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. Thecustomer less factor charges of 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.

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 at 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. The interest rate for advances taken is prime plus 1%.

As of January 31, 2006, assuming continued availability of funding at previous levels by the current factor or alternative sources, management believes that there will be sufficient capital resources from operations and financing arrangements in order to meet our requirements for development, production, marketing, purchases of equipment, and the acquisition of intellectual property rights for future products for the next twelve months.

Although, management believes that alternative forms of financing may be available, there can be no assurance that funds will be available on acceptable terms, if at all. While management has already significantly reduced expenditure levels, in the event that we are unable to maintain our current factoring arrangement or negotiate alternative financing, or negotiate terms that are acceptable to us, we may be forced to further materially modify our business plan, including making further reductions in expenditures. Management believes it can make additional cuts if necessary, and that it can operate under the existing level of financing for at least one year. However, if the current level of financing was reduced and the Company was unable to obtain alternative financing, it could create a material effect on future operating prospects.

As a result of recurring losses incurred by us, the report of our independent Registered Public Accounting firm on the financial statements as of October 31, 2005 contained an explanatory paragraph indicating that we may be unable to continue as a going concern.

Advances From CustomersCustomers.. 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 ContingenciesContingencies..    At January 31, 2005, we We are committed under agreements with certain developers and content providers for milestone and license fee payments aggregating $31.4$5.2 million payable through October 31, 2006.

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

AtAs of January 31, 2005,2006 we had open letters of credit aggregating $7.2 million under our purchase order assignment arrangement$700,000 for inventory purchases to be delivered during the subsequent quarter.quarter ended April 30, 2006.

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, 20052006 we were committed under operating leases for office space and equipment for approximately $1.9$1.5 million through July 2009.

AsIn July 2005, four purported class action complaints were filed against the Company and several current and former directors and officers of the Company in the United States District Court for the District of New Jersey. On September 12, 2005, a fifth purported class action complaint was filed in the same court on behalf of a class of individuals who purchased shares of the Company common stock in the Company's January 31,26, 2005 we hadoffering of six million shares of common stock (the "Offering"). The complaint named as defendants the Company, current and former officers of the Company, and certain financial institutions who served as underwriters with respect to the Offering.

On October 11, 2005, the Court consolidated the five cases and appointed a Lead Plaintiff. On December 14, 2005, Lead Plaintiff filed an outstanding foreign currency forward exchange contract to exchange 2.4 million euros into $2.8 millionAmended Consolidated Complaint, which expires March 31, 2005is now the operative Complaint. The Complaint names the following as defendants: the Company, Carl Yankowski, Jan E. Chason, Jesse Sutton, Joseph Sutton, Morris Sutton, Laurence Aronson, F. Peter Cuneo, James Halpin, Louis Lipschitz, Marc Weisman, RBC Capital Markets Corporation, JMP Securities LLC, Harris Nesbitt & Corp., Wedbush Morgan Securities Inc., and accordingly, recordedGoldstein Golub Kessler LLP.

The Complaint alleges that the Registration Statement and Prospectus filed with the SEC in connection with the Company's Offering and certain of the Company's press releases and other public filings contained material misstatements and omissions about the Company's financial condition and prospects as well as its products. Lead Plaintiff asserts a liability (in accounts payableclaim under Section 11 of the Securities Act against all the defendants on behalf of investors who purchased in the Offering. It asserts a Section 12(a)(2) claim against the Company and accrued expenses)the financial institutions who served as underwriters in connection with the Offering, and a Section 15 control person claim against defendants Carl Yankowski, Jan Chason, Jesse Sutton, Joseph Sutton, and Morris Sutton (the "Defendants"). Lead Plaintiff also asserts a claim under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against the Company and the Defendants and a claim under Section 20(a) of the Exchange Act against the Defendants. The Complaint seeks damages in an unrealized loss of $360,000.unspecified amount. The proposed class period for the Exchange Act claims is December 8, 2004 through September 12, 2005. We will vigorously contest the action.

