market price). As a result of this issuance, we incurred non-cash compensation expense of $465,000 for the three months ended January 31, 2005 and will additionally charge operations $465,000 for each of the succeeding six quarters.

Provision for Income Taxes.    Effective November 1, 2003, we revoked our election to be treated as an S Corporation and we are therefore subject to federal income taxes. We estimate that our effective tax rate will be approximately 40% in fiscal year 2005.

Critical Accounting Policies

Our discussion and analysis of the financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from these estimates under different assumptions or conditions.

We have identified the policies below as critical to our business operations and the understanding of our financial results. The impact and any associated risks related to these policies on our business operations is discussed throughout management's discussion and analysis of financial condition and results of operations where such policies affect our reported and expected financial results.

Reserves for Price Protection and Other Allowances.    We derive revenue from the sale of packaged video game software designed for play on consoles such as PlayStation 2, Xbox and GameCube, and hand-held game devices, principally the GBA. We generally sell our products on a no-return basis, although in certain instances, we may provide price protection or other allowances on certain unsold products in accordance with industry practices. Price protection, when granted and applicable, allows customers a partial credit with respect to merchandise unsold by them. Revenue is recognized net of estimates of these allowances. Sales incentives and other consideration that represent costs incurred by us for assets or services received, such as the appearance of our products in a customer's national circular advertisement, are reflected as selling and marketing expenses. We estimate potential future product price protection and other discounts related to current period product revenue. Generally our price protection for premium-priced titles is higher than that needed for our value titles. Our reserves for price protection and other allowances fluctuate over periods as a result of a number of factors including analysis of historical experience, current sell through of retailer inventory of our products, current trends in the video game market, the overall economy, changes in customer demand and acceptance of our products and other related factors. However, actual allowances granted could materially exceed our estimates as unsold products in the distribution channels are exposed to rapid changes in consumer preferences, market conditions or technological obsolescence due to new platforms, product updates or competing products. For example, the risk of requests for allowances may increase as consoles pass the midpoint of their lifecycle and an increasing number of competitive products heighten pricing and competitive pressures. While management believes it can make reliable estimates regarding these matters, these estimates are inherently subjective. Accordingly, if our estimates change, this will result in a change in our reserves, which would impact the net revenues and/or selling and marketing expenses we report. For the three months ended January 31, 2005 and 2004, we provided allowances for future price protection and other allowances of $1.4 million and $1.3 million,, respectively. The fluctuations in the provisions reflected our estimates of future price protection based on the factors discussed above. We do not have significant exposure to credit risk as the factor generally buys our receivables without recourse; however, during the three months ended January 31, 2004, we recorded a charge for an accounts receivable write-off of $577,000 as a result of the January 2004 bankruptcy filing of Kay-Bee Toys, because sales to this customer were not factored.

Software development costs and prepaid license fees.    Software development costs include milestone payments made to independent software developers under development arrangements.

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Software development costs are capitalized once technological feasibility of a product is established and it is determined that such costs should be recoverable against future revenues. For products where proven game engine technology exists, this may occur early in the development cycle. Technological feasibility is evaluated on a product-by-product basis. Amounts related to software development that are not capitalized are charged immediately to product research and development costs. Prepaid license fees represent license fees paid to intellectual property rights holders for use of their trademarks or copyrights in the development of our products. Minimum guaranteed royalty payments for intellectual property licenses are initially recorded as an asset (prepaid license fees), and a current liability, (accrued royalties payable) at the contractual amount upon execution of the contract when no significant performance remains with the licensor. Capitalized software development costs classified as non-current relate to titles for which we estimate the release date to be more than one year from the balance sheet date.

Commencing upon the related product's release, capitalized software development and prepaid license fees are amortized to cost of sales based upon the higher of (i) the ratio of current revenue to total projected revenue or (ii) the straight-line method. The amortization period is usually no longer than one year from the initial release of the product. The recoverability of capitalized software development costs and prepaid license fees is evaluated based on the expected performance of the specific products for which the costs relate. The following criteria are used to evaluate expected product performance: historical performance of comparable products using comparable technology; orders for the product prior to its release; and estimated performance of a sequel product based on the performance of the product on which the sequel is based.

Accounting for Stock-Based Compensation.    In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share Based Payment" ("SFAS 123(R)"). SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. SFAS 123(R) is effective for us beginning in the third quarter of this fiscal year. The new standard allows for two transition alternatives, either the modified-prospective method or the modified-retrospective method. We have not completed our evaluation of SFAS 123(R) and therefore have not selected a transition method or determined the impact that adopting SFAS 123(R) will have on our results of operations.

Results of Operations

Three months ended January 31, 2005 versus three months ended January 31, 2004

Net Revenues.    Net revenues for the three months ended January 31, 2005 increased to $30.7 million from $24.6 million in the comparable quarter last year. The net increase is principly attributable to sales of GBA video and gadget products, products which were not launched until the third and fourth quarters, respectively, of last year, partially offset by a decline in game sales. There were no new premium-price games launched in the three months ended January 31, 2005 compared to three in the prior year period. In the three months ended January 31, 2005 the sales mix attributable to games, video and gadgets was 45%, 20% and 35%, respectively, compared to the same period last year when games represented 100% of net revenues.

