EDISON, N.J., June 14 /PRNewswire-FirstCall/ -- Majesco Entertainment Company (Nasdaq: COOL), an innovative provider of video games for the mass market, today reported financial results for the second quarter and six months ended April 30, 2010.

For the second quarter ended April 30, 2010, Majesco's net revenues decreased 47% percent to $10.9 million versus $20.5 million in the same period a year ago. During this same period, the Company reported an operating loss of $1.6 million, compared to an operating loss of $0.6 million in the second quarter of 2009. For the quarter, Non-GAAP operating loss was $1.2 million versus Non-GAAP operating income of $0.5 million in 2009. Net loss for the quarter was $1.6 million versus a net loss of $1.7 million in 2009. On a Non-GAAP basis, net loss for the quarter was $1.3 million compared to Non-GAAP net income of $0.3 million last year.

The Company's basic and diluted net loss per share for the quarter ended April 30, 2010 was $0.04 compared to net loss per share of $0.06 in the same period last year. For the same quarter, Non-GAAP basic and diluted net loss per share was $0.03 compared to net income per share of $0.01 last year.

For the six months ended April 30, 2010, the Company's net revenues decreased 25 percent to $40.1 million versus the year ago period. During the same period, the Company reported operating income of $0.9 million compared to operating income of $3.1 million in the same 2009 period. Non-GAAP operating income for the six month period was $2.3 million compared to $5.3 million for the comparable 2009 period. In the six months ended April 30, 2010 net income was $2.2 million compared to net income of $2.5 million for six months ended April 30, 2009. For the same period, Non-GAAP net income was $1.7 million this year compared to $4.5 million in 2009.

The Company's basic and diluted earnings per share for the six months ended April 30, 2010 was $0.06 while basic and diluted earnings per share were $0.09 for the corresponding period in 2009. The Company's Non-GAAP basic and diluted earnings per share for the six months ended April 30, 2010 was $0.04 compared to $0.16 in the corresponding 2009 period.

Jesse Sutton, Chief Executive Officer of Majesco, said, "Our Company's second quarter results were in line with our internal expectations. The revenue decline for the quarter was consistent with our full year guidance of $80 million. We were up against some difficult comparisons with last year when we launched Gardening Mama, and our first Jillian Michaels' title was selling very well. Our costs are under control and we continue to adjust our business model to meet industry challenges. We remain excited about our upcoming titles scheduled to release during the balance of the year. Our management team is striving for improved profitability and is totally committed to building long-term value for our shareholders."

Financial Highlights

• Total operating expenses declined to $4.7 million or 36% from same period 2009.
• At the end of the quarter and six months ending April 30, 2010 the Company had $11.5 million in cash and cash equivalents.
• Total current liabilities declined $7.5 million from $16.2 million on October 31, 2009 to $8.7 million as of April 30, 2010.

Announced Product Line-up

Third Quarter 2010 Ending July 31, 2010

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

• 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.
• 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.
• Serious Sam HD: The Second Encounter for Xbox LIVE Arcade continues the glorious high-definition chaos with a slick new graphic presentation, intense multiplayer action, and an onslaught of all-new levels, enemies and bosses from the golden age of first-person shooters.
• 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(TM) 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.
• Summer Camp Showdown for Wii is a motion-based adventure where players vie for the upper hand in sports and pranks to determine who rules the woods.
• 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.

Fiscal 2010

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

• Zumba Fitness® for Wii, PlayStation®Move and another to be announced system 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 seven and a half million Zumba-enthusiasts in more than 75 countries.
• Crafting Mama for Nintendo DS is the newest brand extension of the Cooking Mama franchise that has sold nearly seven million units. Using the stylus as a universal crafting tool, players 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 vases.
• Greg Hastings Paintball 2 for 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.
• 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.
• Swords for Wii pits players against some of the most formidable adversaries in history using the Wii Remote(TM) with Wii MotionPlus(TM) as their blade for accurate 1-to-1 motion based battles.
• 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.
• 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(TM).

Holiday 2010

• Babysitting Mama for Wii stars the iconic Mama from the best-selling Cooking Mama franchise and features an exciting new play mechanic. This innovative simulation game will be delivered to consumers with an adorable plush baby doll that the babysitter tucks the Wii Remote into in order to interact with the doll and game at the same time in 40 different activities.
• My Baby 3 & Friends for Nintendo DS is the third installment in the My Baby franchise that has sold nearly 2mm units worldwide. My Baby 3 lets players experience the joy of parenting as they feed, bathe, change and cuddle with their in game baby. What's more, the game also sparks new social development skills via interaction with another baby and puppy.

