-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GbP5xE5Qp7B4sZLQVIlwZ4sAL3l5UAIPXRaCWqJMKXo3ptD7BFV0RrefeJZ08cm7 xMsZzfFGbotugyztyOLxSA== 0000950123-06-003957.txt : 20060331 0000950123-06-003957.hdr.sgml : 20060331 20060330215759 ACCESSION NUMBER: 0000950123-06-003957 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20060331 DATE AS OF CHANGE: 20060330 GROUP MEMBERS: ATLANTIS EQUITIES, INC. GROUP MEMBERS: NANCY J. ELLIN GROUP MEMBERS: ROBERT S. ELLIN GROUP MEMBERS: ROBERT S. ELLIN PROFIT SHARING PLAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAJESCO ENTERTAINMENT CO CENTRAL INDEX KEY: 0001076682 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 061529524 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56967 FILM NUMBER: 06725083 BUSINESS ADDRESS: STREET 1: 160 RARITAN CENTER PARKWAY STREET 2: SUITE 1 CITY: EDISON STATE: NJ ZIP: 08837 BUSINESS PHONE: 7328727490 MAIL ADDRESS: STREET 1: PO BOX 6570 CITY: EDISON STATE: NJ ZIP: 08818 FORMER COMPANY: FORMER CONFORMED NAME: MAJESCO HOLDINGS INC DATE OF NAME CHANGE: 20040416 FORMER COMPANY: FORMER CONFORMED NAME: CONNECTIVCORP DATE OF NAME CHANGE: 20010815 FORMER COMPANY: FORMER CONFORMED NAME: SPINROCKET COM INC DATE OF NAME CHANGE: 20000502 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Trinad Capital Master Fund Ltd. CENTRAL INDEX KEY: 0001346370 IRS NUMBER: 980447604 STATE OF INCORPORATION: E9 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 2121 AVENUE OF THE STARS, SUITE 1650 CITY: LOS ANGELES STATE: CA ZIP: 90049 BUSINESS PHONE: 310-601-2500 MAIL ADDRESS: STREET 1: 2121 AVENUE OF THE STARS, SUITE 1650 CITY: LOS ANGELES STATE: CA ZIP: 90049 SC 13D/A 1 y19315dasc13dza.txt AMENDMENT NO. 11 TO SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) (Amendment No. 11) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Majesco Entertainment Company ----------------------------- (Name of Issuer) Common Stock ------------------------------ (Title of Class of Securities) 784495103 -------------- (CUSIP Number) Trinad Capital Master Fund Ltd. 2121 Avenue of the Stars, Suite 1650 Los Angeles, CA 90067 (310) 601-2500 -------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 30, 2006 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following box: |_|. SCHEDULE 13D CUSIP No. 784495103 - ------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Trinad Capital Master Fund Ltd. - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7) SOLE VOTING POWER 2,543,984 SHARES ----------------------------------------------------- BENEFICIALLY 8) SHARED VOTING POWER OWNED BY ----------------------------------------------------- EACH 9) SOLE DISPOSITIVE POWER REPORTING 2,543,984 PERSON ----------------------------------------------------- WITH 10) SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,543,984 - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.43% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON PN - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 784495103 - ------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Robert S. Ellin - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- NUMBER OF 7) SOLE VOTING POWER 33,856 SHARES ----------------------------------------------------- BENEFICIALLY 8) SHARED VOTING POWER OWNED BY 2,898,538(1) EACH ----------------------------------------------------- REPORTING 9) SOLE DISPOSITIVE POWER 33,856 PERSON ----------------------------------------------------- WITH 10) SHARED DISPOSITIVE POWER 2,898,538(1) - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,932,394(1) - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.17% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- (1) Includes (A) 2,543,984 shares of Common Stock owned by the Trinad Capital Master Fund Ltd. (the "Fund"); (B) 47,656 shares of Common Stock owned directly by Nancy J. Ellin, the spouse of Robert S. Ellin; (C) 225,456 shares of Common Stock that are owned directly by Atlantis Equities, Inc., a Delaware corporation of which Nancy J. Ellin is the sole stockholder ("Atlantis"); and (D) 81,442 shares of Common Stock owned by the Robert S. Ellin Profit Sharing Plan (the "Plan"). Mr. Ellin disclaims any beneficial ownership of shares of Common Stock held by the Fund except to the extent of (1) his indirect beneficial ownership as the managing member of Trinad Advisors GP, LLC, the general partner of a principal stockholder of the Fund, and (2) his indirect beneficial ownership as a limited partner of the Fund. Mr. Ellin also disclaims any beneficial ownership of shares of Common Stock owned directly by Mrs. Ellin, Atlantis and the Plan. SCHEDULE 13D CUSIP No. 784495103 - ------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nancy J. Ellin - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- NUMBER OF 7) SOLE VOTING POWER 47,656 SHARES ----------------------------------------------------- BENEFICIALLY 