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Majesco Entertainment Company Reports Second Quarter Fiscal 2012 Financial Results

Zumba Fitness Franchise Has Now Surpassed 7 Million Units Sold (June 11, 2012)

EDISON, NJ -- (Marketwire) -- 06/11/12 -- Majesco Entertainment Company (NASDAQ: COOL), an innovative provider of video games for the mass market, today reported financial results for the second quarter ended April 30, 2012.

For the second quarter ended April 30, 2012, Majesco's net revenues were $30.4 million, down 5 percent versus $32.1 million in the same period a year ago. During the second quarter of 2012, the Company reported operating income of $2.8 million, compared to operating income of $5.3 million in the second quarter of 2011. Net income for the quarter was $2.7 million versus net income of $2.1 million in 2011. On a non-GAAP basis, net income for the quarter was $3.0 million compared to non-GAAP net income of $5.4 million 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.

The Company's basic and diluted net income per share for the quarter ended April 30, 2012 was $0.07, compared to basic and diluted net income per share of $0.05 in the same period last year. Non-GAAP diluted net income per share for the quarter ended April 30, 2012 was $0.07 compared to diluted net income per share of $0.13 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 six months ended April 30, 2012, the Company's net revenues increased 20 percent to $96.6 million versus $80.6 million in the year ago period. The Company reported operating income of $10.3 million compared to operating income of $13.4 million in the same 2011 period. Non-GAAP operating income for the six month period was $11.2 million compared to $14.0 million for the comparable 2011 period. In the six months ended April 30, 2012 net income was $10.4 million compared to net income of $8.8 million for the six months ended April 30, 2011. For the same period, Non-GAAP net income was $10.3 million this year compared to $12.8 million in 2011.


The Company's basic and diluted earnings per share for the six months ended April 30, 2012 were $0.26 and $0.25, respectively, while basic and diluted earnings per share were $0.23 and $0.22, respectively, for the corresponding period in 2011. The Company's Non-GAAP basic and diluted earnings per share for the six months ended April 30, 2012 were $0.25 compared to $0.33 in the corresponding 2011 period.

Jesse Sutton, Chief Executive Officer of Majesco, said, "While the overall retail environment for interactive entertainment remains challenging in both North America and Europe, we are pleased to announce that in the second quarter, sales of Zumba Fitness remained solid, and Majesco delivered another profitable quarter. Zumba Fitness has now sold over 7 million units worldwide, and is the second best selling fitness game of all time. We are very excited for the upcoming holiday season, during which we will launch both Zumba Fitness Core, as well as the much-anticipated, highly innovative Kinect title, NBA Baller Beats. Lastly, we are about to ramp up our social/mobile efforts with the launches of Mini Putt Park on Facebook, as well as at least four exciting new mobile games coming to iOS over the next few months."

Highlights

  • Second quarter 2012 net revenues were $30.4 million, down slightly from $32.1 million compared to the prior year. Sales were driven by the continued strength of Zumba Fitness 2 and the release of Zumba Fitness Rush on Kinect for Xbox 360. International revenue grew over 100% to $6.5 million, accounting for 21% of net revenue in the second quarter.
  • As of April 30, 2012, the Company had $31.7 million in cash and cash equivalents, compared with $18.5 million on April 30, 2011.
  • Zumba Fitness Rush was released on Kinect for Xbox 360 in February, and has been well received. Official Xbox Magazine gave Zumba Fitness Rush a 9 out of 10, while GamerFitNation gave it a 9.5 out of 10. Additionally, Zumba Fitness remains the best-selling fitness title on Kinect, and in April, Zumba Fitness Rush was the #2 best-selling Kinect title overall.
  • In April, Majesco announced NBA Baller Beats; a fun, high energy and first-of-its kind innovative basketball video game launching this fall exclusively on Kinect™ for Xbox 360. NBA Baller Beats gets players on their feet mastering ball handling skills using a real basketball while playing to the beat of an eclectic soundtrack. The Kinect motion sensor captures every movement of both player and ball to create an entirely new basketball gaming experience. NBA Baller Beats will come packaged with an officially-licensed NBA Game Day replica ball from Spalding, and retail for $59.99.
  • In early May, Majesco launched a beta version of Mini Putt Park, its first internally developed and published game on Facebook. The game gives players their very own mini-golf park, letting them build the course of their dreams and play against friends from around the world.
  • Building on the momentum of Zumba Fitness 1 and 2, Majesco announced the next exciting iteration of the franchise will be coming this fall; Zumba Fitness Core is the first game to feature choreography specifically designed to deliver tight and toned abs as well as an effective total-body workout. This energized dance-fitness party is expected to launch this fall on Wii™ and Kinect™ for Xbox 360.

