MAJESCO ENTERTAINMENT COMPANY ANNOUNCES THIRD QUARTER FISCAL 2008 FINANCIAL RESULTS

- Net Sales up 44 percent to $14.5M; Net Income improves to $0.5 million versus a $1.5 million loss -

- Third Quarter 2008 EPS of $0.02 versus Net Loss of $0.06 in Third Quarter 2007 -

EDISON, N.J. - September 11, 2008 -- Majesco Entertainment Company Inc. (NASDAQ: COOL), an innovative provider of video games for the mass market, today reported financial results for the fiscal third quarter ended July 31, 2008.

For the third quarter ended July 31, 2008, Majesco's net revenues increased 44 percent to $14.5 million versus the year ago period. During this same period, the Company reported operating income of $0.3 million compared to an operating loss of $1.3 million in the third quarter of 2007. Net income for the quarter was $0.5 million versus a net loss of $1.5 million in 2007. The Company's basic and diluted earnings per share for this quarter were $0.02 compared to a loss of $0.06 in the same period last year. As discussed below, the Company's net income included a $0.4 million gain in the change of the fair value of warrants in the quarter.

For the nine months ended July 31, 2008, Majesco's net revenues increased 17 percent to $46 million versus the year ago period. During this same period, the Company reported operating income of $2.4 million compared to an operating loss of $2.3 million. Net income through nine months was $3.0 million versus a net loss of $3.8 million in 2007. The Company's basic and diluted earnings per share for the first nine months of fiscal 2008 were $0.11 compared to a loss of $0.16 in 2007. As discussed below, the Company's net income included a $1.0 million gain in the change of the fair value of warrants year to date.

Jesse Sutton, Chief Executive Officer of Majesco Entertainment, said, "We are extremely pleased with our execution during the quarter as we exceeded all of our expectations. Our third quarter results highlight our ability to execute and deliver on our mass market, family friendly strategy and the growth potential that is inherent in our business model. Further, our financial results demonstrate the significant progress we have made in regards to profitability as we drive revenues and continue to prudently manage our costs. For the third quarter 2008, net sales increased 44 percent to $14.5 million, while gross margin grew to 43 percent. The growth in both net sales and margin is attributable to the 87 percent increase in our domestic sales driven by the continued success of our‘Cooking Mama' franchise, our newly released‘Wonderworld Amusement Park' for Wii, and strong demand for‘Cake Mania 2' for DS. Looking ahead to the remainder of fiscal 2008, we have raised our fiscal year revenue guidance to a range of $58 million to $60 million. In addition, we expect to be profitable for fiscal 2008. This performance is despite the move of our Cooking Mama sequel for Wii closer to the December holiday sales season and into our fiscal first quarter 2009.

"We remained focused on delivering titles targeted toward the mass market, casual gamer as we launched four new titles in the third quarter, bringing the number of titles released in the first nine months of fiscal 2008 to 14. Two titles shipped in the quarter were for Nintendo's Wii system and two were for Nintendo's DS handheld," continued Sutton. "We are making significant progress in developing our intellectual property portfolio, as our studio is on schedule to release its first title‘Our House' for DS and recently announced its second title‘Wonderworld Amusement Park' for DS, both of which are set for release in fiscal 2009. We remain poised to further improve our financial position as we continue to deliver on our strategy, expand our revenue base and build our intellectual property assets."

Financial Highlights

    <*>Third quarter 2008, domestic revenue increased 87 percent <*>Third quarter 2008 gross margin was 42.5 percent, compared to 29.5 percent in 2007 <*>For the first nine months of fiscal 2008 net income was $3.0 million, an improvement of $6.8 million from the year ago period <*>For the first nine months of fiscal 2008 the Company's interest and financing costs fell to $0.4 million from $1.5 million in the same period one-year ago <*>Through nine months, basic and diluted EPS increased to $0.11 from a loss of $0.16 in the same period


Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics

To facilitate a comparison between thethree and nine months ended July 31, 2008 and 2007, the Company has presented both GAAP and Non-GAAP financial results. GAAP financial measures, including operating income, net income, and basic and diluted earnings/loss per share, have been adjusted to report Non-GAAP financial measures which exclude gains due to changes in the value of our common stock to be issued in settlement of the class action litigation and related charges, net, and the change in the fair value of warrants issued in connection with our September 2007 equity financing. 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.