8) SHARED VOTING POWER OWNED BY 340,754(2) EACH ----------------------------------------------------- REPORTING 9) SOLE DISPOSITIVE POWER 47,656 PERSON ----------------------------------------------------- WITH 10) SHARED DISPOSITIVE POWER 340,754(2) - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 388,410(2) - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.75% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- (2) Includes (A) 33,856 shares of Common Stock owned by Robert S. Ellin, Mrs. Ellin's spouse, (B) 225,456 shares of Common Stock that are owned directly by Atlantis, a company of which Mrs. Ellin is the sole stockholder; and (C) 81,442 shares of Common Stock owned by the Plan. Mrs. Ellin disclaims any beneficial ownership of shares of Common Stock owned individually by Mr. Ellin, and owned directly by Mr. Ellin and the Plan. SCHEDULE 13D CUSIP No. 784495103 - ------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Atlantis Equities, Inc. - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS SC - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION New York - -------------------------------------------------------------------------------- NUMBER OF 7) SOLE VOTING POWER 225,456 SHARES ----------------------------------------------------- BENEFICIALLY 8) SHARED VOTING POWER OWNED BY ----------------------------------------------------- EACH 9) SOLE DISPOSITIVE POWER REPORTING 225,456 PERSON ----------------------------------------------------- WITH 10) SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 225,456 - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.01% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- SCHEDULE 13D CUSIP No. 784495103 - ------------------- 1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Robert S. Ellin Profit Sharing Plan - -------------------------------------------------------------------------------- 2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3) SEC USE ONLY - -------------------------------------------------------------------------------- 4) SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E) |_| - -------------------------------------------------------------------------------- 6) CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - -------------------------------------------------------------------------------- NUMBER OF 7) SOLE VOTING POWER 81,442 SHARES ----------------------------------------------------- BENEFICIALLY 8) SHARED VOTING POWER OWNED BY ----------------------------------------------------- EACH 9) SOLE DISPOSITIVE POWER REPORTING 81,442 PERSON ----------------------------------------------------- WITH 10) SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,442 - -------------------------------------------------------------------------------- 12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------------------------------------------------------------------------------- 13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.37% - -------------------------------------------------------------------------------- 14) TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- The purpose of this Schedule 13D/A is to reflect the delivery by Trinad Capital Master Fund Ltd. (the "Fund") to Majesco Entertainment Company (the "Issuer") of a letter (the "Letter") on March 30, 2006 in response to a letter the Fund received from the board of directors (sometimes referred to herein as the "Board") of the Issuer on March 29, 2006 and to reflect the purchases of additional shares of common stock, $.001 par value per share (the "Common Stock"), purchased by one or more of the Reporting Persons since the date of the filing of amendment number 10 to this Schedule 13D. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Since the date of the previous amendment number 10 to the Schedule 13D, the Fund used $213,037.74 of investment capital to purchase an aggregate of 171,730 shares of Common Stock. ITEM 4. PURPOSE OF TRANSACTION. The shares of Common Stock owned by the Reporting Persons were acquired for investment purposes. The Reporting Persons have purchased and hold the shares of Common Stock reported by them for investment purposes. On May 11, 2005, one of the Reporting Persons, sent a letter to the Issuer's board of directors requesting that (i) two nominees of the Fund be appointed to serve on the Issuer's Board, (ii) the Issuer withdraw and amend its recently-filed proxy statement relating to its 2005 annual meeting of shareholders, to remove from shareholder consideration the proposal to amend the Issuer's certificate of incorporation to permit a staggered board consisting of three classes of directors, (iii) the Board conduct a thorough review of the Issuer's operations and business model, with a view to maximizing financial performance and limiting SG&A growth to ensure that the forecasted 50% revenue