in 2004, an increase of $2.5 million. Approximately $1.7 million of the increase is the result of promotions, including higher in-store programs incurred over the holiday season in support of our products and television campaigns to the impact of higher sales generatedpromote BloodRayne2 and GBA video. Variable costs, principally freight and warehousing, increased approximately $731,000 in the current quarter.year period due to the increased unit volume in the current period as well as the additional costs incurred in the delivery of games, videos and gadgets imported from Japan and China.

DepreciationGeneral and amortization of $90,000 forAdministrative Expenses.    For the three-monththree month period ended January 31, 2005, general and administrative expenses increased approximately $468,000, or 27.8%, to $2.2 million from $1.7 million in the comparable 2004 remained relatively constantperiod. As expected, we had increased costs as compareda result of becoming a NASDAQ-listed company, and in building our infrastructure to support current and future growth. The increase in general and administrative expenses was attributable to increased staffing costs of $568,000, and $577,000 of increased expenses related to being a publicly-held company. These increases were offset by the absence of a bad debt expense of approximately $577,000 related to the 2003 period.

An unrealized loss of $315,000 relating to a foreign exchange contract (See Note 6 - Notes to Consolidated Financial Statements) was recordedKay-Bee Toys bankruptcy incurred in the three month period ended January 31, 2004.

Non-Cash Compensation Charge.    In the three months ended January 31, 2005 we recorded a non-cash compensation charge of $465,000 related to a below market stock option grant to our Chief Executive Officer in connection with his employment agreement. There was no corresponding gain or losscomparable charge in the same period last year.

MergerDepreciation and Amortization Expenses.    For the three months ended January 31, 2005, depreciation and amortization expense was $287,000 compared to $90,000 in the comparable 2004 period. Depreciation and amortization expense increased due to additional equipment acquired and as a result the amortization of a non-compete agreement and tooling costs.

Operating Income.    For the three month period ended January 31, 2005, operating income decreased approximately $300,000 to $2.0 million from $2.3 million in 2004. The decrease in operating income was due to the planned increases in our infrastructure to support current and future growth as well as increased costs related to becoming a NASDAQ-listed company. Although there can be no assurance, we anticipate that these higher levels of $342,000 incurredexpenditures will be offset by Majescothe higher gross margin in the latter part of the year, during the seasonal peak sales periods.

Interest and Financing Costs.    For the three months ended January 31, 2005, interest and financing costs increased approximately $100,000 to $734,000 from $635,000 in 2004. This increase is due primarily to higher sales volumes, which are subject to purchase order financing, as well as incremental factoring costs.

Other Non-Operating Expenses.    In the three months ended January 31, 2005, we recorded a charge of $69,000 related to a foreign exchange contract. For the three months ended January 31, 2004, principally consista comparable charge of professional fees$315,000 was recorded.

Income Taxes.    A provision for federal and are nonrecurring.

Interest expense and financing costs increased approximately $171,000 to $635,000state income taxes has been provided for at a combined effective rate of 40%. As a result of the three months ended January 31, 2004benefit of certain losses carried forward from $464,000the period during which the company was treated as an S corporation, no tax provision was recorded in the comparable 2003 period as a result of increased volumes subject to purchase order financing.2004 period.

The provision for income taxes in the 2004 period was completely offset by the benefit of deducting timing differences arising from the prior year. In the prior year period the Company was an S Corporation and as a result the Company was not responsible for its income taxes. No pro forma provision was provided forNet Income.    For the three month period ended January 31, 2003 due2005, we generated net income of $700,000 compared to the losses incurred.

The significant increase in sales, coupled with the management of expenses as described above, resulted ina net income of $1.1 million in 2004. The net loss attributable to common stockholders of $400,000 for the three months ended January 31, 2004 as compared2005 period reflects net income of $700,000 less the $1.1 million charge related to a net lossan incentive granted to certain holders for the exercise of $197,000 in the comparable prior year period.warrants.

Liquidity and Capital Resources

OnHistorically, we have met our capital needs through our factoring and purchase order financing arrangements, loans from related persons and advances from customers. In addition, as a result of a series of transactions during our fiscal year 2004 and during the quarter ended January 31, 2005, primarily our February 26, 2004 the Companyprivate placment and our recently completed a private placement of securitiessecondary public offering, in which we raised approximately $25.8 million in gross proceeds from a group of institutional and accredited investors. The private placement resulted in net proceeds to the Company of approximately $22 million after deducting the fees and other expenses related to the financing. In connection with the private placement, the holders of the Series A preferred stock surrendered an aggregate of 352,112 shares of their Series A preferred stock, which were convertible into approximately 25,000,000 shares of common stock.