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$2.9 million at January 31, 20052006 compared to $4.2$2.4 million at October 31, 2004.2005.

Operating Cash FlowsFlows..    For Cash used in operating activities during the three months ended January 31, 2005, we used2006 was $1.3 million compared to cash usage of $3.0 million during the same period in

the prior year. The $1.7 million decrease in operating activities. The principal operatingthe use of cash in operations in 2006 was due primarily to a decrease in 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,fees. This was partially offset by an increase in accounts payablethe amount due from factor and accrued expensesour loss from operations. We expect continued volatility in the use and availability of $1.4 millioncash due to the seasonality of our business, timing of receivables collections and net income of $700,000 generated during the period, adjusted for non-cash charges of $750,000 relatedworking capital needs necessary to depreciation, amortizationfinance our business and officer compensation.growth objectives.

Investing Cash FlowsFlows.. Cash used in investing activities for the three months ended January 31, 20052006 consists primarily of purchases of upgraded computer equipment and leasehold improvements necessary to accommodate our infrastructure growth.growth of $141,000.

Financing Cash FlowsFlows..    Net cash generated from    Cash provided by financing activities forin the three months ended January 31, 2006 was $2.0 million relating to inventory financing. During the three month
period ended January 31, 2005 waswe generated $53.5 million in cash as a result of our secondary offering 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.warrants.

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 ofAt January 31, 2005,2006 we had an outstandingdid not have any 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.contracts.

Item 4. Controls and Procedures.Procedures

Evaluation of Disclosure Controls and Procedures.    As of January 31, 2005,Our management, with the participation of our management, the Chief Executive OfficerPresident and Chief Financial Officer, ofhas evaluated the Company evaluatedeffectiveness of our disclosure controls and procedures, (asas defined in the Securities Exchange Act Rule 13a-15(e) and 15d-15(e), as of 1934 (the "Exchange Act") Rules 13a-15(c) and 15d-1.5(e)). the end of the period covered by this report.

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.

While we believe our disclosure controls and procedures and our internal control over financial reporting have improved, no system of controls can prevent errors and fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur. Controls can also be circumvented by individual acts of some people, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with its policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

During the quarter ended January 31, 2006 we recognized that improvements are necessary in the following areas:

•	As a result of recent staff changes, maintaining sufficient personnel with an appropriate level of accounting knowledge and experience and training in the application of generally accepted accounting principles (GAAP) commensurate with our financial reporting requirements is needed.

•	Improved documentation of procedures and controls for our European operations which had their first significant revenues during this quarter.

We are actively taking steps to address these situations. We also performed additional post-closing procedures to ensure our consolidated financial statements were prepared in accordance with U.S. GAAP. Subject to the limitations above, management believes that the consolidated financial statements and other financial information contained in this report, fairly present in all material respects our financial condition, results of operations, and cash flows for the periods presented.

Based on thisthe evaluation of the effectiveness of our Chief Executive Officerdisclosure controls and procedures, our President and Chief Financial Officer concluded that as of January 31, 2005, our disclosure controls and procedures were effective in that they provide reasonable assurance thatfor timely gathering, analyzing and disclosing the 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 withthis report. There were 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 changechanges in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f))that occurred during theour most recent fiscal quarter ended January 31, 2005 that has materially affected, or isthat are 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.None

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.Item 1A. Risk Factors

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 aNo 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.None

Item 3. Defaults Upon Senior Securities

None.None

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

None.None

Item 5. Other Information

None.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 YankowskiMorris Sutton pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			31.2			Certification of Jan E. ChasonJohn Gross pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			32.1			Certification of Carl YankowskiMorris Sutton pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			32.2			Certification of Jan E. ChasonJohn Gross pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.ENTERTAINMENT COMPANY

/s/ Jan E. ChasonMorris Sutton       Jan E. ChasonMorris Sutton Interim Chief FinancialExecutive Officer Date: March 17, 2005

Date: March 13, 2006