MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY UNAUDITED SUPPLEMENTARY PRODUCT DATA NET SALES BY PLATFORM FOR THREE AND TWELVE MONTHS (Unaudited, in thousands) Three Months Ended Twelve Months Ended October 31, October 31, ------------------------ -------------------------- 2012 % 2011 % 2012 % 2011 % ------- --- ------- --- -------- --- -------- ---Nintendo Wii $13,867 52% $13,415 53% $ 79,014 60% $ 73,209 59%Microsoft Xbox 360 8,383 32% 2,901 12% 34,874 26% 23,235 18%Nintendo DS 3,601 14% 7,569 30% 13,743 10% 22,179 18%Nintendo 3DS 284 1% - -% 1,736 1% - -%Sony Playstation 3 76 0% 232 1% 885 1% 4,670 3%Other 351 1% 1,021 4% 2,035 2% 1,998 2% ------- --- ------- --- -------- --- -------- ---TOTAL $26,562 100% $25,138 100% $132,287 100% $125,291 100% ======= === ======= === ======== === ======== === MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) October 31, October 31, 2012 2011 ------------ ------------ (unaudited)ASSETSCurrent assets: Cash and cash equivalents $ 18,038 $ 13,689 Due from factor, net 12,501 937 Accounts and other receivables 3,936 3,143 Inventory 7,762 11,605 Advance payments for inventory 257 5,975 Capitalized software development costs and license fees 3,489 12,564 Prepaid expenses and other current assets 1,724 3,071 ------------ ------------ Total current assets 47,707 50,984Property and equipment, net 1,003 1,184Other assets 588 209 ------------ ------------ Total assets $ 49,298 $ 52,377 ============ ============LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable and accrued expenses $ 15,490 $ 20,313 Inventory financing payables - 1,238 Advances from customers and deferred revenue 4,454 5,642 Warrant liability - current 17 - ------------ ------------ Total current liabilities 19,961 27,193Warrant liability - noncurrent - 1,949Commitments and contingenciesStockholders' equity: Common stock -- $.001 par value; 250,000,000 shares authorized; 41,862,321 and 41,307,349 shares issued and outstanding at October 31, 2012 and October 31, 2011, respectively 42 41 Additional paid-in capital 120,755 119,222 Accumulated deficit (90,888) (95,501) Accumulated other comprehensive loss (572) (527) ------------ ------------ Net stockholders' equity 29,337 23,235 ------------ ------------ Total liabilities and stockholders' equity $ 49,298 $ 52,377 ============ ============ MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share data) Three Months Ended Year Ended October 31, October 31, ------------------------ ------------------------ 2012 2011 2012 2011 ----------- ----------- ----------- -----------Net revenues $ 26,562 $ 25,138 $ 132,287 $ 125,291 ----------- ----------- ----------- -----------Cost of sales Product costs 11,155 12,258 46,718 54,939 Software development costs and license fees 10,593 5,914 42,054 22,151 Loss on impairment of software development costs and license fees - future releases - 2,726 - 2,726 ----------- ----------- ----------- ----------- 21,748 20,898 88,772 79,816 ----------- ----------- ----------- -----------Gross profit 4,814 4,240 43,515 45,475 ----------- ----------- ----------- -----------Operating costs and expenses Product research and development 1,894 1,773 7,784 6,992 Selling and marketing 3,801 2,676 20,157 14,707 General and administrative 1,989 2,567 10,077 10,506 Depreciation and amortization 118 175 566 398 Loss on impairment of software development costs and license fees - cancelled games - - 1,219 1,512 ----------- ----------- ----------- ----------- 7,802 7,191 39,803 34,115 ----------- ----------- ----------- -----------Operating income (loss) (2,988) (2,951) 3,712 11,360Other expenses (income) Interest and financing costs, net 193 177 958 1,255 Change in fair value of warrant liability (346) 761 (1,932) 2,847 ----------- ----------- ----------- -----------Income (loss) before income taxes (2,835) (3,889) 4,686 7,258 Income taxes (106) 5 73 426 ----------- ----------- ----------- -----------Net income (loss) $ (2,729) $ (3,894) $ 4,613 $ 6,832 =========== =========== =========== ===========Net income (loss) per share: Basic $ (0.07) $ (0.10) $ 0.12 $ 0.18 =========== =========== =========== =========== Diluted $ (0.07) $ (0.10) $ 0.11 $ 0.17 =========== =========== =========== ===========Weighted average shares outstanding: Basic 40,440,609 39,601,781 39,973,248 38,527,589 =========== =========== =========== =========== Diluted 