We used $3.3 million of the net proceeds to pay certain creditors,sold equity securities, including $2.5 million for a previously negotiated settlement amount to Atari Interactive, Inc. and approximately $2.5 million to repay portions of loans previously made to the us by two of our executive officers. In order to satisfy the remaining balance of the loans previously provided by the two executive officers, we agreed to issue to them, in the aggregate, 100 units. The Company will use the remaining balance of the proceeds for working capital purposes.

In accordance with EITF 00-19, "Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled in, a Company's Own Stock", the Company will initially account for the fair value of the warrants issued in the private placement as a liability until a registration statement for the underlying shares of common stock to be issuedissuances upon the conversion of the preferred stock and the exercise of the warrants, is declared effective. As of the closing date of the private placement the fair value of the warrants was approximately $21 million calculated utilizing the Black-Sholes option pricing model. In addition, changes in the market value of the Company's common stock from the closing date through the effective date of the registration statement will result in non-cash charges or credits to operations to reflect the change in fair value of the warrants during this period. At the effective date of the registration statement, the fair value of the warrants will be reclassified to equity and, accordingly, the net effect of the application of the EITF would not be expected to have awe received

material impact onaggregate net proceeds of approximately $81 million over the last twelve months. We have used a portion of these proceeds to reduce indebtedness, to satisfy certain settlements in connection with litigation, and to fund the growth of our financial positionbusiness, as well as for general corporate purposes, including working capital.

While our cash and cash equivalents balance was $54.5 million at January 31, 2005, we expect continued volatility in the use and availability of cash due to the seasonality of our business. The Company is exploring taking certain steps, including the possibilitybusiness, timing of amending the investment agreements,receivables collections and working capital needs necessary to mitigate the impact of the treatment required by EITF 00-19.

finance our business and growth objectives. Although there can be no assurance, management believes that there arewill be sufficient capital resources from our operations includingand financing arrangements in order to meet our factoring and purchase order arrangements, and as a result of the proceeds received in our private placement, to finance our operational requirements through October 31, 2004, including the funding offor development, production, marketing, and the sale of new products, the purchases of equipment, and the acquisitionacquisiiton of intellectual property rights for future products. products for the next twelve months.

If we incur operating losses, or if unforeseen events occur that would require us to locate additional funding, we may needbe required to raise additional capital or incur debt to fund our operations. We would expect to seek such capital through sales ofissue additional equity or undertake debt securitiesfinancing and/or loans from banks, butfinancial institutions. However, there can be no assurance that suchthese funds will be available to us on acceptable terms, if at all. Failure to obtain such financing or obtaining it on terms not favorable to us could have a material adverse effect on future operating prospects and continued growth. Management believes it can operate under a curtailed operating plan if suitable financing is not available.

Cash FlowsFactoring and Purchase Order Financing.    We do not have any bank debt. To satisfy our liquidity needs, we factor our receivables. We also utilize purchase order financing through the factor and through a finance company to provide funding for the manufacture of our products. In connection with these arrangements, the finance company and the factor have a security interest in substantially all of our assets. In addition, certain of our officers provide personal guarantees in connection with these arrangements.

Cash was $434,000Under the terms of our factoring agreement, we assign our accounts receivable to the factor. The factor, in its sole discretion, determines whether or not it will accept a receivable based on its assessment of its credit risk. Once a receivable is accepted by the factor, the factor assumes substantially all of the credit risk associated with the receivable. The factor is required to remit payments to us for the assigned accounts receivable in accordance with the terms of the assigned invoice, regardless of whether the factor receives payment on the receivable, so long as the customer does not have a valid dispute related to the invoice. The amount remitted to us by the factor equals the invoiced amount adjusted for allowances and discounts we have provided to the customer. The factor charges 0.5% of invoiced amounts for these credit and collection services.

In addition, we may request that the factor provide us with cash advances based on our accounts receivable and inventory. The factor may either accept or reject our request for advances in its discretion. Amounts to be paid to us by the factor for any assigned receivable are offset by any amounts previously advanced by the factor. As our needs require, we may request that the factor advance 80% of the eligible receivables and advance 50% of inventory, up to a maximum of $1 million. Total advances under the factor arrangement, including letters of credit for purchase order financing is limited to $30 million in the aggregate. The interest rate for advances taken is prime plus 1%.

We utilize purchase order financing arrangements in order to enable us to provide letters of credit necessary for the manufacture of our products. Manufacturers require us to present a letter of credit in order to manufacture the products required under a purchase order. Currently, we utilize letters of credit from a finance company which charges 3.3% of the purchase order amount for each transaction for 60 days. Our factor also provides purchase order financing at a cost of 0.5% of the purchase order amount for each transaction for 30 days. Additional charges are incurred under both arrangements if letters of credit remain outstanding in excess of the original time period.