Announced Product Line-up

Third Quarter Fiscal 2012 Ending July 31, 2012
To date, the Company has announced the following titles that were, or are expected to be, released during its fiscal third quarter 2012:

  • Mini Putt Park, Majesco's first internally developed social game, is now live in Beta form exclusively on the Facebook® Platform . Players of all ages can design their very own miniature golf course in this ultimate mini putt social experience. As the world's first-ever virtual mini putt construction kit, Mini Putt Park lets players build a replica of their real-life home course, a fantastical otherworldly course or something in between. Players can either visit Putter Island and conquer course after course, each complete with a crazy boss to defeat, or take the fun to their friends list by sharing their own custom courses with friends to complete.
  • Zumba® Fitness Rush Bollywood Style Pack, Majesco's first downloadable content pack for Zumba Fitness, was just released in May, and features three exotic Bollywood songs to spice up your workout and build your track library. Featuring stylized Indian choreography that has won fans over with its fun, high energy movements, the Bollywood Style Pack lets you dance with Zumba® creator Beto, and celebrity Zumba® instructors Kass Martin and Tanya Beardsley. Additionally, Majesco Entertainment launched a Zumba® wear Avatar Collection so fans can customize their Xbox LIVE® avatars with virtual apparel inspired by the fan favorite Zumba® Wear apparel and accessory line currently worn by millions.

Fiscal 2012
To date, the Company has announced the following titles that are expected to be released during the rest of fiscal 2012:

  • Zumba® Fitness Core, the latest release in the best-selling fitness game franchise, will be coming this fall to the Wii and Kinect for Xbox 360. Zumba Fitness Core is an energized dance-fitness party featuring choreography specifically designed to deliver tight and toned abs as well as an effective total-body workout. Dance your way to toned, sexy abs with Zumba® Fitness Core, featuring 40 new songs and routines, more than 20 international dance styles from around the world and hot new choreography that's designed to sculpt stronger abs through an exhilarating full body workout. Lose yourself in the music as celebrity Zumba® instructors guide you through choreography set to contagious new Zumba® fitness originals and a broader mix of smash hits from hot artists including Enrique Iglesias and Don Omar.
  • NBA Baller Beats, the first ever full body motion-based NBA video game will be available this fall exclusively on Kinect™ for Xbox 360®. NBA Baller Beats is a fun, high energy basketball video game that lets you perform like a pro using a real basketball. NBA Baller Beats even comes packaged with an officially-licensed NBA Game Day replica ball from Spalding, and challenges players to time their dribble to the beat of each song and perform a variety of skill moves displayed on-screen. Bounce the ball to the beat of 30 licensed tracks spanning decades and genres including hits from Kanye West, LMFAO, Run DMC, Queen, Common, Janelle Monae, and more. Perfect 20 different baller moves and increase your stamina in single player mode, break it down and practice different skills in Move School mode or show-off in multiplayer mode and go head-to-head against up to 8 players. From novice to pro, every baller can raise their game with three difficulty levels available on every song: Rookie, Pro, and Baller. The NBA Baller Beats and Spalding ball bundle will be available for the suggested retail price of $59.99 when it launches exclusively on Kinect for Xbox 360 September 11th.
  • Harley Pasternak's Hollywood Workout, the interactive game that gives you direct access to the fitness program used by many of today's Hollywood celebrities, launches this fall on Kinect for Xbox 360 and Wii. Renowned fitness and nutrition expert, best-selling author, and acclaimed celebrity trainer Harley Pasternak will introduce you to his breakthrough 5-Factor program that is an easy yet effective approach to reach your personal fitness goals. Hollywood Workout provides players with direct access to Harley Pasternak, the trainer behind many of Hollywood's hottest bodies including Lady Gaga, Megan Fox, Katy Perry, Hilary Duff, Jennifer Hudson, Robert Pattinson and Kanye West. The secret is Harley's 5-Factor Fitness program that requires just 25 minutes a day, five days a week. Run, jump, squat, and work out in stylish A-list environments, including a beach front condo, downtown L.A. loft, and a Hollywood Hills home. Never miss a session and stay motivated by following your progress with the Fitness Tracker, a detailed calendar that tracks workouts, points earned per day, and time left in your program. You can even take before and after pictures to monitor your progress on Kinect for Xbox 360. Choose your goals, follow Harley's advice and 5-Factor program and you too can achieve the Hollywood body you've always dreamed of!
  • Double Dragon Neon will be released as a full-scale digital game on Xbox LIVE® Arcade for the Xbox 360® video game and entertainment system from Microsoft and PlayStation®Network this summer. Majesco Entertainment has once again partnered with WayForward, the award-winning team known for bringing franchise favorites including BloodRayne: Betrayal back to audiences in exciting new ways, and is thrilled for the fan-favorite developer to put its signature spin on the father of all brawlers: Double Dragon! Double Dragon: Neon isn't a shoddy sequel -- it's a face-melting 80's tour de force! Featuring bodacious characters, gnarly combat, and a retro aesthetic, it's pure over-the-top baditude... to the max!
  • Mama's Combo Pack Volume 1 & 2 on Nintendo DS™ and Mama's 2-Pack on Wii™ will hit store shelves this August for the terrific value of $29.99 each. Cooking Mama, the iconic kitchen cutie who has sold more than 13 million copies worldwide, is serving up double the fun and terrific value with three separate combo packs that bundle together some of the hit franchise's best-selling games. Mama's Combo Pack Volume 1 for Nintendo DS™ mixes up a recipe for fun by combining the original best-selling classic Cooking Mama with Camping Mama: Outdoor Adventures. Mama's Combo Pack Volume 2 for Nintendo DS™ includes Cooking Mama 2: Dinner with Friends and Crafting Mama. Mama's 2-Pack for Wii™ brings the culinary action to your console in Cooking Mama Cook Off and Cooking Mama World Kitchen. The Wii Remote™ transforms into your universal cooking tool as you chop, grate, slice, stir and roll in motion-based cooking activities.
  • Hello Kitty will make her Nintendo 3DS™ debut in Hello Kitty Picnic with Sanrio Friends. Filled with loads of fun activities and cute collectibles, Hello Kitty Picnic is set to launch in North America this holiday season. Hello Kitty Picnic with Sanrio Friends invites players to join Hello Kitty and her Sanrio friends as they prepare for a picnic adventure. Play 10 mini-games including Hidden Object, Spot the Difference, and Picnic Blanket Checkers to collect goodies for the party. Explore and decorate whimsical 3D environments including Hello Kitty's bedroom, kitchen, and more. Interact directly with Hello Kitty using the 3DS touch screen and listen as the game guides you along. Invite your friends to join the fun in using a variety of multiplayer modes as you play with your favorite Sanrio characters including My Melody®, Keroppi®, Chococat®, Badtz-Maru®, Little Twin Stars®, and many more!