In the fiscal year ended October 31, 2007, the Company recorded a $2.8 million charge in connection with the expected settlement of class action litigation. The charge was comprised of $2.5 million, representing the fair value, on the date the agreement was executed, of the common stock expected to be distributed when the settlement becomes effective and $0.3 million representing a change in the value of the shares from that date through October 31, 2007.

The Company will adjust the fair value of the liability to the fair value of the shares expected to be distributed at each balance sheet date and record the resulting change as a non-cash charge, or gain, to earnings in each period until the shares are distributed. Due to fluctuations in the Company's stock price, this resulted in a non-cash gain of $0.3 million during the nine months ended July 31, 2008. The settlement provides that if the fair value of the stock falls below $2.5 million, the Company will issue additional shares, subject to certain limitations, with a fair market value equal to the amount of the decrease. Therefore, the liability will not be adjusted below $2.5 million.

During the fourth quarter of 2007, the Company raised $5.9 million in an equity financing. As part of that transaction, the Company issued warrants that contain a provision that under certain circumstances in which the Company is sold, merged, or otherwise enters into a "fundamental transaction", as defined in the warrant agreement, with a company that is not publicly traded, the warrants may be settled by a cash payment. As a result, the warrants were recorded as a liability at their fair value of $2.1 million, in accordance with FASB statement No. 150, Accounting For Certain Financial Instruments with Characteristics of Both Liabilities and Equity, and FASB Staff position 150-1 Issuers Accounting for Freestanding Financial Instruments Composed of More Than One Option or Forward Contract Embodying Obligations under FASB Statement 150. In addition, the Company will measure the fair value of the warrants at each balance sheet date, and record the change in fair value as a non-cash charge orgain to earnings each period. Changes in the Company's stock price resulted in a non-cash gain of $0.4 million during the quarter ended July 31, 2008 and $1.0 million during the nine months ended July 31, 2008. The warrants were valued at $0.5 million at July 31, 2008.

Comparison of Three Months Ended July 31, 2008 to July 31, 2007

-- Net revenue was $14.5 million in 2008 compared to $10.0 million in 2007. The increase is primarily due to strong sales of "Wonderworld Amusement Park" for Wii, strong demand for "Cake Mania 2" for DS and continued success of our "Cooking Mama" franchise.

-- In the third quarter of 2008, 92 percent of revenue came from domestic sales with only 8 percent from international. This compares to the third quarter of 2007 when 71 percent of revenue came from domestic sales with 29 percent from international.

-- Gross margin was 42.5 percent, compared to 29.5 percent in 2007. The increase was primarily attributable to two new releases for the Nintendo Wii console in 2008, and the strong performance of our domestic products. Additionally, our margin benefited from the final payment stemming from a minimum purchase order for our 2007 agreement to distribute Dance, Dance Revolution.

-- GAAP operating income was $0.3 million compared to 2007 operating loss of $1.3 million. Non-GAAP 2008 operating loss was $0.3 million, compared to Non-GAAP operating loss of $1.4 million in 2007.

-- GAAP net income was $0.5 million, or $0.02 per share, which included a $0.4 million non-cash gain in the fair value of warrants issued, compared to third quarter 2007 GAAP net loss of $1.5 million, or $0.06 per share. Non-GAAP net income was $0.1 million, or $0.01 per share, compared to a Non-GAAP net loss of $1.6 million, or $0.07 per share in 2007.

-- Interest expense and financing costs were $0.1 million in 2008 versus $0.3 million in 2007, as the Company benefited from the ability to self finance operations due to the capital raised last fall and lower factoring fees.

-- At July 31, 2008, the Company had cash and cash equivalents of $7.8 million.

Comparison of Nine Months Ended July 31, 2008 to July 31, 2007

-- Net revenue was $45.9 million in 2008 compared to $39.1 million in 2007.

-- In the nine months of fiscal 2008, 94 percent of revenue came from domestic sales with 6 percent from International. This compares to 87 percent domestic and 13 percent international in the same period last year. Domestic sales increased 26.9 percent over 2007, which included $2.9 million from the sale of Dance Dance Revolution products.

-- Gross margin was 39.4 percent compared to 34.8 percent in the same period during 2007.

-- GAAP operating income was $2.4 million in 2008, which included a $0.3 million gain for the "class action" litigation. This was compared to an operating loss of $2.3 million during the same period in 2007, which included a $2.5 million charge for the "class action" litigation. Non-GAAP operating income for the nine months of 2008 was $2.1 million, compared to Non-GAAP operating loss of $0.1 million for the same period in 2007.