growth the Issuer has publicly projected in fiscal 2005 translates into healthy margin expansion and improved earnings as a percentage of overall revenues; and (iv) that management compensation be better aligned with operating results and shareholder return. The letter further states that in the event that the Issuer's common shares continue in the Fund's view to remain undervalued, that it may seek to accumulate additional common shares and become more actively involved in the Issuer. The Issuer's Board has failed to respond to the May 11, 2005 letter. On September 28, 2005, the Fund made an offer (the "Offer") to the Issuer in a letter addressed to the Issuer's Board to invest $5 million in the Issuer through the purchase from the Issuer of 3,333,333 shares of Common Stock at a price of $1.50 per share, representing a premium of 13.6% over the closing price of the Common Stock on the date immediately preceding the Offer. On October 6, 2005, the Fund received a response from the Issuer's Board that stated only that the Board reviewed the Offer and "does not feel that this proposal is in the best interests of our shareholders (other than Trinad)." The Issuer has failed to provide any further explanation or justification for its response. On October 18, 2005, the Fund sent another letter to the Issuer's Board requesting that it immediately begin exploring strategic alternatives to increase shareholder value, including, without limitation, a debt or equity financing to improve liquidity, one or more strategic acquisitions (combined with any required financing), a merger of the Issuer with another company or a sale of the Issuer, whether through the sale of its assets, a merger or consolidation or otherwise. Despite an announcement by the Issuer that it had amended its existing Factoring Agreement, the Reporting Persons continue to believe that the Issuer is facing a liquidity crisis. Further, to the knowledge of the Reporting Persons, the Issuer has not received any other offers to make an equity investment in the Issuer. The Reporting Persons continue to believe that the Issuer would stand to benefit substantially by the infusion of additional equity capital. Such equity capital would improve the Issuer's financial position and increase the likelihood that it would be able to obtain additional, needed equity capital and funds from additional borrowings, if necessary. Accordingly, on October 28, 2005, the Fund made another offer (the "Revised Offer") to the Issuer's Board to invest $7.5 million in the Issuer through the purchase from the Issuer of approximately 4,285,714 shares of Common Stock at a price of $1.75 per share, representing a premium of more than 20% over the closing price of the Common Stock on the date immediately preceding the Offer. The Revised Offer also represents an increase of 16.7% in the per share price, and an aggregate increase of $2,500,000, compared to the initial Offer. The Revised Offer was subject to a satisfactory due diligence review of the Issuer and to majority representation on the Issuer's Board of qualified individuals nominated by the Fund . The Issuer's Board failed to respond to the October 28, 2005 letter. On November 7, 2005, the Fund sent another letter to the Issuer's Board in which it questioned the failure by the Issuer to respond to the Fund's offer to provide $7.5 million in equity financing to the Issuer at a price that represents a substantial premium to the then-trading price of the Issuer's Common Stock. In that letter the Fund also requested that the Issuer immediately call a special meeting of the shareholders so that the Issuer's shareholders may immediately consider again whether a staggered Board is appropriate given the Issuer's disappointing performance, and whether the current members of the Board are suitable to continue to lead the Issuer. On February 10, 2006, in the wake of the resignation of two additional members of the Issuer's Board , the Fund sent another letter to the Issuer's Board, in which the Fund requested the following: o that the Issuer immediately move to create an independent board of directors and appoint two designees of the Fund to the Issuer's Board, to fill the vacancies recently created by the resignations of Messrs. Halpin and Weisman; o that Messrs. Jessie and Joey Sutton, the sons of Morris Sutton, immediately resign or be removed as officers and employees of the Issuer; and o that Morris Sutton, the Chief Executive Officer and a member of the Board of the Issuer, cease making threats to resign from the Issuer and establish a new business in competition with the Issuer. Once again, the Issuer failed to formally respond to this letter. The Fund continues to request that the Issuer immediately create an independent board of directors and appoint two designees of the Fund as discussed above, and that Messrs. Jessie and Joey Sutton, the