EDISON, NJ — (Marketwired) — 09/15/14 — Majesco Entertainment Company (NASDAQ: COOL), an innovative provider of video games for the mass market, today reported financial results for the third quarter of fiscal 2014 ended July 31, 2014.
For the third quarter ended July 31, 2014, Majesco–s net revenues were $2.9 million compared to $4.0 million in the same period a year ago. During the third quarter of fiscal 2014, the Company reported an operating loss of $2.3 million, compared to an operating loss of $3.6 million in the third quarter of fiscal 2013. Net loss for the third quarter was $2.7 million compared to net loss of $3.6 million in the third quarter of fiscal 2013. Included in the net loss for the third quarter of fiscal 2014 are a $1.3 million impairment loss on the Company–s investment in GMS Entertainment and a $1.2 million gain on the extinguishment of liabilities. The Company–s net loss per share for the quarter ended July 31, 2014 was $(0.44), compared to net loss per share of $(0.63) in the same period last year.
On a non-GAAP basis, the net loss for the third quarter ended July 31, 2014 was $3.6 million compared to non-GAAP net loss of $3.3 million in the third quarter of last year. The non-GAAP net loss per share for the quarter ended July 31, 2014 was $(0.58) compared to net loss per share of $(0.57) in the same period last year. Please refer to the Reconciliation of GAAP to non-GAAP Financial Measures table included later in this release for additional information and details on non-GAAP items.
For the nine months ended July 31, 2014, the Company–s net revenues were $28.1 million compared to $37.2 million in the year ago period. The Company reported an operating loss of $9.8 million compared to operating loss of $7.8 million in the same period of 2013. For the nine months ended July 31, 2014, net loss was $10.8 million compared to net loss of $8.1 million for the nine months ended July 31, 2013. The Company–s net loss per share for the nine months ended July 31, 2014 was $(1.69), compared to net loss per share of $(1.39) for the corresponding period in 2013.
Non-GAAP operating loss for the nine month period was $8.9 million compared to non-GAAP operating loss of $6.0 million for the comparable period in 2013. For the same period, non-GAAP net loss was $11.1 million in 2014 compared to non-GAAP net loss of $6.3 million in 2013. The Company–s non-GAAP net loss per share for the nine months ended July 31, 2014 was $(1.73) compared to net loss per share of $(1.08) in the corresponding period of 2013. Please refer to the Reconciliation of GAAP to non-GAAP Financial Measures table included later in this release for additional information and details on non-GAAP items.
All per-share information above gives effect to a reverse stock split effected on June 13, 2014 at a ratio of one-for-seven.
“In the third quarter the launch of the popular Bound by Flame game on next gen platforms partially lessened the impact of the ongoing decline in Zumba catalog sales. Additionally, we plan to release several games for the holiday season during our fourth fiscal quarter including Shadow Warrior, Cooking Mama 5: Bon Appetit, Costume Quest 2 and Gone Home,” said Jesse Sutton, Chief Executive Officer of Majesco Entertainment. “However, the market for casual game software for the Nintendo Wii and DS gaming systems, from which we have historically derived the majority of our revenue, remains weak and, as a result, our revenues have not been adequate to cover our operating expenses which has had a negative impact on our working capital. We are continuing to explore and implement initiatives to reduce our operating expenses, diversify our business into new categories, and evaluate possible strategic alternatives in an effort to maximize company value.”
The Board of Directors has retained Bond Lane Partners, LLC to act as its financial advisor to assist in evaluating strategic alternatives to maximize Company value. Strategic alternatives the Company may pursue may include, but are not limited to, a merger, joint venture, strategic investment, asset divestitures, or similar transactions, as well as continuing to operate the business in the ordinary course.
There can be no assurance that the exploration of such strategic alternatives will result in any transaction. The Company does not currently intend to disclose further development with respect to this process unless and until the Board approves a specific transaction or otherwise concludes its review of strategic alternatives.