Advances From Customers.    On a case by case basis, distributors and other customers have agreed to provide us with cash advances on their orders. These advances are then applied against future sales to these customers. In exchange for these advances, we offer these customers beneficial pricing or other considerations.

Commitments and Contingencies.    At January 31, 2004 compared to $314,000 at2005, we are committed under agreements with certain developers and content providers for milestone and license fee payments aggregating $31.4 million payable through October 31, 2003. The Company had a working capital deficit of $8.8 million compared to $10.9 million at October 31, 2003.

During the three months ended January 31, 2004, $1.9 million was provided by operating activities generated primarily by $1.1 million of net income generated during the period, the reduction of due from factor of $301,000 and inventories of $9.1 million and an increase in accounts payable and accrued expenses of $2.7 million, partially offset by an increase in prepaid software development and license fees of $1.4 million and a decrease in advances from customers of $9.9 million.

Cash used in investing activities was related to capital expenditures of $22,000

During the three-month period ended January 31, 2004, $1.7 million was used by financing activities primarily as a result of $2.4 million in finance company repayments, $300,000 in repayments to officers and shareholders, partially offset by $1 million received related to a loan from a related party.

The Company expects continued volatility in the use of cash due to seasonality of the business, receivable payment cycles and quarterly working capital needs to finance its publishing businesses and growth objectives.2006.

We do not currently have any material commitments with respect to any capital expenditures.

At January 31, 2004, the Company is committed under its agreements with certain developers for milestone and license fee payments aggregating $ 4.3 million through October 31, 2004.

At January 31, 2004, the Company2005, we had open letters of credit aggregating $1.4$7.2 million under the Company'sour purchase order assignment arrangement for inventory to be delivered during the subsequent quarter.

Risk FactorsAs of January 31, 2005 we had entered into "at will" employment agreements with several key executives. These employment agreements include provisions for, among other things, annual compensation, bonus arrangements and stock option grants. These agreements also contain provisions related to severance terms and change of control provisions.

As of January 31, 2005 we were committed under operating leases for office space and equipment for approximately $1.9 million through July 2009.

As of January 31, 2005, we had an outstanding foreign currency forward exchange contract to exchange 2.4 million euros into $2.8 million which expires March 31, 2005 and, accordingly, recorded as a liability (in accounts payable and accrued expenses) an unrealized loss of $360,000.

We have experienced recent net lossesare party to other routine claims and we may incur future losses.

In fiscal years 2002suits brought by us and 2003, we incurred net losses of $751,000 and $10,841,000, respectively. We believe these net losses were principally related to financing costs, non-recurring litigation and impairment reserves. There can be no assurances that we will not continue to experience net losses.

The National Association of Securities Dealers (the "NASD") is conducting a review of certain unusual trading activityagainst us in the Company's common stock which coincidesordinary course of business, including disputes arising over contractual claims and collection matters. In the opinion of management, after consultation with the signing of the letter of intent with respect to the Merger,legal counsel, the outcome of which could have a material adverse effect on the Company's reputation, listing, financial condition, results of operations and liquidity.

We have received a letter from the NASD's Market Regulation Department stating that the NASD is conducting a review of unusual trading activity in our common stock between the time of

the signing of the letter of intent with respect to the Merger and the date that we announced that a letter of intent was signed. There also appears to be unusual trading activity around the time of the signing of the definitive agreement for the Merger and prior to the announcement of such signing.

Depending upon the outcome of the review by the NASD, the matter could be referred to the Securities and Exchange Commission for further action. If the Company is sanctioned or otherwise held liable for this trading any such sanctions could have a material adverse effect on the Company's reputation, listing, financial condition, results of operations and liquidity. In addition, it is possible that such matters may give rise to civil or criminal actions.

In connection with recent litigation, the Company has entered into a settlement agreement which requires substantial funds to satisfy and provides restrictions on the Company's ability to take certain actions.

In August 2003, the U.S. District Court of Massachusetts in Infogrames Interactive, Inc. v. Majesco Sales Inc. entered judgment against Majesco in the approximate amount of $6.7 million pursuant to a breach of contract action, which action the parties subsequently settled. The settlement agreement (the "Atari Settlement") provides for certain restrictions on the Company's ability to, among other things, incur indebtedness or liens, liquidate, merge or dispose of any of its assets, enter into any transaction with any affiliate or increase the pay or compensation of any of its affiliates. While we believe that the Company will be able to successfully perform under the Atari Settlement, the restrictions contained therein could have a material adverse impact on our business operations, financial condition, and/or ability to raise capital in the future.

Potential non-cash charges to operations may result from the Private Placement.