-- GAAP net income was $3.0 million, or $0.11 per share, compared to a 2007 net loss of $3.8 million, or $0.16 per share, which included a $2.5 million charge for the "class action" litigation. Non-GAAP net income was $1.7 million, or $0.06 per share, compared to Non-GAAP net loss of $1.6 million, or $0.07 per share, in 2007.

-- Interest expense and financing costs were $0.4 million for the nine months of 2008 versus $1.5 million during the same period in 2007. The reduction was attributable to the Company's ability to self- finance most of its purchasing requirements following a financing of $5.9 million in September 2007, in addition to reduced fees.

Announced Product Line-up Third Quarter 2008 ending July 31, 2008:

All of the following titles were released in North America during the Company's third quarter:

-- Nancy Drew: The Mystery of the Clue Bender Society for DS is the follow up to The Deadly Secret of Olde World Park and offers mystery buffs and Nancy Drew fans a fresh interactive caper with new gameplay elements including snowmobiling and boating.

-- Blast Works: Build, Trade, Destroy for Wii is an innovative interpretation of a geometric shooter that lets players build their own personalized game experiences and then share their creations with friends via WiiConnect24.

-- Wonder World Amusement Park for Wii brings to life a fully 3D world of boardwalk games, rides and prizes across multiple themed areas that players can explore with personalized avatars.

-- Cake Mania® 2 for DS is the sequel to the best-selling DS game based on Sandlot Games' award-winning downloadable title. Players lead Jill Evans through more than 200 different levels of baking and frosting madness with an all-new customer base, exotic locations, kitchen upgrades and multiple endings.

Fiscal 2008

To date, the Company has announced the following titles that have been released or are expected to be released during the rest of fiscal 2008:

-- Three Wii games that are part of the award-winning Humongous adventure game series that has sold nearly 15 million units and earned more than 400 awards for excellence: Freddi Fish, Pajama Sam and Spy Fox. Freddi Fish: Kelp Seed Mystery for Wii lets young players help underwater detective Freddi Fish solve the case of Grandma Grouper's missing kelp seeds before all of the sea creatures go hungry. The easy point-and-click interface allows players to earn a reaction from just about everything and a variety of mini-games helps players solve the mystery, develop hand-eye coordination and increase learning. Pajama Sam in Don't Fear the Dark for Wii allows players to join Sam as he embarks on his journey to capture Darkness in a land of talking trees, hilarious carrots and non-stop adventure. Explore a world of secrets and slumber in this motion-based adventure that creates a fun learning environment to encourage critical thinking while fostering listening and memory skills. Spy Fox in Dry Cereal for Wii teams players up with super-sleuth Spy Fox, Monkey Penny and Professor Quack as they take on tough assignments through 100 levels of spy-speeding fun, arcade-style games.

-- Babysitting Mania for DS is based on the hit online PC simulation from Gogii Games that challenges players to manage unruly kids, lists of chores and out-of-control houses without losing their cool.

-- Zoo Hospital for Wii, a wholly-owned IP for Majesco, is the first Wii game of its kind that lets players experience a veterinarian's job by performing various surgical procedures on 48 different animals that they can then care for in their enclosures to ensure a healthy recovery.

-- Air Traffic Chaos for DS lets players take charge as an air traffic controller at the world's busiest airports so they can safely maintain an efficient flight schedule and order on the runways.

-- Orchard for online and retail PC is a simulation that challenges players to manage all facets of a retail business, including planting and harvesting crops, developing new recipes, buying ingredients and hiring a workforce.

-- Away: Shuffle Dungeon for DS is a premier role playing game that features creative contributions from renowned industry visionaries: RPG creator Hironobu Sakaguchi, character designer Naoto Oshima and composer Nobuo Uematsu. Players take control of the young hero "Sword," who must rescue as many kidnapped townsfolk as possible from a mysterious unknown that has been slowly "spiriting them away."

-- Jillian Michaels' Fitness Ultimatum 2009 for Wii is the first game of its type to combine a celebrity fitness trainer with the Wii and innovative Wii Fit Balance Board accessory to offer players a fun and entertaining way to get in shape.

