They would have done better selling lemonade. That's just one conclusion industry observers might come up with after digesting yesterday's quarterly earnings statement from Psychonauts publisher Majesco.

　　The company reported sales of $4.6 million for the quarter ending July 31, 2005. The bottom-line tally was a loss of $37.5 million.

　　"The lower than expected sales of some of our key products combined with the effects of the upcoming console transition and overall industry softness have made this a very challenging year," Majesco president Jesse Sutton said in a statement.

　　The company also lowered its full-year guidance. Previously, it had predicted a full-year operating loss of $16 million to $19 million on sales of $120 million to $125 million. Majesco now expects to post a full-year operating loss of $40 million to $45 million on sales of $60 million to $65 million. The full fiscal year ends October 31, 2005.

　　The analysts at Wedbush Morgan downgraded Majesco Entertainment from Buy to Sell after the figures were released yesterday.

　　However, it's not just the lowered guidance that likely has investors worried; it's the possibility the company may go out of business. "Although management believes it will be successful in either increasing the availability from its current factor or obtaining alternative financing, there can be no assurance that it will be successful in these efforts, or at terms acceptable to the Company. Failure to obtain such financing or obtaining it with unfavorable terms could have an adverse effect on future operating prospects and continued growth," Majesco said in a statement.

　　Upcoming games that could help Majesco pull out of its slump include Jaws Unleashed, Infected, Aeon Flux, and Teen Titans.

　　Yesterday after the earnings news was released, investors bid the stock down 35 percent. Today in trading, the stock tumbled further, trading down to $1.23, almost 50 percent lower than yesterday's closing price and a new 52-week low. Volume today was extremely heavy with 11,602,552 shares trading hands; average daily volume through yesterday was 728,861 shares.