In accordance with Emerging Issues Task Force Issue 00-19 ("EITF 00-19"), "Accounting for Derivative Financial Instruments Indexed To, and Potentially Settled in, a Company's Own Stock", we will initially account for the fair value of the warrants issued in the private placement as a liability until a registration statement for the resale of the underlying shares of common stock to be issued upon the conversion of the preferred stock and the exercise of the warrants is declared effective. As of the closing date of the private placement, the fair value of the warrants was approximately $21 million calculated utilizing the Black-Sholes option pricing model. In addition, changes in the market value of our common stock from the closing date through the effective date of the registration statement, will result in non-cash charges or credits to operations to reflect the change in fair value of the warrants during this period. At the effective date of the registration statement, the fair value of the warrants will be reclassified to equity and, accordingly, the net effect of the application of the EITF would not be expected to have a material impact on our financial position and our business. We are exploring taking certain steps, including the possibility of amending the investment agreements, to mitigate the impact of the accounting treatment required by EITF 00-19. However, in the interim, the effect of the EITF will be to record an initial liability and then to record non-cash charges or credits to our operating results to reflect the change in the fair value. Accordingly, the accounting treatment may have a negative impact on the way we are perceived by investors and by potential customers and partners. Further, it may have an adverse effect on our stock price and business prospects.

Our business is seasonal and cyclical and if we do not meet product development or delivery schedules, we will experience fluctuation in our operating results.

Our business is highly seasonal, and fluctuates greatly on a quarterly basis with the highest levels of consumer demand, and a significant percentage of our revenue, occurring in the October through December calendar quarter. The timing of hardware platform introduction is often tied to the year-end holiday season and is not within our control. In addition, if we miss this key selling period, due to product or approval delays, delayed introduction of a new platform for which we have developed products, shipping delays, weather or any other reason, our sales will suffer disproportionately. Our industry is also cyclical. Videogame platforms have historically had a life cycle of four to six years. As one group of platforms is reaching the end of its cycle and new platforms are emerging, consumers often defer game software purchases until the new platforms are available, causing sales to decline. This decline may not be offset by increased sales of products for the new platform.

Development schedules, particularly for new hardware platforms and high-end multimedia PCs, are difficult to predict because they involve creative processes, use of new development tools for new platforms, research and experimentation associated with development for new technologies, availability and price of licensing rights and availability of, and costs associated with, timely and accurate delivery schedules. Failure to meet any of these schedules may cause a shortfall in our revenue and profitability and cause our operating results to be materially different from expectations. Delays that prevent or otherwise hinder the release of our products, especially during peak selling seasons, may reduce lifetime sales of those products and our reputation in the marketplace.

Customer accommodations could materially adversely affect our earnings.

When demand for specific games falls below expectations, we sometimes negotiate accommodations to retailers or distributors in order to maintain our relationships with our customers and access to the distribution channels. These accommodations include our not requiring that all booked orders be filled. We also negotiate price discounts and credits against future orders with our customers. The conditions our customers must meet to be granted price protection or other allowances are, among other things, compliance with applicable payment terms, delivery to us of weekly inventory and sell-through reports, and participation in the launches of our premium title releases. When we offer price protection, we offer it with respect to a particular product to all of our retail customers, however, only those customers who meet the conditions detailed above can avail themselves of such price protection. We also offer a 90-day limited warranty to our end users that our products will be free from manufacturing defects.

At the time of product shipment, we establish reserves, including reserves under our policies for price protection and other allowances. These reserves are established according to our estimates of the potential for markdown allowances based upon historical rates, expected sales, retailer inventories of products and other factors. Although we believe that the reserves that we have established for customer accommodations are adequate, there is the possibility that actual customer accommodations could exceed our reserves. The effect of this would be a further reduction in our earnings. We cannot predict with certainty the amount or nature of accommodations that will be provided to our customers in future periods.

Increased competition for limited shelf space and promotional support from retailers could affect the success of our business and require us to incur greater expenses to market our products.

Retailers typically have limited shelf space and promotional resources to support any one product among an increasing number of newly introduced entertainment software products. Competition for retail shelf space is expected to increase, which may require us to increase our marketing expenditures. Competitors with more extensive lines, popular products and financial resources frequently have greater bargaining power with retailers. Accordingly, we may not be able to achieve or maintain the levels of support and shelf space that such competitors receive. As a result, sales of our products may be less than expected.

Our activities will require additional financing, which may not be obtainable on acceptable terms, if at all.

As our business expands, we expect to increase our expenses for sales, marketing and product development efforts. Although there can be no assurance, Company management believes that there are sufficient capital resources from operations, including our factoring and purchase order financing arrangements, and from funds received in our recently completed private placement, to finance our operational requirements through October 31, 2004. If we 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 to seek such capital through sales of additional equity or debt securities and/or loans from banks, but there can be no assurance that such funds will be available to us on acceptable terms, if at all. Failure to obtain such financing or obtaining it on terms not favorable to us could have a material adverse effect on future operating prospects and continued growth, as well as diluting investors in this Offering.