-- Bananagrams for Facebook is an anagram game based on the popular board game of the same name. This free Facebook application ignores all of the rules of traditional board games in favor of an every-player-for-themselves approach that delivers lighting-fast puzzle play guaranteed to get the mind moving and drive players "bananas."

First Quarter 2009 ending January 31, 2009:

To date, the Company has announced the following titles that are expected for release during the fiscal first quarter of 2009:

-- Cooking Mama: World Kitchen for Wii is the sequel to the best-selling Cooking Mama Cook Off game that has sold nearly half a million units and challenges players to use the Wii Remote as the ultimate cooking utensil.

-- Major Minor's Majestic March for Wii marks the return of the creative team behind the renowned PaRappa the Rapper franchise-legendary game designer and multimedia musician Masaya Matsuura and famed New York artist Rodney Alan Greenblat. The game turns the Wii Remote into a "special" baton the bandleader Major Minor uses to keep tempo, recruit new band members and pick up valuable items, while marching through whimsical locations.

-- Cake Mania: In the Mix! for Wii marks the first introduction of Sandlot Games' best-selling PC title on the Wii system. The game integrates motion-based control with the series' signature cake-baking multi-tasking gameplay style.

-- Rollin' Rascals for DS challenges players to roll adorable round pets around obstacles and into identical twos to clear them from the game board in this addictive puzzler.

-- Wonder World Amusement Park for DS is the second game from Majesco Studios Santa Monica. This companion game to the Wii version that launched in July lets players experience a complete day at the park in the palm oftheir hands. Using the Touch Screen, players can toss, drive, shoot, whack, fish and spin in more than two dozen mini-games throughout six themed zones.

-- Escape the Museum for Wii is based on the popular hidden object online game from Gogii Games. A devastating earthquake has rocked the foundations of the National Museum of History and players must help Susan Anderson escape from the crumbling building to the safety outside. Players wander through the museum's maze of 12 different hunt and find areas and 25 action-packed adventure scenes, using the Wii Remote to uncover hidden exits and save priceless archaeological artifacts.

-- Marker Man Adventures for DS is a unique game based on drawing and physics challenges as players maneuver the charming stick figure, Marker Man, through 150 scrolling world puzzles in his attempt to find his best friend, Doodle Dog.

-- PowerBike for DS is an intense motorcycle racer that features death-defying stunts, intense police chases and competitive multiplayer modes.

-- Math Blaster in the Prime Adventure for DS is inspired by the original hit PC game from Knowledge Adventure that makes learning fun by combining a variety of adventure-based learning games with challenging mathematic puzzles and the unique capabilities of Nintendo DS.

Fiscal 2008 Outlook

The Company is increasing its fiscal 2008 full year net revenue guidance to a range of $58 million to $60 million from its previous expectation of $53 million to $58 million. The revised guidance also reflects the change in the release date of Cooking Mama: World Kitchen for Wii from fiscal 2008 to fiscal 2009. The Company also expects to be profitable for 2008. The Company believes that its mix of international revenues for the year will approximate 10 to 15 percent of worldwide revenues, a slight decline from previous years' range of 15 to 20 percent. The Company expects full-year 2008 gross margins to show modest improvement over the 33.9 percent reported in 2007. The Company's guidance assumes the release of approximately 24 titles in 2008 with approximately 9 Wii, 12 DS titles and 3 other. This compares to 19 titles in 2007, comprised of 2 Wii, 13 DS and 4 other. The Company's results are impacted by seasonality from the December holiday period and variability based on release schedules.

Conference Call

At 4:30 PM ET today, management will host an earnings conference call. To access the call in the U.S., please dial 1-877-317-6701 and international callers please dial 1-412-317-6701. The access code for the call is 4881586. 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 Relations" section of the Company's Web site at http://www.majescoentertainment.com. In addition, a replay of the call will be available via telephonefor seven business days beginning 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 4881586.

About Majesco Entertainment Company

Majesco Entertainment Company is a provider of video games for the mass market. Building on 22 years of operating history, the company is focused on developing and publishing a wide range of casual and family oriented video games on leading console and portable systems. Product highlights include Nancy Drew, Cooking Mama and Cake Mania 2 for Nintendo DS and Cooking Mama: Cook Off for the Wii system. The company's shares are traded on the Nasdaq Stock Market under the symbol: COOL. Majesco is headquartered in Edison, NJ and has an international office in Bristol, UK. More information about Majesco can be found online at http://www.majescoentertainment.com.


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