sons of Morris Sutton, immediately resign or be removed as officers and employees of the Issuer. The Reporting Persons continue to believe that a more independent board of directors would provide greater value to the Issuer and its shareholders, and that the Board has improperly served to implement the personal directives of Morris Sutton at a great cost to the Issuer and its shareholders. The Fund has proposed that its two managing directors be appointed to the Issuer's Board to fill the vacancies recently created by the unexpected resignations of Messrs. Halpin and Weisman. In doing so, the Issuer would have a primarily independent Board that is far more likely to serve and represent the interests of all of the Issuer's shareholders and not merely one constituency led by Morris Sutton. Further, the Reporting Persons believe that Messrs. Jessie and Joey Sutton do little to further the Issuer's business and strategic objectives, and have been placed in such high-paying positions of management as a result of Morris Sutton's selfish desire to compensate his own children at the expense of the Issuer and its shareholders. The Fund had been advised by members of the Issuer's Board that it would receive a response during the week of March 13th to its request to appoint two nominees to the Board and to terminate Messrs. Jessie and Joey Sutton. The Fund once again failed to receive a response within the time frame and, as a result, the Fund has begun to take steps to more actively seek to change the composition of the Issuer's Board and to effect the other changes it has been seeking, including, without limitation, by means of seeking to call a special meeting of shareholders to elect a new slate of directors. On March 24, 2006, the Fund delivered to the Secretary of the Issuer the Notice notifying the Issuer of the Fund's intention to nominate three (3) persons for election to the Board of Directors of the Issuer at the 2006 annual meeting of stockholders of the Issuer. As previously disclosed on several occasions, the Fund has sought to create a more independent Board and has requested that the Issuer take all appropriate action to appoint independent members designated by the Fund. The Fund intends to prepare and file with the Securities and Exchange Commission (the "SEC") a proxy statement and form of proxy relating to the nomination of three persons to serve as members of the Issuer's Board. The Reporting Persons have made numerous requests that the Issuer and the Board take actions to improve the performance and financial condition of the Issuer and to establish a more appropriate corporate governance structure. To date, all of the Fund's requests have been ignored, apparently for the purpose of furthering Morris Sutton's objective to entrench his family members and operate the Issuer for the financial benefit of himself and his family members. The Fund believes that a number of factors clearly support this conclusion and the necessity of immediately expanding the current Board (consisting of three individuals) through the election of experienced independent directors that are capable of adding value to the Issuer. These factors include the following: o The Issuer continues to experience substantial and increasing reductions in revenues and substantial losses. The Issuer had revenues of approximately $59.7 million and it incurred an operating loss of approximately $70.1 million in fiscal 2005, compared to revenues of approximately $120.9 million and an operating profit of $12.1 million in fiscal 2004. o Notwithstanding these increasingly poor results from operations, based on the Issuer's filings with the SEC, in fiscal 2005 the Issuer: o paid Jesse Sutton, the son of Morris Sutton, more than $555,000 in total cash compensation, granted him options to purchase 90,000 shares of Common Stock having a present value as of the grant date of $288,000; o paid Joseph Sutton, the son of Morris Sutton, more than $246,000 in total cash compensation, granted him options to purchase 51,000 shares of Common Stock having a present value as of the grant date of $163,200; and o engaged a printing and packaging company in which Morris Sutton's brother is a co-owner, for which the Issuer has received bills of approximately $2,300,000. o In February 2006, the Issuer named Morris Sutton, the Chairman and a principal shareholder of the Issuer, President and Interim Chief Executive Officer. o Also in February 2006, two of the Issuer's independent directors resigned because, according to disclosure made by the Issuer in a Form 8-K, "[the independent directors] believed Morris Sutton would not commit to continuing his association with the Issuer if the independent directors were to insist upon the resignation of certain other members of the Sutton family employed by the Company." o On March 16, 2006, the Nasdaq Stock Market ("Nasdaq") notified