FISCAL 2012 RELEASE SCHEDULE

---------------------------------------------------------------------------- Quarter 1 Quarter 2 Quarter 3 Quarter 4 ---------------------------------------------------------------------------- Zumba® Fitness Zumba® Fitness Mini Putt Park, Zumba® Fitness 2, Wii Rush, Kinect Facebook Core, Kinect, Wii ---------------------------------------------------------------------------- Zumba® Fitness Rush Bollywood NBA Baller Beats, Cooking Mama 4, 3DS Style Pack Kinect ---------------------------------------------------------------------------- Harley Pasternak's Twister Mania, Zumba® Fitness Hollywood Workout, Kinect Avatar Collection Kinect, Wii ---------------------------------------------------------------------------- Alvin & the Chipmunks, Kinect, Cooking Mama Combo Wii, DS Packs, Wii, DS ---------------------------------------------------------------------------- Hello Kitty Picnic Jaws: Ultimate with Sanrio Predator, 3DS, Wii Friends, 3DS ---------------------------------------------------------------------------- Jillian Michaels Fitness Adventure, Double Dragon Neon, Kinect XBLA, PSN ---------------------------------------------------------------------------- Nano Assault, 3DS Sci-Fi Heroes, iOS ---------------------------------------------------------------------------- Winter Stars, Legends of Loot, Kinect, Wii, Move iOS ---------------------------------------------------------------------------- The Hidden, 3DS ---------------------------------------------------------------------------- Face Racers: Photo Finish, 3DS ----------------------------------------------------------------------------

Fiscal 2012 Outlook
The Company expects fiscal 2012 full year net revenue in a range of $130 to $140 million, and non-GAAP earnings per share of $0.20 to $0.30. This reflects an anticipated challenging retail environment in our third fiscal quarter, as it relates to our catalog products; we have no new retail releases scheduled in our third quarter. This outlook is based on an estimated fully diluted share count of approximately 41.5 million, and assumes non-cash compensation of approximately $0.04 to $0.05 per share for fiscal 2012. The Company has not provided a reconciliation of forward-looking GAAP and Non-GAAP financial measures due to the potential effects that changes in its stock price may have on the fair value of outstanding warrants.

