Liquidity and Capital Resources

On February 26, 2004, we completed a private placement of units consisting of preferred stock and warrants 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 $21.4 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. With respect to the warrants to purchase common stock issued in connection with the private placement as a result of (i) the closing price of our common stock being greater than $2.50 per share and (ii) the average daily trading volume was greater than 75,000 shares for a 60 consecutive calendar day period which ended on May 31, 2004, the warrants are eligible to be called by us for redemption which redemption will not take effect until such time as a registration statement for resale of the shares of common stock underlying the warrants has been declared effective. If the warrants are called and if they are exercised for cash we would receive gross proceeds of approximately $26.8 million. While we are considering to call the warrants, there can be no assurance that we will do so or that if we do call the warrants, that the warrant holders would exercise their right to purchase the common stock.

We used $3.3 million of the net proceeds to pay certain creditors, 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 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. We will use the remaining balance of the proceeds for working capital purposes.

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 have initially accounted for the fair value of the warrants as a liability until the above mentioned registration statement 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-Scholes 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. (We recorded a charge to operations of $49.2 million during the three months ended April 30, 2004 to reflect the change in market value of the warrants). At the effective date, 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.

In May 2004, we received a letter from a warrantholder making demand that we repurchase for $1.75 million by June 21, 2004 warrants (issued by ConnectivCorp prior to the Merger) to purchase an aggregate of 147,182 shares at $.10 per share. Management does not believe that this put is a valid obligation and intends to contest its validity. However, if this matter proceeds to litigation there is no assurance that we will prevail and the cost of such litigation could be significant.

In the opinion of management, upon the advice of counsel, we have made adequate provision for potential liability, if any, arising from litigation and other claims. However, 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 those matters, and developments or assertions by or against us relating to intellectual property rights and intellectual property licenses, could have a material adverse effect on the our business, financial condition and operating results.

Although there can be no assurance, management believes that there are sufficient capital resources from operations, including 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 of development, production, marketing and the sale of new products, the purchases of equipment, and the acquisition of intellectual property rights for future

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products. Although there can be no assurances, we also may be able to obtain additional funds through the exercise of the warrants sold in the private placement as discussed above. 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.

Cash Flows

Cash was $1.7 million at April 30, 2004 compared to $744,000 at April 30, 2003. The proceeds from the private placement in February 2004 were principally used to finance the conversion of the working capital deficiency of $10.9 million at October 30, 2003 into positive working capital of $8.3 million at April 30, 2004.

For the six months ended April 30, 2004 approximately $16.1 million was used by operations. The usage of cash was attributable to the increase in due from factor of $8.4 million, decrease in advances from customer of $4.9 million, increased development and software costs of $5.3 million, increased prepaid expenses of $700,000, increases in accounts payable and accrued expenses of $800,000 and a $4.0 million pay down of the settlement obligation, partially offset by a decrease in inventory of $6.3 million.

Cash used in investing activities related to capital expenditures of $95,000.

Cash generated from financing activities for the six months ended April 30, 2004 was $17.7 which included the aforementioned $21.4 million in net proceeds from the private placement and a loan from a related party of $1.0 million. The proceeds from the financings were used for working capital and $2.0 million was used to repay borrowings to the finance company and an additional $2.8 million was used to repay loans from shareholders and an officer.

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

At April 30, 2004 we do not currently have any material commitments with respect to any capital expenditures.

At April 30, 2004 we are committed under agreements with certain developers for future milestone and license fee payments aggregating $3.2 million and $10.1 million, respectively.

At April 30, 2004 we had open letters of credit aggregating $14.3 million under our purchase order assignment arrangement for inventory to be delivered during the subsequent quarter.