the Issuer that based on the Issuer's Form 10-Q for the period ended January 31, 2006, the Issuer no longer satisfies the requirement for continued listing on the Nasdaq Capital Market set forth in Marketplace Rule 4310(c)(2)(B), which requires the Issuer to have a minimum of $2.5 million in stockholders' equity, $35.0 million market value of listed securities, or $500,000 of net income from continuing operations. The Company is required to present its plan to achieve and sustain compliance to Nasdaq on or before March 30, 2006. o On January 25, 2005, one day before the Issuer's offering of six million shares of Common Stock, Albert Ades, the father-in-law of Jesse Sutton, filed a notice of his intention to sell 25,000 shares of the Issuer's Common Stock, resulting in gross proceeds of more than $343,000. This offering has been the subject of numerous lawsuits based on extensive violations of securities laws, described below. o There have been numerous lawsuits filed against the Issuer and its current and former directors, including: o On December 2, 2005, a vendor filed a complaint against the Issuer in the Supreme Court of the State of New York, County of New York, alleging breach of contract and failure to pay in connection with services rendered. The complaint seeks approximately $2.6 million in damages plus interest and costs, including attorney's fees. o In July 2005, four purported class action complaints were filed against the Issuer and several current and former directors and officers of the Issuer 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 Issuer's Common Stock in the Issuer's January 26, 2005 offering of six million shares of Common Stock (the "Offering"). The complaint named as defendants the Issuer, several current and former directors and officers of the Issuer, and certain financial institutions who served as underwriters with respect to the Offering. The Complaint alleges that the Registration Statement and Prospectus filed with the SEC in connection with the Issuer's Offering and certain of the Issuer's press releases and other public filings contained material misstatements and omissions about the Issuer's financial condition and prospects as well as its products. Lead Plaintiff asserts a claim under Section 11 of the Securities Act against all the defendants on behalf of investors who purchased shares in the Offering. It asserts a Section 12(a)(2) claim against the Issuer and 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 Issuer and the Defendants and a claim under Section 20(a) of the Exchange Act against the Defendants. The Complaint seeks damages in an unspecified amount. o As the Reporting Persons have previously announced, the Issuer has rejected generous financing offers from the Fund. The Board's failure to respond to our many overtures has resulted in the continued deterioration of the Issuer. On October 28, 2005, the Fund made an offer (the "Offer") to the Board to invest $7.5 million in the Issuer through the purchase from the Issuer of approximately 4,285,714 shares of the Issuer's Common Stock at a price of $1.75 per share. The Offer price represented a premium of more than 20% over the closing price of the Common Stock on the date immediately preceding the Offer, and represents a premium of nearly 48% over yesterday's closing price of the Common Stock. To the shock and dismay of us and our fellow Issuer shareholders, the Board did not even bother to respond to our Offer. At the time, and in retrospect, it is clear that the Board's inaction amounted to a gross and blatant disregard of the interests of the Issuer and its shareholders. Further, the Fund continues to request that Messrs. Jessie and Joey Sutton, the sons of Morris Sutton, immediately resign or be removed as officers and employees of the Issuer. The Reporting Persons continue to believe that a more independent board of directors would provide greater value to the Issuer and its shareholders, and that the Board has improperly served to implement the personal directives of Morris Sutton at a great cost to the Issuer and its shareholders. In appointing additional independent members to the Board, the Issuer would have a primarily independent Board that is far more likely to serve and represent the interests of all of the Issuer's shareholders, and not merely one constituency led by Morris Sutton. Further, the Reporting Persons believe that Messrs. Jessie and Joey Sutton do little to further the Issuer's business and strategic objectives, and have been placed in such high-paying positions of management as a result of Morris Sutton's selfish desire to compensate his own children at the expense of the Issuer and its shareholders. On March 24, 2006, the Fund made an offer to the Issuer in a letter addressed to the Issuer's Board to invest $3 million in the Issuer through the purchase from the Issuer of 2,000,000 