Conference Call
At 4:30 p.m. (ET) today, 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 http://ir.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 1-412-317-0088. Enter access code 10014835.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
To facilitate a comparison between the three and six months ended April 30, 2012 and 2011, 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
  • 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."

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 all leading console and handheld platforms as well as online, social networks and mobile devices. Product highlights include Zumba® Fitness, Cooking Mama™, and Alvin and the Chipmunks. The company's shares are traded on the NASDAQ Stock Market under the symbol: COOL. Majesco is headquartered in Edison, NJ with offices in San Francisco, CA, Brockhampton, UK, and a social games development studio in Foxboro, MA. More info can be found online at www.majescoent.com or on Twitter at www.twitter.com/majesco.

Safe Harbor
Some statements set forth in this release, including the estimates under the headings "Fiscal 2012 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 consumer demand for videogame consoles and related 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. 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.

MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY UNAUDITED SUPPLEMENTARY PRODUCT DATA NET SALES BY PLATFORM FOR THREE AND SIX MONTHS (Unaudited, in thousands) Three months Ended April 30, Six months Ended April 30, -------------------------------- -------------------------------- 2012 % 2011 % 2012 % 2011 % ----------- --- ----------- --- ----------- --- ----------- --- (thousands) (thousands) (thousands) (thousands) Nintendo Wii $ 12,161 40% $ 20,091 63% $ 59,608 62% $ 45,990 57% Microsoft Xbox 360 14,741 49% 7,014 22% 24,338 25% 17,958 22% Nintendo DS 2,224 7% 3,343 10% 9,194 9% 12,361 15% Nintendo 3DS 393 1% - -% 1,457 2% - -% Sony Play- station 3 258 1% 1,279 4% 690 1% 3,610 5% Accessories and other 623 2% 415 1% 1,293 1% 689 1% ----------- --- ----------- --- ----------- --- ----------- --- TOTAL $ 30,400 100% $ 32,142 100% $ 96,580 100% $ 80,608 100% =========== === =========== === =========== === =========== === MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) April 30, October 31, 2012 2011 ------------ ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 31,734 $ 13,689 Due from factor, net 3,871 937 Accounts and other receivables, net 4,592 3,143 Inventory, net 5,507 11,605 Advance payments for inventory 226 5,975 Capitalized software development costs and license fees, net 5,451 12,564 Prepaid expenses and other current assets 736 3,071 ------------ ------------ Total current assets 52,117 50,984 Property and equipment, net 1,056 1,184 Other assets 159 209 ------------ ------------ Total assets $ 53,332 $ 52,377 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 17,560 $ 20,313 Inventory financing payable - 1,238 Advances from customers and deferred revenue 373 5,642 Warrant liability - current 957 - ------------ ------------ Total current liabilities 18,890 27,193 Warrant liability - 1,949 Commitments and contingencies Stockholders' equity: Common stock - $.001 par value; 250,000,000 shares authorized; 41,341,850 and 41,307,349 shares issued and outstanding at April 30, 2012 and October 31, 2011, respectively 41 41 Additional paid-in capital 120,058 119,222 Accumulated deficit (85,072) (95,501) Accumulated other comprehensive loss (585) (527) ------------ ------------ Net stockholders' equity 34,442 23,235 ------------ ------------ Total liabilities and stockholders' equity $ 53,332 $ 52,377 ============ ============ 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 -------------------------- -------------------------- 2012 2011 2012 2011 ------------ ------------ ------------ ------------ Net revenues $ 30,400 $ 32,142 $ 96,580 $ 80,608 ------------ ------------ ------------ ------------ Cost of sales Product costs 9,093 13,281 32,931 34,104 Software development costs and license fees 9,136 5,210 28,464 13,222 ------------ ------------ ------------ ------------ 18,229 18,491 61,395 47,326 ------------ ------------ ------------ ------------ Gross profit 12,171 13,651 35,185 33,282 ------------ ------------ ------------ ------------ Operating costs and expenses Product research and development 1,671 1,973 3,978 3,203 Selling and marketing 4,686 2,630 13,672 9,639 General and administrative 2,679 2,295 5,696 5,603 Loss on impairment of software development costs and license fees - cancelled games 228 1,362 1,219 1,362 Depreciation and amortization 149 57 307 102 ------------ ------------ ------------ ------------ 9,413 8,317 24,872 