Even if a new platform is successful, we must continue to deliver and market products accepted in the marketplace.

Even if we are able to accurately predict which platforms will be most successful, we must deliver and market videogames that are accepted in our extremely competitive marketplace. Prior to 1998, Majesco acted mostly as a distributor of videogames, not a publisher. Development and marketing efforts require substantial investment of time, money, personnel and other resources that we cannot be assured to ever recoup from our final products. In the event we are not successful in developing, licensing, marketing or distributing videogames, our financial conditions, results of operations and future prospects could be materially impacted.

Videogame products typically have market life spans of only three to 12 months. Our new products may not achieve and sustain market acceptance during the short life cycle sufficient to generate revenue to recover our investment in developing the products and to cover our other costs. It is therefore important for us to be able to continue to develop many high quality new products that are popularly received. If we are unable to do this, our business and financial results may be materially negatively affected.

In addition, Microsoft, Sony and Nintendo, currently the largest companies operating in the entertainment hardware and software industry, have the financial resources to withstand significant price competition and to implement extensive advertising campaigns. Many of our other competitors also have far greater financial, technical, personnel and other resources than we do, and many are able to carry larger inventories and adopt more aggressive pricing policies. Prolonged price competition or reduced operating margins could cause a significant decrease in our profits.

Our platform licensors are also competitors and frequently control the manufacturing and access to our videogame products. If they do not approve our products, we will be unable to make sales of our products.

Our intellectual property licenses generally require that we submit new products developed under licenses for approval prior to release. In addition, some of our hardware licensors (such as Sony for the PlayStation 2™, Microsoft for the Xbox™ and Nintendo for the GameCube™ and Game Boy Advance™) are also competitors. While we believe our relationships with our hardware licensors are positive, the potential for delay or refusal to approve or support our products exists. Such occurrences would hurt our business and have a material adverse impact on our financial performance and future growth prospects.

If we are unable to maintain or acquire licenses to intellectual property, we will publish fewer titles and our revenue may decline.

Although we continue to develop our own intellectual property, many of our products are based on or incorporate intellectual property and other character or story rights acquired or licensed from third parties. These license and distribution agreements are limited in scope and time, and we may not be able to renew key licenses when they expire or to include new products in existing licenses. If we are unable to maintain these licenses and obtain additional licenses with significant commercial value, or maintain them at reasonable costs, we will be unable to increase our revenue in the future unless we offset the loss of such revenue with revenue from our independently created material.

If we do not develop products for widely accepted new videogame platforms, our business will suffer.

We derive most of our revenue from the sale of products for play on proprietary videogame platforms of third parties, such as Sony's PlayStation 2™,   Microsoft's Xbox™ and Nintendo's GameCube™ and Game Boy™.   Therefore, the success of our products is driven in large part by the success of new videogame hardware systems and our ability to accurately predict which platforms will be most successful in the marketplace. Technology changes rapidly in our business, and if we fail to anticipate new technologies, the quality, timeliness and competitiveness of our products will suffer. We must make product development decisions and commit significant resources well in advance of the anticipated introduction of a new platform. A new platform for which we are developing products may be delayed, may not succeed or may have a shorter life cycle than anticipated. If the platforms for which we are developing products are not released when anticipated or do not attain wide market acceptance, our revenue growth will suffer.

Majesco did not receive the consent of certain of its distributors and licensors with respect to the recently completed merger.

Certain agreements pursuant to which Majesco operates with certain of its distributors and licensors require that Majesco obtain the consent of such distributor or licensor prior to an assignment of the agreement or in some cases, a change of control of Majesco. In connection with the Merger, Majesco did not obtain the consent of certain of its distributors and licensors and such distributors and licensors may have the right to terminate these contracts as a result of Majesco's failure to obtain such consent. While we believe we will be able to obtain such consents, and have already commenced this process, if we are unable to obtain certain of the consents, those distributors and licensors may terminate their contracts with us and such termination could have a material adverse effect on our financial condition and results of operations.

In December 2003, we received a letter of termination from one of our distributors, Vivendi Universal Games International, indicating Vivendi was terminating its existing License and Distribution Agreement with us as a result of the Merger. Although we believe that the basis for the termination is not in accordance with the provisions of the License and Development Agreement, we are currently discussing this termination letter with Vivendi and Vivendi has indicated an interest in entering into a new contract under revised terms, however, there can be no assurance that we will be successful in negotiating a new contract on terms acceptable to us, or at all.

Approximately 55% of our sales for the year ended October 31, 2003 were generated from three (3) customers and, accordingly, the loss of any one such customer could adversely affect our sales.