40,440,609 39,601,781 40,823,197 40,123,968 =========== =========== =========== =========== MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended October 31 -------------------------- 2012 2011 ------------ ------------CASH FLOWS FROM OPERATING ACTIVITIESNet income $ 4,613 $ 6,832Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 565 398 Change in fair value of warrant liability (1,932) 2,847 Non-cash compensation expense 1,686 1,468 Loss on disposal of assets - - Provision for price protection and customer allowances 4,324 3,928 Amortization of capitalized software development costs and license fees 17,363 6,204 Loss on impairment of software development costs and license fees 1,219 4,238 Impairment of Goodwill 54 - Provision for excess inventory 1,515 1,794 Changes in operating assets and liabilities, net of acquisition: Due from factor (15,888) (2,997) Accounts and other receivables, net (830) (3,223) Inventory 2,328 (4,981) Capitalized software development costs and license fees (9,441) (18,064) Advance payments for inventory 5,678 (521) Prepaid expenses and other assets 845 (1,918) Accounts payable and accrued expenses (4,868) 8,752 Customer billings due to distribution partner - - Advances from customers and deferred revenue (1,139) 4,660 ------------ ------------ Net cash provided by operating activities 6,092 9,417 ------------ ------------CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property and equipment (338) (465)Purchase of assets of Quick Hit, Inc., net of acquired cash - (779) ------------ ------------ Net cash used in investing activities (338) (1,244) ------------ ------------CASH FLOWS FROM FINANCING ACTIVITIESProceeds from exercise of options and warrants 9 1,830Income tax withholding from exercise of options and warrants (161) -Inventory financing (1,238) (4,319) ------------ ------------ Net cash used in financing activities (1,390) (2,489) ------------ ------------Effect of exchange rates on cash and cash equivalents (15) 1 ------------ ------------Net increase in cash and cash equivalents 4,349 5,685Cash and cash equivalents -- beginning of year 13,689 8,004 ------------ ------------Cash and cash equivalents -- end of year $ 18,038 $ 13,689 ============ ============SUPPLEMENTAL CASH FLOW INFORMATIONCash paid during the year for interest and financing costs $ 870 $ 1,255 ============ ============Cash paid during the year for income taxes $ 591 $ 3 ============ ============SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIESLeased assets $ 46 $ 163 ============ ============Warrant liability reclassified to additional paid-in capital upon exercise $ - $ 1,042 ============ ============Issuance of warrants for license fees $ - $ 58 ============ ============ MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except share amounts) Three Months Ended Year Ended October 31, October 31, ------------------------ ------------------------ 2012 2011 2012 2011 ----------- ----------- ----------- -----------GAAP operating income (loss) $ (2,988) $ (2,951) $ 3,712 $ 11,360Non-cash compensation (1) 385 405 1,686 1,468 ----------- ----------- ----------- -----------Non-GAAP operating income (loss) $ (2,603) $ (2,546) $ 5,398 $ 12,828 =========== =========== =========== ===========GAAP net income (loss) $ (2,729) $ (3,894) $ 4,613 $ 6,832Non-cash compensation (1) 385 405 1,686 1,468Change in fair value of warrants (2) (346) 761 (1,932) 2,847 ----------- ----------- ----------- -----------Non-GAAP net income (loss) $ (2,690) $ (2,728) $ 4,367 $ 11,147 =========== =========== =========== ===========GAAP net income (loss) per diluted share $ (0.07) $ (0.10) $ 0.11 $ 0.17Non-cash compensation (1) 0.01 0.01 0.04 0.04Change in fair value of warrants (2) (0.01) 0.02 (0.05) 0.07 ----------- ----------- ----------- -----------Non-GAAP net income per diluted share $ (0.07) $ (0.07) $ 0.10 $ 0.28 =========== =========== =========== ===========Shares used in GAAP and Non-GAAP per diluted share amounts 40,440,609 39,601,781 40,823,197 40,123,968 =========== =========== =========== ===========
(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 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.
For additional information, please contact:
Company Contact:
Michael Vesey
Chief Financial Officer
732.476.1956
Investor Relations Contact:
Stephanie Prince/Jody Burfening
LHA
212.838.3777
sprince@lhai.com