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.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures.    As of April 30, 2004, with the participation of our management, the Chief Executive Officer and Chief Financial Officer of the Company evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the "Exchange Act") Rules 13a-15(e) and 15d-15(e)). In designing and evaluating our 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

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objectives. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April 30, 2004, 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 our 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 be 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. In connection with the rules, we are continuing the process of reviewing and documenting our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Changes in Internal Controls.    No change in the Company's 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 April 30, 2004 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

As previously disclosed in our public filings, we entered into a settlement agreement with Atari Interactive, Inc. in settlement of that certain judgment entered by the US District Court of Massachusetts against Majesco Sales Inc., our wholly-owned subsidiary and sole operating company, in the approximate amount of $6.7 million, pursuant to a breach of contract action. On May 11, 2004, in exchange for a one-time payment of $1.5 million by the Company to Atari, paid on May 21, 2004, Atari agreed to a complete release of the Company from (i) any further obligations ($2.7 million and accrued interest); (ii) all restrictions contained in the settlement agreement; and (iii) all obligations of any nature whatsoever with regard to the judgment. Prior to such date, we had paid $4.0 million to Atari pursuant to the terms of the settlement agreement.

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

On February 26, 2004, we raised gross proceeds of approximately $25.8 million in a private placement in which we issued to accredited investors 2,583 units, each unit consisting of (i) one share of our 7% convertible preferred stock, convertible into 10,000 shares of our common stock and (ii) a three year warrant to purchase 10,000 shares of our common stock at an exercise price of $1.00 per share. The net proceeds of the private placement were used as follows: (i) approximately $3.3 million to pay certain creditors, including part of the previously negotiated settlement amount to Atari; (ii) approximately $2.5 million to repay portions of loans previously made to us by Jesse Sutton, our President and Chief Executive Officer, and Joseph Sutton, our Executive Vice President of Research & Development; and (iii) the remainder for working capital purposes. In addition, JMP Securities LLC, the placement agent in the private placement, received a warrant to purchase up to 268 units, such units to be on the same terms as such were issued to the investors.

The sales and issuances described above were made 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.

Item 3.    Defaults Upon Senior Securities

None

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

On February 13, 2004, a majority of stockholders, representing 73% of the then outstanding common stock executed a written consent of stockholders in lieu of a meeting whereby the following matters were approved: (i) the amendment of our Certificate of Incorporation to change the name of ConnectivCorp to "Majesco Holdings Inc." and to increase the authorized number of shares of our common stock from 40,000,000 to 250,000,000; (ii) the adoption of our 2004 Employee, Director and Consultant Stock Option Plan allowing us to grant options to purchase shares of our common stock and make awards of stock; and (iii) the issuance of an aggregate of 100 "units" (as such term is described above in item 2), to Jesse Sutton, our President and Chief Executive Officer, and Joseph Sutton, our Executive Vice President of Research and Development as partial repayment of outstanding loans previously made to Majesco Sales Inc. by such persons.

Subsequently, in accordance with federal securities law, these matters became effective on April 13, 2004.

Item 5.    Other Information

None

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

(a) Exhibits

31.1				Rule 13a-14(a) Certification of Chief Executive Officer.
31.2				Rule 13a-14(a) Certification of Chief Financial Officer.
32.1				Section 1350 Certificate of Chief Executive Officer.
32.2				Section 1350 Certificate of Chief Financial Officer.

(b) Reports on Form 8-K

On February 6, 2004, the Company furnished a Current Report on Form 8-K under Item 5.

On February 11, 2004, the Company furnished a Current Report on Form 8-K under Items 7 and 12.

On February 17, 2004, the Company furnished an Amendment No. 1 to its Current Report on Form 8-K, dated January 5, 2004 and filed on January 12, 2004, under Item 4.

On February 18, 2004, the Company furnished an Amendment No. 1 to its Current Report on Form 8-K, dated December 5, 2003 and filed on December 22, 2004, under Items 1 and 7.

On February 19, 2004, the Company furnished an Amendment No. 2 to its Current Report on Form 8-K, dated December 5, 2003 and filed on December 22, 2004, under Items 1 and 7.

On March 19, 2004, the Company furnished a Current Report on Form 8-K under Items 7 and 12.

On April 8, 2004, the Company furnished a Current Report on Form 8-K under Items 5 and 7.

On April 27, 2004, the Company furnished a Current Report on Form 8-K under Items 5 and 7.

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.

MAJESCO HOLDINGS INC.

/s/ Jesse Sutton

Jesse Sutton Chief Executive Officer & President Date: June 14, 2004

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