Fiscal 2010 Outlook

We are confirming our full year guidance for net revenue of approximately $80 million. Our profit guidance is for Non-GAAP EPS of approximately $0.05. The Company's guidance assumes the release of approximately 32 SKUs in 2010, including 12 DS and 14 Wii, 9 titles released in the third quarter and 13 titles released in the fourth quarter. We also expect that roughly 62% of our revenue will come from DS titles; 32% from Wii titles and 6% 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 1-800-860-2442. The access code for the call is "438599". 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 1-877-344-7529 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 April 30, 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 the sale of certain state income tax net operating loss carryforwards
• Change in fair value of warrants
• Settlement of certain litigation in 2009
• Costs of operating a development studio in California in 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 & 2011 RELEASE SCHEDULE

        2010 GAMES
        ----------

        Quarter 1         Quarter 2          Quarter 3          Quarter 4
                          ---------
      Alvin and the                                           Zumba Fitness
      Chipmunks: The                                          Wii, Move and
      Squeakquel Wii   Data East Arcade     Tetris Party       another TBA
     ($39.99) and DS     Classics Wii,     Deluxe Wii and     system, Price
         ($29.99)           $19.99           DS, $29.99            TBA
     ---------------  -----------------   ---------------    --------------
         My Hero:                           Attack of the
     Firefighter DS,    Let's Draw DS,    Movies 3-D Wii &   Ghostwire DSi,
          $19.99            $19.99           360, $29.99        Price TBA
    ----------------   ---------------   -----------------  ---------------
                                                              Greg Hastings
                                                               Paintball 2
                                                              Wii, Xbox 360
                       The Daring Game       Super Speed     and PS3; $49.99
     My Hero: Doctor     for Girls Wii      Machines DS,     (360 and PS3),
        DS, $19.99      and DS, $19.99         $19.99            $39.99 Wii
    ----------------  ----------------      ------------     ---------------
     Hot and Cold: A
     3D Hidden Object
         Adventure
       DSiWare, 800     Pizza Delivery   Pirates PlundArrr    Crafting Mama
          points       Boy Wii, $29.99       Wii, $29.99        DS, $29.99
    -----------------  ---------------   ------------------  --------------
      A Boy and His
     Blob: Trouble on
        Blobolonia,         Summer Camp     Flip's Twisted
     Virtual Console,      Showdown Wii,       World Wii,
      500 Wii Points          $19.99             $29.99
    -----------------                      --------------   ---------------
                                          Serious Sam HD:
       Hello Kitty                           The Second
        Party, DS,                        Encounter XBLA,    Dawn of Heroes
          $29.99                             1200 points        DS, $29.99
       -----------                       ----------------   ---------------
     Serious Sam HD:
         The First                                             My Baby 3 &
     Encounter XBLA,                      Dance Sensation!     Friends DS,
        1200 points                          Wii, $29.99          $29.99
                                         -----------------
                                                               Swords Wii,
                                                                  $29.99
                                                              ------------

        2011 GAMES
        ----------

        Quarter 1
    Babysitting Mama
        Wii, $39.99
    ----------------




    Monster Tale DS,
         Price TBA
    ----------------

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

                    MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
                            UNAUDITED SUPPLEMENTARY DATA
                               NET SALES BY PLATFORM

                      Three Months Ended               Six Months Ended
                            April 30,                      April 30,
                            ---------                      ---------
                   2010     %       2009    %      2010    %     2009      %
                   ----    ---      ----   ---     ----   ---    ----     ---
    Nintendo Wii  $2,678  24.6%  $10,734  52.2% $10,651  26.6%  $31,737  59.5%
    Nintendo DS    8,002  73.4%    9,305  45.3%  28,257  70.4%   20,463  38.3%
    Other            226   2.0%      509   2.5%   1,204   3.0%    1,168   2.2%
                     ---   ---       ---   ---    -----   ---     -----   ---
    TOTAL        $10,906 100.0%  $20,548 100.0% $40,112 100.0%  $53,368 100.0%
                 ======= =====   ======= =====  ======= =====   ======= =====

                                            Net  Sales by
                                               platform %
                                            -------------
                                         Forecast  Actual   Actual
                                         --------  ------   ------
                                             2010    2009     2008
                                               --    ----       --
    Nintendo Wii                             32.3%   53.0%    34.0%
    Nintendo DS                              61.5%   42.8%    61.7%
    Other                                     6.2%    4.2%     4.3%
                                              ---     ---      ---
    TOTAL                                   100.0%  100.0%   100.0%
                                            =====   =====    =====