Gross Profit.    Gross profit for the three months ended January 31, 2005 increased to $11.0 million from $7.5 million in the first quarter last year and the gross profit margin increased to 35.7% from 30.4% in the prior year period. This improvement is primarily attributable to sales of gadgets, which operate at significantly higher margins than games and video.

Product Research and Development Expenses.    For the three months ended January 31, 2005, product research and development costs increased to $814,000 from $574,000 in the comparable 2004 period. The increase is mostly attributable to employee related costs which include the hiring of additional quality control personnel necessary to support the increased number of projects in the development cycle.

Selling and Marketing Expenses.    In the three months ended January 31, 2005, selling and marketing expenses increased 88.6% to $5.3 million from $2.8 million in the same three month period

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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 promote BloodRayne2 and GBA video. Variable costs, principally freight and warehousing, increased approximately $731,000 in the current 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.

General and Administrative Expenses.    For the three 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 period. As expected, we had increased costs as a 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 Kay-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 comparable charge in the same period last year.

Depreciation 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 expenditures will be offset by the 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, a comparable charge of $315,000 was recorded.

Income Taxes.    A provision for federal and state income taxes has been provided for at a combined effective rate of 40%. As a result of the benefit of certain losses carried forward from the period during which the company was treated as an S corporation, no tax provision was recorded in the comparable 2004 period.

Net Income.    For the three month period ended January 31, 2005, we generated net income of $700,000 compared to a net income of $1.1 million in 2004. The net loss attributable to common stockholders of $400,000 for the 2005 period reflects net income of $700,000 less the $1.1 million charge related to an incentive granted to certain holders for the exercise of warrants.

Liquidity and Capital Resources

Historically, 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 2004 private placment and our recently completed secondary public offering, in which we sold equity securities, including issuances upon the exercise of warrants, we received

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aggregate 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 business, 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, timing of receivables collections and working capital needs necessary to finance our business and growth objectives. Although there can be no assurance, management believes that there will be sufficient capital resources from our operations and financing arrangements in order to meet our requirements for development, production, marketing, purchases of equipment, and the acquisiiton of intellectual property rights for future products for the next twelve months.

If unforeseen events occur that require us to locate additional funding, we may be required to issue additional equity or undertake debt financing and/or loans from financial institutions. However, there can be no assurance that these 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.

Factoring 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.

Under 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.

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Commitments and Contingencies.    At January 31, 2005, 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, 2006.

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

At January 31, 2005, we had open letters of credit aggregating $7.2 million under our purchase order assignment arrangement for inventory to be delivered during the subsequent quarter.

As 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 are party to other routine claims and suits brought by us and against us in the ordinary 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 those matters (including those matters described above), and developments or assertions by or against the Company relating to intellectual property rights and intellectual property licenses, could have a material 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 infrastructure growth.

Financing Cash Flows.    Net cash generated from financing activities for the three month
period ended January 31, 2005 was $53.5 million and consisted of (i) net proceeds of $6.5 million
from the exercise of warrants at a discount; (ii) net proceeds from the exercise of stockholder and placement agent warrants, issued in the February 2004 private placement of $11.3 million and (iii) net proceeds of $41.9 million from the sale of stock in 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.

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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 Procedures.

Evaluation of Disclosure Controls and Procedures.    As of January 31, 2005, 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(c) and 15d-1.5(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 objectives. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 31, 2005, our disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to he 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 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 addition, as of October 31, 2005, we will become subject to the heightened internal control and procedure requirements of Section 404 of the Sarbanes-Oxley Act. Therefore, management has intensified its review and documentation of our disclosure controls and procedures, including our internal controls and procedures for financial reporting, and is focused on a number of areas that we would like to improve, 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 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 our 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, 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

On December 28, 2004, we entered into a settlement agreement relating to our previously reported litigation with Rage Games Limited. Pursuant to the agreement, on February 15, 2005, we paid $650,000 for a full and complete settlement of all litigation between the parties.

On January 10, 2005, we entered into a settlement agreement relating to our previously reported litigation with Entertainment Finance International, pursuant to which, on January 12, 2005, we paid to EFI $250,000, and thereafter, on February 3, 2005, as a result of the closing of our secondary public offering, an additional $985,000, resulting in a full and complete settlement of all litigation between the parties.

We are party to other routine claims and suits brought by us and against us in the ordinary course of business, including disputes arising over contractual claims and collection matters. In the opinion

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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 those matters (including those matters described above), and developments or assertions by or against us relating to intellectual property rights and intellectual property licenses, could have a material adverse effect on our business, financial condition, and results of operations or liquidity.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.    Defaults Upon Senior Securities

None.

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

None.

Item 5.    Other Information

None.

Item 6.    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 of Carl Yankowski pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2			Certification of Jan E. Chason pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1			Certification of Carl Yankowski pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2			Certification of Jan E. Chason pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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/ Jan E. Chason Jan E. Chason Chief Financial Officer Date: March 17, 2005

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