As of October 31, 2003, three (3) customers accounted for approximately 55% of our sales. While this percentage is due in part to a consolidation of the retail industry generally, and although we are seeking to broaden our customer base, no assurance can be made that our efforts will be successful or that these three (3) customersroutine claims will not continue to account for a large concentration of our sales. The loss of one or more of these three (3) customers, or any other customer that accounts for a significant portion of our sales, could materially adversely affect our business, operating results, and financial condition.

Our international revenues are subject to currency fluctuations.

We expect foreign sales to continue to account for a growing portion of our revenue. Such sales are subject to unexpected regulatory requirements, tariffs and other barriers. Additionally, foreign sales are primarily made in local currencies, which may fluctuate against the dollar. While we may hedge against foreign currency fluctuations, we cannot control translation issues. Any negative impact on our financial condition as a result of currency fluctuation or other international issues can be expected to have a material adverse effect on our results of operations and future operating prospects.

Our intellectual property is vulnerable to misappropriation and the effects of competitive, non-infringing technology.

We own or have rights to use proprietary technology that we believe affords us a current competitive advantage. This technology is not, however, fully protected from infringement by competitors or from the introduction of non-infringing technologies. Our rights and the additional steps we have taken to protect our intellectual property may not be adequate to deter misappropriation, and our proprietary position remains subject to the risk that our competitors or others will independently develop non-infringing technologies substantially equivalent or superior to our technologies.

Intellectual property claims may increase our product costs or require us to cease selling affected products.

Development of original content sometimes results in claims of intellectual property infringement. Although we make reasonable efforts to ensure our products do not violate the intellectual property rights of others, it is possible that third parties still may allege such infringement. Such claims, or litigation resulting therefrom, could require us to stop selling the affected product(s), redesign such product(s) to avoid infringement and/or obtain a license for future sales of such product(s). Any of

the foregoing could have a material adverse effect on our business, financial condition, and results of operations and future business prospects.

We depend heavily on our directors and executive officers and would have difficulty replacing them.

Our future success depends to a significant degree on the skills, experience and efforts of our directors and executive officers. We do not currently have employment agreements with our executive officers and we may not be able to retain their services or those of other key personnel. The loss of these personnel could materially adversely affect our business and our ability to achieve profitability.

We need to attract and retain key personnel and manage our growth effectively in order to remain a successful company.

The market for technical, creative, marketing and other personnel essential to the development of our products and management of our business is extremely competitive. To manage this anticipated growth, we must implement systems and train, manage and integrate our increased employee base. We cannot make assurances we have made adequate allowances forliquidity. In addition, the costs and risks associated with this growth, that our proceduresother effects of pending or controls will be adequate to support our operations,future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or that we will be able to successfully offercriminal), settlements, judgments and expand our product base. If we cannot successfully recruitinvestigations, claims and retain the employees we need, our ability to developchanges in those matters (including those matters described above), and manage our businesses will be impaired. If we are unable to manage our growth effectively, our business could be materially adversely affected.

We are controlleddevelopments or assertions by a small number of stockholders, some of which are key members of our executive management, and such control could prevent the taking of certain actions that may be beneficial to other stockholders.

A significant portion of our voting securities are owned or controlled by various members of the Sutton family. Although each member of the Sutton family may vote their respective shares independently, due to their substantial ownership of our voting securities, together they control the outcome of substantially all matters submitted to a vote of our stockholders, including but not limited to the selection of certain members to our Board of Directors and the adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination we may potentially be involved in. Additionally, Morris Sutton is the Chairman of our Board of Directors, Jesse Sutton (Morris' son) is our President and Chief Executive Officer and a member of our Board and Joseph Sutton (Morris' son) is our executive vice president of research and development and a member of our Board, thereby also giving them substantial control over matters considered by the officers and directors ofagainst the Company without approval of stockholders.

Anti-takeover provisions in our certificate of incorporation and Delaware law could prevent a potential acquirer from buying your stock.

Anti-takeover provisions of Delaware law may make a change in control of our Company more difficult, even if a change in control would be beneficial to our stockholders. These provisions may allow our board of directors to prevent or make changes in the management and control of our company. Without any further vote or action on the part of the stockholders, the board of directors will have the authority to determine the price, rights, preferences, privileges and restrictions of our preferred stock. This preferred stock may have preference over and impair the rights of the holders of Common Stock. Although the ability to issue preferred stock may provide us with flexibility in connection with possible investment acquisitions and other corporate purposes, this issuance may make it more difficult for a third party to acquire a majority of our outstanding voting stock. Similarly, our authorized but unissued common stock is available for future issuance without stockholder approval.

Our common stock is subject to penny stock regulation, which may limit the liquidity of our common stock and the ability of our stockholders to sell shares.