19,909 ------------ ------------ ------------ ------------ Operating income 2,758 5,334 10,313 13,373 Other expenses (income) Interest and financing costs, net 200 245 663 955 Change in fair value of warrant liability (165) 2,928 (992) 3,344 ------------ ------------ ------------ ------------ Income before income taxes 2,723 2,161 10,642 9,074 Income taxes 20 86 213 237 ------------ ------------ ------------ ------------ Net income $ 2,703 $ 2,075 $ 10,429 $ 8,837 ============ ============ ============ ============ Net income per share: Basic $ 0.07 $ 0.05 $ 0.26 $ 0.23 ============ ============ ============ ============ Diluted $ 0.07 $ 0.05 $ 0.25 $ 0.22 ============ ============ ============ ============ Weighted average shares outstanding: Basic 39,819,106 38,051,035 39,777,497 37,841,453 ============ ============ ============ ============ Diluted 41,387,755 40,426,306 41,445,746 39,322,894 ============ ============ ============ ============ MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Six Months Ended April 30, -------------------------- 2012 2011 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 10,429 $ 8,837 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 307 102 Change in fair value of warrant liability (992) 3,344 Non-cash compensation expense 863 627 Provision for price protection and customer allowances 3,006 2,202 Amortization of capitalized software development costs and license fees 10,690 3,220 Loss on impairment of software development costs and license fees 1,219 1,362 Provisions for excess inventory - 848 Changes in operating assets and liabilities, net of acquisition: Due from factor (5,940) (6,833) Accounts and other receivables, net (1,487) (1,205) Inventory 6,098 (55) Capitalized software development costs and license fees (4,750) (5,178) Advance payments for inventory 5,712 5,251 Prepaid expenses and other assets 2,309 203 Accounts payable and accrued expenses (2,748) 2,326 Advances from customers and deferred revenue (5,222) (385) ------------ ------------ Net cash provided by operating activities 19,494 14,666 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (179) (325) ------------ ------------ Net cash used in investing activities (179) (325) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Repayment of inventory financing (1,238) (5,557) Proceeds from exercise of warrants - 1,691 ------------ ------------ Net cash used in financing activities (1,238) (3,866) ------------ ------------ Effect of exchange rates on cash and cash equivalents (32) (1) ------------ ------------ Net increase in cash and cash equivalents 18,045 10,474 Cash and cash equivalents - beginning of year 13,689 8,004 ------------ ------------ Cash and cash equivalents - end of year $ 31,734 $ 18,478 ============ ============ SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Landlord-provided leasehold improvements $ - $ 163 ============ ============ Warrant liability reclassified to additional paid-in capital upon exercise $ - $ 937 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the year for interest and financing costs $ 663 $ 955 ============ ============ Cash paid during the year for income taxes $ 514 $ - ============ ============ MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except share amounts) Three Months Ended Six Months Ended April 30, April 30, -------------------------- -------------------------- 2012 2011 2012 2011 ------------ ------------ ------------ ------------ GAAP operating income $ 2,758 $ 5,334 $ 10,313 $ 13,373 Non-cash compensation (1) 429 352 863 627 ------------ ------------ ------------ ------------ Non-GAAP operating income $ 3,187 $ 5,686 $ 11,176 $ 14,000 ============ ============ ============ ============ GAAP net income $ 2,703 $ 2,075 $ 10,429 $ 8,837 Non-cash compensation (1) 429 352 863 627 Change in fair value of warrants (2) (165) 2,928 (992) 3,344 ------------ ------------ ------------ ------------ Non-GAAP net income $ 2,967 $ 5,355 $ 10,300 $ 12,808 ============ ============ ============ ============ GAAP net income per diluted share $ 0.07 $ 0.05 $ 0.25 $ 0.22 Non-cash compensation (1) 0.01 0.01 0.02 0.02 Change in fair value of warrants (2) (0.01) 0.07 (0.02) 0.09 ------------ ------------ ------------ ------------ Non-GAAP net income per diluted share $ 0.07 $ 0.13 $ 0.25 $ 0.33 ============ ============ ============ ============ Shares used in GAAP and Non-GAAP per diluted share amounts 41,387,755 40,426,306 41,445,746 39,322,894 ============ ============ ============ ============ (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:
Todd Greenwald, CFA
Director of Investor Relations & Strategic Planning
732-476-1938
tgreenwald@majescoentertainment.com


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