 | ) | ||||
Proceeds from exercise of options and warrants |
1,824 | | ||||||
Net cash used in financing activities |
(3,733 | ) | (5,684 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
(3 | ) | (22 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
11,670 | (1,290 | ) | |||||
Cash and cash equivalents beginning of period |
8,004 | 11,839 | ||||||
Cash and cash equivalents end of period |
$ | 19,674 | $ | 10,549 | ||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES |
||||||||
Landlord-provided leasehold improvements |
$ | 163 | $ | | ||||
Warrant liability reclassified to additional paid-in capital upon exercise |
1,042 | | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION |
||||||||
Cash paid for interest |
$ | 1,078 | $ | 710 | ||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
July 31, | July 31, | ||||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||||
GAAP operating income (loss) |
$ | 938 | $ | (1,744 | ) | $ | 14,310 | $ | (799 | ) | |||||||||
Non-cash compensation (1) |
436 | 393 | 1,063 | 1,326 | |||||||||||||||
Severance (2) |
| | | 403 | |||||||||||||||
Non-GAAP operating income |
$ | 1,374 | $ | (1,351 | ) | $ | 15,373 | $ | 930 | ||||||||||
GAAP net income (loss) |
$ | 1,889 | $ | (1,643 | ) | $ | 10,727 | $ | 557 | ||||||||||
Non-cash compensation (1) |
436 | 393 | 1,063 | 1,326 | |||||||||||||||
Severance (2) |
| | | 403 | |||||||||||||||
Change in fair value of warrants (3) |
(1,258 | ) | (183 | ) | 2,085 | (412 | ) | ||||||||||||
Sale of NJ state operating loss carryforwards (4) |
| | | (1,656 | ) | ||||||||||||||
Non-GAAP net income |
$ | 1,067 | $ | (1,433 | ) | $ | 13,875 | $ | 218 | ||||||||||
GAAP net income (loss) per diluted share |
$ | 0.05 | $ | (0.04 | ) | $ | 0.27 | $ | 0.01 | ||||||||||
Non-cash compensation (1) |
0.01 | 0.01 | 0.03 | 0.04 | |||||||||||||||
Severance (2) |
| | | 0.01 | |||||||||||||||
Change in fair value of warrants (3) |
(0.03 | ) | (0.01 | ) | 0.05 | (0.01 | ) | ||||||||||||
Sale of NJ state operating loss carryforwards (4) |
| | | (0.04 | ) | ||||||||||||||
Non-GAAP net income per diluted share |
$ | 0.03 | $ | (0.04 | ) | $ | 0.35 | $ | 0.01 | ||||||||||
Shares used in GAAP and Non-GAAP per diluted
share amounts |
41,318,806 | 36,934,987 | 39,827,022 | 37,142,649 | |||||||||||||||
(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, then 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 nine months ended July 31, 2010. |