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

                           Three Months Ended          Six Months Ended
                                April 30,                  April 30,
                                ---------                  ---------
                              2010         2009        2010         2009
                              ----         ----        ----         ----
    Net revenues           $10,906      $20,548     $40,112      $53,368
                           -------      -------     -------      -------
    Cost of sales
      Product costs          5,447        7,816      17,175       19,647
      Software
       development
       costs and
       license fees          2,232        6,016      10,099       14,976
      Loss on
       impairment of
       software
       development
       costs and
       license fees -
       future releases         116            -       1,021          170
                               ---          ---       -----          ---
                             7,795       13,832      28,295       34,793
                             -----       ------      ------       ------
    Gross profit             3,111        6,716      11,817       18,575
                             -----        -----      ------       ------
    Operating costs
     and expenses
      Product research
       and development         707        1,301       1,641        2,594
      Selling and
       marketing             1,527        3,198       4,584        7,333
      General and
       administrative        2,266        2,099       4,390        4,593
      Depreciation and
       amortization             44           69          97          138
      Settlement of
       litigation and
       related charges,
       net                       -          264           -          404
      Loss on
       impairment of
       software
       development
       costs and
       license fees -
       cancelled games         160          380         160          380
                               ---          ---         ---          ---
                             4,704        7,311      10,872       15,442
                             -----        -----      ------       ------
    Operating (loss)
     income                 (1,593)        (595)        945        3,133
    Other expenses
     (income)
      Interest and
       financing costs,
       net                     125          221         621          679
      Change in fair
       value of
       warrants                (27)         880        (229)       1,015
                               ---          ---        ----        -----
    (Loss) income
     before income
     taxes                  (1,691)      (1,696)        553        1,439
      Income taxes             (84)           -      (1,647)      (1,027)
                               ---          ---      ------       ------
    Net (loss) income      $(1,607)     $(1,696)     $2,200       $2,466
                           =======      =======      ======       ======
    Net (loss) income
     per share:
      Basic                 $(0.04)      $(0.06)      $0.06        $0.09
                            ======       ======       =====        =====
      Diluted               $(0.04)      $(0.06)      $0.06        $0.09
                            ======       ======       =====        =====
    Weighted average
     shares
     outstanding:
      Basic             36,874,270   28,494,960  36,789,337   28,206,927
                        ==========   ==========  ==========   ==========
      Diluted           36,874,270   28,494,960  36,793,821   28,420,121
                        ==========   ==========  ==========   ==========

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

                                                                     October
                                                        April 30,      31,
                                                             2010        2009
                                                             ----        ----
                                                        (unaudited)
    ASSETS
    Current assets:
      Cash and cash equivalents                           $11,503     $11,839
      Due from factor                                       1,154       1,172
      Accounts and other receivables, net                     938       1,145
      Inventory, net                                        4,186       6,190
      Advance payments for inventory                        1,190       3,126
      Capitalized software development costs and
       license fees                                         3,554       3,678
      Prepaid expenses                                        815         847
                                                              ---         ---
        Total current assets                               23,340      27,997
    Property and equipment, net                               434         447
    Other assets                                               69          83
                                                              ---         ---
        Total assets                                      $23,843     $28,527
                                                          =======     =======
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable and accrued expenses                $7,391      $9,586
      Inventory financing payables                          1,209       6,053
      Advances from customers                                  94         543
                                                              ---         ---
        Total current liabilities                           8,694      16,182
    Warrant liability                                         397         626
    Commitments and contingencies
    Stockholders' equity:
      Common stock - $.001 par value; 250,000,000
       shares authorized; 38,646,938 and 38,553,740
       shares issued and outstanding at April 30, 2010
       and October 31, 2009, respectively                      39          38
      Additional paid-in capital                          114,395     113,484
      Accumulated deficit                                 (99,161)   (101,361)
      Accumulated other comprehensive loss                   (521)       (442)
                                                             ----        ----
        Net stockholders' equity                           14,752      11,719
                                                           ------      ------
        Total liabilities and stockholders' equity        $23,843     $28,527
                                                          =======     =======

                  MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited, in thousands)