shares of Common Stock at a price of $1.50 per share, representing a premium of 27.1% over yesterday's closing price of the Common Stock. The Fund believes that such financing is required by the Issuer immediately both to meet internal liquidity requirements and to address the requirements of Nasdaq described above with the goal of avoiding delisting of the Common Stock. In accordance with the letter, the Fund's offer expired on Wednesday, March 29, 2006. The Fund intends to promptly file a law suit against the Issuer and several current and former directors and officers of the Issuer. The complaint may allege, among other things, that the defendants breached their fiduciary duties while managing the business affairs of the Issuer, engaged in self-dealing transactions to further their personal interests, usurped corporate opportunities, mismanaged and/or wasted the Issuer's assets and used poor judgment in appointing certain officers of the Issuer. The complaint may also seek to enjoin the Issuer from taking certain corporate actions. On March 29, 2006, the Fund received a letter from the Board (the "Board Letter") rejecting the Fund's financing offer and making certain other allegations. On March 30, 2006, the Fund delivered the Letter to the Issuer's Board in response to the Board Letter. A copy of the Letter is attached as Exhibit A hereto and is incorporated herein by reference. The Reporting Persons may at any time, or from time to time, acquire additional shares of Common Stock or dispose of their shares of Common Stock, propose or pursue any of the foregoing actions or matters or change their intentions with respect to the matters referred to herein. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) As of the date hereof: (i) The Fund may be deemed to beneficially own 2,543,984 shares of Common Stock, representing approximately 11.43% of the outstanding shares of Common Stock. (ii) Robert S. Ellin may be deemed to beneficially own 2,932,394 shares of Common Stock, representing approximately 13.17% of the outstanding shares of Common Stock, including: (A) 33,856 shares of Common Stock owned directly by Robert S. Ellin; (B) 2,543,984 shares of Common Stock owned by the Fund; (C) 47,656 shares of Common Stock owned directly by Nancy J. Ellin, the spouse of Robert S. Ellin; (D) 225,456 shares of Common Stock owned directly by Atlantis, a Delaware corporation of which Nancy J. Ellin is the sole stockholder; and (E) 81,442 shares of Common Stock owned by the Plan. Mr. Ellin disclaims any beneficial ownership of shares of Common Stock held by the Fund except to the extent of (1) his indirect beneficial ownership as the managing member of Trinad Advisors GP, LLC, the general partner of a principal stockholder of the Fund, and (2) his indirect beneficial ownership as a limited partner of the Fund. Mr. Ellin also disclaims any beneficial ownership of shares of Common Stock owned directly by Mrs. Ellin, Atlantis and the Plan. (b) As of the date hereof: (i) The Fund has sole power to vote and dispose of 2,543,984 shares of Common Stock. (ii) Robert S. Ellin has sole power to vote and dispose of 33,856 shares of Common Stock and shared power to vote and dispose of 2,898,538 shares of Common Stock, reflecting, (A) 2,543,984 shares of Common Stock owned by the Fund; (b) 47,656 shares of Common Stock owned directly by Nancy J. Ellin, the spouse of Robert S. Ellin; (C) 225,456 shares of Common Stock that are owned directly by Atlantis; and (D) 81,442 shares of Common Stock owned by the Plan. Mr. Ellin disclaims any beneficial ownership of shares of Common Stock held by the Fund except to the extent of (1) his indirect beneficial ownership as the managing member of Trinad Advisors GP, LLC, the general partner of a principal stockholder of the Fund, and (2) his indirect beneficial ownership as a limited partner of the Fund. Mr. Ellin also disclaims any beneficial ownership of shares of Common Stock owned directly by Mrs. Ellin, Atlantis and the Plan. (c) The following Reporting Persons have effected the following transactions with respect to shares of the Common Stock since the date of the previous amendment number 10 to the Schedule 13D: On March 27, 2006, the Fund purchased 100,000 shares of Common Stock through an open market transaction at a price of $1.2113 per share. On March 29, 2006, the Fund purchased 5,510 shares of Common Stock through an open market transaction at a price of $1.2227 per share. On March 29, 2006, the Fund purchased 66,220 shares of Common Stock through an open market transaction at a price of $1.2861 per share. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Not applicable. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit A: Letter dated March 30, 2006 from Trinad Capital Master Fund Ltd. to the Board of Directors of Majesco Entertainment Company SIGNATURES After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: March 31, 2006 TRINAD CAPITAL MASTER FUND LTD. By: Trinad Capital L.P. By: Trinad Advisors GP, LLC By: /s/ Robert S. Ellin -------------------------------- Robert. S. Ellin, Managing Member /s/ Robert S. Ellin ------------------------------------- Robert S. Ellin /s/ Nancy J. Ellin ------------------------------------- Nancy J. Ellin ATLANTIS EQUITIES, INC. /s/ Nancy J. Ellin ------------------------------------- By: Nancy J. Ellin, President ROBERT S. ELLIN PROFIT SHARING PLAN /s/ Robert S. Ellin, Trustee ------------------------------------- By: Robert S. Ellin, Trustee TRINAD CAPITAL MASTER FUND LTD. By: Trinad Capital L.P. By: Trinad Advisors GP LLC By: /s/ Robert S. Ellin -------------------------------- Name: Robert S. Ellin Title: Managing Member EX-99.A 2 y19315daexv99wa.txt EX-99.A: LETTER TO BOARD OF DIRECTORS EXHIBIT A TRINAD CAPITAL MASTER FUND LTD. 2121 Avenue of the Stars, Suite 1650 Los Angeles, California 90067 March 30, 2006 Majesco Entertainment Company 160 Raritan Center Parkway Suite 1 Edison, New Jersey 08837 Attention: Board of Directors of Majesco Entertainment Company Gentlemen: We are once again disappointed by the Company's failure to act upon or accept any of our offers to make fundamental changes with respect to the Company's misuse of capital resources, board composition, management structure, corporate governance and executive compensation. For the last 10 months, we have sought to work constructively with the Company's Board of Directors to improve shareholder value for all of the Company's shareholders. During this time, we have continuously made ourselves available to meet with the Company's Board and management to discuss our proposals to improve the performance and financial condition of the Company and to establish a more appropriate corporate governance structure. To date, all of our requests have been ignored, while at the same time, the Company continues in a downward spiral. Our numerous conversations with the Board to date have resulted in a complete lack of action and a series of broken promises including, without limitation, representations that the Sutton family would never regain management control of the business (in light of the Company's poor performance under their direction) and reassurance that the Company would not receive a "going concern" designation from its auditors. We are troubled by the statement in your letter to us that the Company has sufficient capital resources to meet its capital needs. In the Company's recently filed Form 10-K, the Company's independent accounting firm stated in their report that "the Company has suffered losses that raise substantial doubt about its ability to continue as a going concern." Furthermore, the Company recently filed a Form 8-K disclosing that it has received a notice of delisting from The NASDAQ Stock Market ("Nasdaq") advising the Company that it does not comply with the Nasdaq's equity, market value and net income minimum requirements. While we believe that the business operations of the Company may have somewhat stabilized (as a result of the efforts of members of the Board who have since resigned due to a disagreement with the Company on fundamental matters discussed below), the Company still lacks the financial resources to prudently manage its business and maintain its valuable Nasdaq listing. Based on this disclosure as well as the Company's continuing net losses and increasing expenses, we have serious reservations about the Board's determination that the Company has sufficient capital resources to continue its operations. The Board's comparison of the Company's performance over the past year to its publicly-traded competitors is without foundation and demonstrates the extent to which the Board is simply not carefully monitoring the Company's performance. To our knowledge, none of these competitors have had a reduction in their market capitalization of 90%, substantially eliminated available cash reserves (and in the process received a "going concern" designation) and failed by a significant margin to achieve publicly issued revenue guidance (including a net loss of $70.9 million on $59.7 of revenues). Surely, the Company is unique in its failures and the magnitude thereof, and it is simply a gross misstatement to compare the Company to its competitors. It is not fair to lump this Board's and management's performance in with that of its peers; you should collectively stand up and take a bow for your collective achievements. We believe that Jessie and Joey Sutton, the President and the Executive Vice President of Research and Development, respectively, do little to further the Company's business and strategic objectives, and have been placed in extraordinarily high-paying positions of management as a result of Morris Sutton's selfish desire to compensate his own children at the