Our common stock is subject to regulations of the SEC relating to the market for penny stocks. These regulations generally require thatintellectual property rights and intellectual property licenses, could have a disclosure schedule explaining the penny stock market and the risks associated with the penny stock market be delivered to purchasers of penny stocks and imposes various sales practice requirements on broker-dealers who sell penny stocks to persons other

than established customers and accredited investors. Moreover, broker-dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. Accordingly, there can be no assurance that an active trading market in the Company's shares will be developed or sustained.

Our common stock is thinly traded, and the public market may provide little or no liquidity for holders of our common stock.

There is currently a limited volume of trading in our common stock and on many days there is no trading activity in our common stock. Holders of our common stock may find it difficult to find buyers for their shares at prices quoted in the market, or at all.

Our stock price may be volatile, which could result in substantial losses for investors.

Volatility in the market could cause our stockholders to incur substantial losses. An active public market for our common stock may not develop and the market price of our common stock may become highly volatile particularly as additional information concerning Majesco is released to the market for the first time. The market price of our common stock may fluctuate significantly in response to the following factors, some of which are beyond our control:

•	changes in market valuations of similar companies;

•	announcements by us or our competitors of new or enhanced products, technologies or services or significant contracts, acquisitions, strategic relationships, joint ventures or capital commitments;

•	regulatory developments;

•	additions or departures of key personnel;

•	deviations in our results of operations from the estimates of securities analysts; and

•	future issuances of our Common Stock or other securities.

If we are not current in our periodic filings with the SEC, we could lose our eligibility to trade our securities on the OTC Bulletin Board, which would have anmaterial adverse effect on the Company's business, financial condition, and results of operations or liquidity.

Cash Flows

Cash and cash equivalents were $54.5 million at January 31, 2005 compared to $4.2 million at October 31, 2004.

Operating Cash Flows.    For the three months ended January 31, 2005, we used cash of $3.0 million in operating activities. The principal operating use of cash was expenditures of $9.0 million for capitalized software development costs and prepaid license fees related to new games, videos and gadgets in development for sale in 2005 and later periods and $1.3 million of other prepayments. Operating sources of cash included a decrease in inventory build-up from year end of $4.3 milion, an increase in accounts payable and accrued expenses of $1.4 million and net income of $700,000 generated during the period, adjusted for non-cash charges of $750,000 related to depreciation, amortization and officer compensation.

Investing Cash Flows.    Cash used in investing activities for the three months ended January 31, 2005 consists primarily of purchases of upgraded computer equipment and leasehold improvements necessary to accommodate our ability to raise additional funds.infrastructure growth.

We are required to file annualFinancing Cash Flows.    Net cash generated from financing activities for the three month
period ended January 31, 2005 was $53.5 million and quarterly reports withconsisted of (i) net proceeds of $6.5 million
from the SEC, pursuant toexercise of warrants at a discount; (ii) net proceeds from the Securities Exchange Actexercise of 1934, as amended,stockholder and the rules promulgated thereunder. To the extent we do not timely file such reports, our securities may no longer be permitted to be traded on the OTC Bulletin Board, and would then be listed on the "pink sheets." Such action would have an adverse affect on our ability to raise additional fundsplacement agent warrants, issued in the future since many potential investors will not investFebruary 2004 private placement of $11.3 million and (iii) net proceeds of $41.9 million from the sale of stock in companies whose securities are traded on the "pink sheets."a secondary public offering, partially offset by
(iv) repayments of $6.2 million of inventory financing.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks, including the changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from changes in market rates and prices.

Foreign exchange contracts used to hedge foreign currency exposure are subject to market risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes. As of January 31, 2005, we had an outstanding foreign currency forward exchange contract to exchange 2.4 million euros into $2.8 million which expires March 31, 2005 and, accordingly, recorded as a liability (in accounts payable and accrued expenses) the unrealized loss of $360,000.

Item 4.    Controls and ProceduresProcedures.

Evaluation of Disclosure Controls and Procedures.    As of January 31, 2004,2005, with the participation of the Company'sour management, the Chief Executive Officer and Chief Financial Officer of the Company evaluated the Company'sour disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e)13a-15(c) and 15d-15(e)15d-1.5(e)). In designing and evaluating the Company'sour disclosure controls and procedures, management recognized that any

controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on this evaluation, the Company'sour Chief Executive Officer and Chief Financial Officer concluded that, as of January 31, 2004, the Company's2005, our disclosure controls and procedures were (1) designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the Company's Chief Executive Officer and Chief Financial Officer by others within those entities, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information required to behe disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.forms and that management is timely alerted to material information relating to the company during the period when our periodic reports are being prepared .

