Company also Announces Increased Availability from Factor, Notifications from NASDAQ and Disclosure of Auditor Opinion
EDISON, N.J., February 9, 2006 - Majesco Entertainment Company (NASDAQ: COOL) today announced several developments related to changes in management, its Board of Directors, financing arrangements and other disclosures.
MANAGEMENT AND DIRECTOR CHANGES
The Board of Directors has named Morris Sutton as its Chairman and Interim Chief Executive Officer, effective immediately. The role of Chairman had been previously filled by James Halpin and the role of CEO had been vacant. The Company will continue to search for a permanent Chief Executive Officer.
As the Founder of Majesco, Morris Sutton has been integral in building Majesco into a leading provider of value-priced video game software. In his new role as Chairman and Interim CEO, Mr. Sutton will oversee all aspects of the Company and continue to spearhead its sales and business development efforts. Mr. Sutton has more than 40 years of business experience and has helped to build personal relationships with key retail customers and entertainment industry executives. Under Morris' leadership, the Company will continue to reduce costs and focus on operating efficiently.
"My focus as Interim CEO will be to guide the Company back to profitability by building sales and reducing costs," said Morris Sutton, newly appointed Chairman and Interim CEO. He continued saying, "I look forward to leading Majesco once again as we shift our strategy back to producing the value and handheld products that helped to build our business since I founded this Company 20 years ago."
Majesco also announced that James Halpin has resigned as a member and Chairman of the Board of Directors, and as a member of its Audit and Compensation Committees. Additionally, Marc Weisman has resigned as a member of the Company's Board of Directors and as Chairman of the Nominating and Governance Committee, and a member of the Audit Committee, and Compensation Committee.
The Company is actively seeking two new independent members to join its Board of Directors. To continue to have the Board of Directors comprised of a majority of independent directors, both Jesse Sutton and Joseph Sutton have also resigned from Majesco's Board. Presently, the Majesco board will consist of three members, including two independent directors and the newly appointed Chairman, Morris Sutton.
INCREASED FINANCIAL AVAILABILITY
The Company announced that its maximum availability under its existing factoring and finance facilities has been increased from $16.0 million to $20.0 million. The Company believes that this arrangement provides it with greater long-term financial flexibility.
Majesco announced that it has received notice from The Nasdaq Stock Market that based upon its most recent Annual Report on Form 10-K, the Company no longer complies with Marketplace Rule 4450(a)(3), which requires the Company to have a minimum of $10.0 million in stockholders' equity.
Nasdaq has requested that on or before February 21, 2006, the Company provide it with a plan to achieve and sustain compliance going forward. The Company is in the process of evaluating its alternatives with respect to this notice.
The Company also announced that in its Form 10-K filed last week, the audit opinion of Goldstein Golub Kessler LLP contained a going-concern emphasis, based on the Company's recent history of net losses. Management's plan in regard to these matters is contained in Note 1 in the footnotes to its year-end financial statements.
This disclosure is made pursuant to Nasdaq Marketplace Rule 4350(b)(1)(B) which requires Nasdaq-listed companies to publicly announce when an audit opinion contains a going-concern emphasis. The Company's annual report on Form 10-K is available from the SEC's website at http://www.sec.gov or the "Investor Information" section of the Company's website at http://www.majescoentertainment.com.