                                                        Six Months Ended
                                                            April 30,
                                                            ---------
                                                          2010      2009
                                                          ----      ----
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                          $2,200    $2,466
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Depreciation and amortization                         97       138
      Change in fair value of warrants                    (229)    1,015
      Share-based litigation settlement                      -       404
      Non-cash compensation expense                        911       805
      Loss on disposal of assets                            19         -
      Provision for price protection and customer
       allowances                                        2,142     1,145
      Amortization of software development costs and
       prepaid license fees                              2,839     4,680
      Loss on impairment of software development costs
       and prepaid license fees                          1,181       550
      Changes in operating assets and liabilities:
        Due from factor                                 (2,314)   (1,382)
        Accounts and other receivables                     346       515
        Inventory                                        1,990     2,693
        Capitalized software development costs and
         prepaid license fees                           (3,895)   (7,019)
        Prepaid expenses                                 1,975    (2,341)
        Accounts payable and accrued expenses           (1,943)    3,014
        Advances from customers                           (680)     (237)
                                                          ----      ----
          Net cash provided by operating activities      4,639     6,446
                                                         -----     -----
    CASH FLOWS FROM INVESTING ACTIVITIES
    Purchases of property and equipment                   (104)      (82)
                                                          ----       ---
      Net cash used in investing activities               (104)      (82)
                                                          ----       ---
    CASH FLOWS FROM FINANCING ACTIVITIES
    Inventory financing                                 (4,844)   (1,540)
                                                        ------    ------
      Net cash used in financing activities             (4,844)   (1,540)
                                                        ------    ------
    Effect of exchange rates on cash and cash
     equivalents                                           (27)      (67)
                                                           ---       ---
    Net (decrease) increase in cash and cash
     equivalents                                          (336)    4,757
    Cash and cash equivalents - beginning of period     11,839     5,505
                                                        ------     -----
    Cash and cash equivalents - end of period          $11,503   $10,262
                                                       =======   =======
    SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
     FINANCING ACTIVITIES
    Cash paid for interest                                $621      $680
                                                          ====      ====
    Litigation settlement costs paid in stock               $-    $1,412
                                                           ---    ======

                          MAJESCO ENTERTAINMENT COMPANY

              RECONCILIATION OF GAAP to NON-GAAP FINANCIAL MEASURES

                      (in thousands, except share amounts)

                        Three Months Ended               Six Months Ended
                              30-Apr                         30-Apr
                              ------                         ------
                           2010         2009            2010          2009
                           ----         ----            ----          ----

     GAAP operating
      (loss) income     $(1,593)       $(595)           $945        $3,133
     Settlement of
      litigation and
      related
      charges, net
      (1)                     -          264             -            404
     Non-Cash
      Compensation
      (3)                   389          394             933          806
     Severance (4)            -            -             403            -
     California
      studio (5)              -          421               -          960
     Non-GAAP
      operating
      (loss) income     $(1,204)        $484          $2,281        $5,303
                        =======         ====          ======        ======

     GAAP net (loss)
      income            $(1,607)     $(1,696)         $2,200        $2,466
     Settlement of
      litigation and
      related
      charges, net
      (1)                     -          264             -             404
     Change in fair
      value of
      warrants (2)          (27)         880            (229)        1,015
     Non-Cash
      Compensation
      (3)                   389          394             933           806
     Severance (4)            -            -             403             -
     California
      studio (5)              -          421               -           960
     Net proceeds
      from sale of
      NJ state
      operating loss
      carryforwards
      (6)                     -          -            (1,656)       (1,115)
     Non-GAAP net
      (loss) income     $(1,245)        $263          $1,651        $4,536
                        =======         ====          ======        ======

     GAAP net (loss)
      income per
      diluted share      $(0.04)      $(0.06)          $0.06         $0.09
     Settlement of
      litigation and
      related
      charges, net
      (1)                    $-        $0.01              $-         $0.01
     Change in fair
      value of
      warrants (2)           $-        $0.03          $(0.01)        $0.04
     Non-Cash
      Compensation
      (3)                 $0.01        $0.01           $0.03         $0.03
     Severance (4)           $-           $-           $0.01            $-
     California
      studio (5)             $-        $0.02              $-         $0.03
     Net proceeds
      from sale of
      NJ state
      operating loss
      carryforwards
      (6)                    $-           $-          $(0.05)       $(0.04)
     Non-GAAP net
      (loss) income
      per diluted
      share              $(0.03)       $0.01           $0.04         $0.16
                         ======        =====           =====         =====

    Shares used in
     GAAP and Non-
     GAAP per
     diluted share
     amounts         36,874,270   28,494,960       36,793,821   28,420,121
                     ----------   ----------       ----------   ----------

    (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