Majesco Issues “Going Concern” Warning

Following the release of the company’s fourth quarter results last week Majesco’s independent auditing firm has added a “going concern” statement to the company’s financial report. The statement from the Cooking Mama and Jaws Unleashed publisher warns that there is “substantial doubt” over the company’s ability to continue as a going concern during the new financial year, with a forecast 10 to 15 percent drop in revenues for 2007. The company’s financial results had shown a narrowing of losses from $34.2 million in 2005 to $2.9 million by the end of 2006. In the company’s revised Form 10-K filing with the U.S. Securities & Exchange Committee (SEC), it is admitted that the company many require additional financing in order to operate going forwards, while giving no assurances that this financing can be obtained. However, the report states that “although there can be no assurance, our management believes that based on our current plan there are sufficient capital resources from operations, including our factoring and purchase order financing arrangements, to finance our operational requirements through at least the next twelve months. If we continue to incur operating losses, or if unforeseen events occur that would require additional funding, we may need to raise additional capital or incur debt to fund our operations.” “We would expect," the report concludes, "to seek such capital through sales of additional equity or debt securities and/or loans from financial institutions, but there can be no assurance that funds will be available to us on acceptable terms, if at all, and any sales of additional securities will be dilutive to investors.”