Majesco Entertainment (NASDAQ: COOL) is a long running video game developer, which dates back to the mid 80s. The New Jersey based company grew to fame with games for early Nintendo and Sega consoles. Unfortunately, the company has run into some hard times. The game developer experienced a terrible 2013 and has yet to recuperate fully. Nonetheless, Majesco has vowed to fight on and has taken steps to transition to an all-digital business model. Near the end of 2015, the company announced their decision to end their traditional package games business, while also slimming staff numbers to five.
At the time, the company also announced the development of two new games. They revitalized and rereleased A Boy and His Blob, which has been a fan favorite through the ages. They also announced a new game called Glue. The upgraded A Boy and His Blob was released in January of 2016 and made available through various platforms, including Steam. Most gamers were satisfied with the upgraded version of the game. Unfortunately, it has failed to improve COOL stock, which remains below 80 cents as of Friday July the 1st of 2016.
During the past 24 months, the company’s stock as fluctuated between $0.55 and $2.90. In December of 2015, Majesco managed to regain full compliance with all NASDAQ listing requirements. The stock has remained below the $1.00 threshold, so problems may be on the horizon. In July of 2015, Majesco transferred their packaged business to a newly formed subsidiary, Zift Interactive LLC. Zift is expected to pay Majesco a specified percentage of its net revenue of all retail sales quarterly. During their last earnings report, the company reported net revenues of $412,000 for the three months ended on April the 30th of 2016. The revenue equates to a 76% decrease, when compared to the same quarter last year.
The EPS for the quarter was -0.08 compared to -0.052 for the previous year. During the period, the company spent 1.3 million on General and Administrative Expenses, with $20,000 doing towards Product Research and Development and $19,000 doing for Selling and Marketing. After the terrible earnings, the company filed a Form S-8 with the intention to distribute 3,950,000 to employees. In April of 2016, Majesco announced an above market registered direct offering with proceeds forecasted around 1.5 million dollars.
According to a recent study from NJBiz.com, three Majesco Entertainment CEOs rank within the top 100 highest paid CEOs in New Jersey. David Rector ranked in at 76 bringing in over $122,000. Barry Honig was 64th at $504,308. And finally, Jesse Sutton ranked in at 58 with $803,346. Of course, Sutton resigned in 2015 and Rector took over his post. Nonetheless, Sutton was expected to remain on board to provide consulting for the company’s Download Business for 24 months after his resignation. His severance payment included 50% of the net monthly revenues from that business for a maximum of $10k per month.
COOL stock is rarely covered by analysts. However, Zacks downgraded the company to hold in May of 2015. Zacks analysts also gave the stock a $1.5 price target. More recently on May the 11th of 2016, the Maxim Group reiterated their buy rating for the company and set a $10 price target for the stock. On May 26, 2016, Aegis Capital analysts reiterated their buy rating for the stock and gave it a price target of $8.7. The last notable spike for COOL stock came in January of this year, when the company announced a special dividend of $10 million. During this time, the stock gained over 120%. CEO Barry Honig admitted the special dividend was “another step in returning value to shareholders.”
The stock’s price didn’t maintain the momentum for long and started to sink days later. Now, Majesco investors hinge their hope on the outcome of the company’s upcoming game, Glue. In March of this year, it was revealed that Glue would be launched during the Summer of 2016 for the PC. The first-person puzzle-platform will incorporate an innovative ragdoll physics engine. Gamers will be able to utilized their Glue gun to interact with objects to advance from one level to the next. Majesco paired with Dinosaur Games, which will finish development.
As Co-Chairman and CEO Barry Honig stated, “The company has spent significant time developing the game and we believe it will be a great success in the market.”. Investors can only wait and hope Glue will prove to be a success. It will be the glue needed to prevent Majesco’s futures from falling apart at the seams?