As a closely-held company with no public reporting obligations prior to our merger with ConnectivCorp in December 2003, we had previously committed limited personnel and resources to the development of our internal financial controls and systems. In connection withaddition, as of October 31, 2005, we will become subject to the rules, we are continuingheightened internal control and procedure requirements of Section 404 of the processSarbanes-Oxley Act. Therefore, management has intensified its review and documentation of reviewing and documenting our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from timeis focused on a number of areas that we would like to time make changes aimed at enhancing their effectivenessimprove, including the segregation of duties in key functions; the creation of formal accounting controls, policies and procedures; the hiring of additional management and staff experienced in financial reporting; and finalizing documentation of our accounting and disclosure internal controls and procedures. Further, management continues to look for methods to ensure that our systems evolve with our business.business and to improve our overall system of control. In order to aid management in these efforts, we have recently retained consultants to assist in the assessment of our internal accounting and disclosure controls and to make recommendations for timely corrective actions.

Changes in Internal Controls.    No change in the Company'sour internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the fiscal quarter ended January 31, 20042005 that has materially affected, or is reasonably likely to materially affect, the Company'sour internal control over financial reporting.

PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

There have been no material developments inOn December 28, 2004, we entered into a settlement agreement relating to our previously reported pending legal proceedings.

Item 2.    Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

On December 5, 2003, we consummated a mergerlitigation with Majesco, whereby CTTV Merger Sub, our wholly-owned subsidiary, merged with and into Majesco.Rage Games Limited. Pursuant to the merger,agreement, on February 15, 2005, we paid $650,000 for a full and complete settlement of all litigation between the stockholders of Majesco received 15,325,000 shares ofparties.

On January 10, 2005, we entered into a settlement agreement relating to our common stockpreviously reported litigation with Entertainment Finance International, pursuant to which, on January 12, 2005, we paid to EFI $250,000, and 925,000 shares of series A convertible preferred stock in exchange for all of the issued and outstanding common stock of Majesco. The 925,000 shares of series A preferred stock that were issued in the Merger are convertible into 65,675,000 shares of common stock at any time after we amend our Certificate of Incorporation to increase our authorized common stock to allow for such conversion. Asthereafter, on February 3, 2005, as a result of the Merger, Majesco becameclosing of our wholly-owned subsidiarysecondary public offering, an additional $985,000, resulting in a full and our sole operating business. The sharescomplete settlement of common stockall litigation between the parties.

We are party to other routine claims and series A convertible preferred stock issuedsuits brought by us and against us in the merger were issuedordinary course of business, including disputes arising over contractual claims and collection matters. In the opinion

of management, after consultation with legal counsel, the outcome of such routine claims will not have a material adverse effect on our business, financial condition, and results of operations or liquidity. In addition, the costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in reliance upon an exemption from the Securities Act of 1933 set forth in Section 4(2)those matters (including those matters described above), and developments or assertions by or against us relating to issuancesintellectual property rights and intellectual property licenses, could have a material adverse effect on our business, financial condition, and results of securities by an issuer not involving any public offeringoperations or liquidity.

During the period from October 1, 2003 through December 5, 2003, we raised $507,200 through the saleItem 2.    Unregistered Sales of 5,072,000 sharesEquity Securities and Use of common stock at $0.10 per share. These sales were made to accredited investors in reliance upon an exemption from the Securities Act of 1933 set forth in Section 4(2) relating to sales by an issuer not involving any public offering. No underwriter was involved with these transactions.Proceeds

None.

Item 3.    Defaults Upon Senior Securities

NoneNone.

Item 4.    Submission of Matters to a Vote of Security Holders

NoneNone.

Item 5.    Other Information

NoneNone.

Item 6.    Exhibits and Reports on Form 8-K.

(a)	Exhibits

	10.1						Employment Agreement, dated February 2, 2005, by and between Majesco Holdings Inc., Majesco Sales Inc. and Lester E. Greenman.
	31.1			Certification byof Carl Yankowski pursuant to Section 302 of the Company's Chief Executive Officer.			Sarbanes-Oxley Act of 2002.
	31.2			Certification byof Jan E. Chason pursuant to Section 302 of the Company's Chief Financial Officer.			Sarbanes-Oxley Act of 2002.
	32.1			Certification by the Company's Chief Executive Officerof Carl Yankowski pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2			Certification by the Company's Chief Financial Officerof Jan E. Chason pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)	Reports on Form 8-K

On December 22, 2003, the Company furnished a Current Report on Form 8-K under Items 1, 2 and 7.

On January 12, 2004, the Company furnished a Current Report on Form 8-K under Items 4, 7 and 8.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CONNECTIVCORPMAJESCO HOLDINGS INC.

/s/ Jesse Sutton

Jesse SuttonJan E. Chason Jan E. Chason Chief ExecutiveFinancial Officer & President Date: March 22, 200417, 2005