To date, the Company has announced the following titles for launch during its fourth quarter of fiscal 2014:
on Nintendo 3DS stars Mama from the best-selling franchise that defined the cooking genre. Create 60+ mouth-watering recipes, from classic fare to exotic cultural dishes and sweet treats. Players will keep busy with new household activities and games set within Mama–s bustling Burger Shop. Launching September 16th.
on PlayStation® 4 and Xbox One will be released as part of a retail distribution partnership with Devolver Digital. The game is a bold new vision of the 1997 cult classic, reimagined with a blend of modern design, inventive combat mechanics, and a contemporary retelling of Lo Wang–s comical rise to legend. Launches this October.
on PC and digital consoles is being published under the Midnight City label. Developed by Tim Schafer–s Double Fine Productions, the game stars candy-crazed crusaders Wren and Reynold who must once again protect Halloween from untold horrors, and grown-ups! Your favorite trick-or-treaters come armed with a new batch of costumes they wear to transform into giant super-powered fantasy Hallowarriors. Fans of the original can look forward to a sweet upgraded battle system and a story that is unmistakably Double Fine. Costume Quest 2 is slated for PC and digital console release this Halloween.
The following titles are expected to be released during the Company–s first quarter of fiscal 2015 and beyond:
on Nintendo 3DS stars the global icon in a fun rainbow race to the finish line with her super cute friends. Customize outfits and vehicles to race across a variety of tracks peppered with power ups. Unlock 20 additional adventures as you play with your favorite Sanrio characters! Launches this November.
on digital consoles is being published under the Midnight City label. The Fullbright Company–s runaway hit brings the explorative Greenbriar family experience to a whole new audience. Heralded as one of the best games of 2013, Gone Home extends an invitation into an ordinary family–s mysterious past as a young woman who discovers an empty house that–s much more than it seems. The game will release on digital consoles later this year.
on PC is the next chapter of the Heretic Kingdoms saga. Players are caught up in a terrible conspiracy and propelled on a journey through a world of dark fantasy. Take control of the Devourer, a demon that swallows the souls of the dead and brings them back into the mortal realm as puppets. But is the demon their master — or their servant? Epic battles and unexpected plot twists await those brave enough to rise to the challenge when the game launches this November.
At 4:30 p.m. EDT today, September 15, 2014, management will host an earnings conference call. To access the call in the U.S., please dial 1-800-860-2442. 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 website at . In addition, a replay of the call will be available via telephone through September 19, 2014, 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 1-412-317-0088. Enter access code #10052031.
To facilitate a comparison between the three and nine months ended July 31, 2014 and 2013, 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 consolidated statements of operations:
Expenses related to non-cash compensation
Expenses related to workforce reduction
Change in fair value of warrants
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 to Non-GAAP Financial Measures.”
Majesco Entertainment Company is an innovative developer, marketer, publisher and distributor of interactive entertainment for consumers around the world. Building on more than 25 years of operating history, the company develops and publishes a wide range of video games on console, handheld and mobile platforms, as well as digital networks through its Midnight City label. Majesco also owns 50% of GMS Entertainment, the parent company of online gaming company Pariplay, which specializes in iGaming, iLottery and social gaming. Majesco is headquartered in Edison, NJ and the company–s shares are traded on the Nasdaq Stock Market under the symbol: COOL. More info can be found online at or on Twitter at .
Some statements set forth in this release, including the estimates under the headings “Fiscal 2014 Outlook” contain forward-looking statements that are subject to change. Examples of forward-looking statements include statements relating to industry prospects, our future economic performance including anticipated revenues and expenditures, results of operations or financial position, and other financial items, our business plans and objectives, including our intended product releases, and may include certain assumptions that underlie forward-looking statements. Statements including words such as “anticipate,” “believe,” “estimate” or “expect” and statements in the future tense are forward-looking statements. These statements are subject to business and economic risk and reflect management–s current expectations, and involve subjects that are inherently uncertain and difficult to predict. Some of the risks and uncertainties 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; 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, 2013. 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.
(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 accounts payable balances and claims for which applicable statutes of limitations expired.
(3) Represents one time severance costs related to a workforce reduction. During January 2013, 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 approximately 40 employees.
(4) 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.
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