expense of the Company and its shareholders. Our belief is bolstered by the resignation of two of the Company's independent directors in February because, according to disclosure made by the Company in a Form 8-K, "[the independent directors] believed Morris Sutton would not commit to continuing his association with the Issuer if the independent directors were to insist upon the resignation of certain other members of the Sutton family employed by the Company." We also note that the Company has never disclosed the compensation to be paid to Morris Sutton in his newly-appointed role as interim Chief Executive Officer or in other capacities. We are of the view that the Company has in the past sought to improperly characterize Mr. Sutton as someone other than an "executive officer," although he has clearly been serving in charge of a principal business unit and has been performing a policy making function for the Company. We believe that the failure to disclose such information was an intentional attempt to circumvent the requirements of applicable securities laws. It is clearly in the best interests of the Company's shareholders that a new executive management team be assembled with appropriate industry experience that is guided by the interests of shareholders and focused on the maximization of shareholder value. Incremental changes cannot save the Company at this time. We are confident that our slate of nominees will add value to the Board's decision-making process and enhance the Board's ability to maximize shareholder value. We have selected nominees with the financial, operating and marketing experience that we believe is necessary to improve the Company's operating performance. Our board nominees are committed to working with management to reduce annual operating expenses and to improve profitability for the benefit of the Company's shareholders. Also, given that none of our nominees is currently affiliated with the Company other than through their respective stock ownership, it is clear that they will each be capable of making decisions on a far more independent basis than the Board has been able to do in the past. We also continue to believe that our equity investment proposal is generous, reasonable and serves the interests of the Company's shareholders, as evidenced by the premium offered compared to the recent trading price of the Company's equity securities. We are not aware of any other proposals to purchase equity securities of the Company at this time, notwithstanding the Company's response to our offer that it is "confident we can, if necessary, obtain additional financing on terms more favorable than those you have proposed." In light of the foregoing, it is clear that the response that you elected to make publicly-available was not founded on a correct factual or legal analysis, but rather, represents yet another poorly-veiled and ill-conceived attempt to continue to operate the Company for the primary benefit of the Sutton family while the Company continues to deteriorate, without regard to your fiduciary duties to all of the Company's shareholders. Further, we hereby request the immediate resignation of Louis Lipschitz from the Company's Audit and Compensation Committees and from the entire Board. It is abundantly clear that--under his auspices--the Company has (i) agreed to compensate the members of the Sutton family in entirely excessive amounts given, in particular, the Company's current financial position and results of operations and (ii) failed to disclose the substantial compensation paid to Morris Sutton that should have been disclosed in the Company's filings with the Securities and Exchange Commission. It is entirely inappropriate for Mr. Lipschitz to serve on any of these important committees when in fact his actions have been directed to protecting and compensating members of the Sutton family at the expense of all shareholders. The excessive compensation paid to members of the Sutton family has only deprived the Company of much-needed earnings that could be instrumental to reverse the Company's current plight. Mr. Lipschitz's ill-advised actions have consistently demonstrated a blatant disregard for the public shareholders of the Company. In light of the foregoing, and as previously announced, we are expeditiously proceeding to take legal action against the current members of the Board and certain members of the Company's management. Unfortunately, we anticipate that we will only obtain suitable relief for the Company's shareholders and ourselves at such time as a court of law evaluates this situation and provides for a suitable and appropriate remedy. Very truly yours, TRINAD CAPITAL MASTER FUND LTD. By: Trinad Capital L.P. By: Trinad Advisors GP LLC By: /s/ Robert S. Ellin ---------------------------- Name: Robert S. Ellin Title: Managing Member -----END PRIVACY-ENHANCED MESSAGE-----