Securities Class Action Suit Commenced against Majesco Entertainment Company (Nasdaq: COOL), its Directors, and Certain Underwri

PHILADELPHIA, Sept. 14  /PRNewswire/ -- Barrack, Rodos & Bacine today issued the following: The Denver Employees Retirement Plan commenced a class action in the United States District Court for the District of New Jersey on behalf of all persons, other than defendants, who purchased shares of Majesco Entertainment Company ("Majesco" or the "Company") common stock issued pursuant to the prospectus and registration statement ("Registration Statement") filed with the Securities and Exchange Commission in connection with the Company's January 26, 2005 public offering of six million shares of common stock at a price of $12.50 per share (the "Offering").

The complaint charges the Company, its directors, and certain underwriter banks with violations of Sections 11, 12, and 15 of the Securities Act of 1933, 15 U.S.C. Sections 77k, 77l, and 77o.  The complaint alleges that defendants made materially false and misleading statements in the Registration Statement about the Company's financial results, operations and sales, including its expected results for fiscal year 2005.  Specifically, the complaint alleges that the defendants falsely reported Majesco's financial results for 2004 by inflating its capitalized software costs, under-accruing for bad debt expense, and overstating operating income thereby.  Defendants also reported, without a basis, that for 2005 Majesco would bring in $175-$185 million in revenue and operating income of $16-$18 million.  The Registration Statement failed to disclose that Majesco reported on its balance sheet capitalized costs associated with product development at an inflated value. The Registration Statement further failed to disclose that the Company failed to accrue reserves for risky accounts receivables that were not likely to be paid and that the Company could not factor with its normal accounts receivable servicing vendor.  The Registration Statement further failed to adequately disclose that the Company would need to substantially increase price protection and other allowances offered to customers, and, therefore, the related accruals, to create customer demand in 2005.  The Registration Statement also failed to disclose that Majesco had engaged in huge channel stuffing initiatives to achieve 2004 goals and that, as a result, defendants possessed information that the Company would be facing weak sales across all product lines throughout 2005.  The complaint also sets forth additional material misrepresentations in the Registration Statement, including misstatements and omissions that were necessary to make the statements that were contained in the Registration Statement not misleading. The complaint seeks to recover damages on behalf of all persons who purchased Majesco securities pursuant to the Registration Statement for the Offering.

On July 12, 2005, Majesco drastically lowered its guidance for its fiscal year 2005, cutting its expected results from $175 to $185 million of net revenues and $16 to $18 million of operating income downward to between $120 million and $125 million in net revenues and an operating loss of $16 million to $19 million.  Additionally, the Company announced that its Chief Executive Officer, Carl Yankowski, had resigned his position.  This news shocked the market. Shares of Majesco fell $3.33 per share, or 48.33 percent, on unusually high volume, on July 13, 2005, to close at $3.56 per share.  The stock has since dropped further due to subsequent announcements.

Barrack, Rodos & Bacine has extensive experience in prosecuting investor class actions involving false registration statements.  Barrack, Rodos & Bacine has prosecuted securities, antitrust and consumer class actions for more than 25 years.  The firm has offices in Philadelphia, San Diego, New York and New Jersey and has been designated lead counsel by federal and state courts across the country in large, complex cases.  For more information about Barrack, Rodos & Bacine, please visit their website at http://www.barrack.com/.

If you purchased Majesco common stock sold in the Company's January 26, 2005 Offering described above, you may, no later than September 16, 2005, move the Court to serve as lead plaintiff of the Class, if you so choose.  In order to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this case or your rights or interests, please contact Leslie Bornstein Molder, Esquire, Barrack, Rodos & Bacine, 3300 Two Commerce Square, 2001 Market Street, Philadelphia, PA 19103, , 215-963-0600, fax number 215-963-0838. 

DATASOURCE: Barrack, Rodos & Bacine



CONTACT:  Leslie Bornstein Molder, Esquire of Barrack, Rodos & Bacine,

[phone], or fax [phone], 



Web site:  http://www.barrack.com/

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