UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~June 3130, ~~2019~~2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-37466

Majesco

(Exact Name of Registrant as Specified in Its Charter)

California		77-0309142
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

412 Mount Kemble Ave., Suite 110C Morristown, NJ		07960
(Address of principal executive offices)		(Zip code)

(973) 461-5200
(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, par value $0.002 per share		MJCO		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at ~~February~~August 37, 2020
Common Stock, $0.002 par value per share		43,~~235~~372,~~701~~515 shares

MAJESCO

INDEX TO FORM 10-Q FOR THE QUARTER ENDED ~~DECEMBER~~JUNE 3130, ~~2019~~2020

PART I - FINANCIAL INFORMATION		1
Item 1.	Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2928
Item 3.	Quantitative And Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	44
PART II - OTHER INFORMATION		4546
Item 1A.	Risk Factors	4546
Item 6.	Exhibits	4549
Signatures		4650

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Majesco and Subsidiaries

Consolidated Balance Sheets
(All amounts are in thousands of US Dollars except share data and as stated otherwise)

	December 31,			March 31,
	June 30,			March 31,
	2019			2019
	2020			2020
ASSETS	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	1923,~~996~~320		$	1135,~~329~~240
Short term investments		257,~~542~~546			2816,~~108~~173
Restricted cash		4239			4339
Accounts receivable, net		2629,~~259~~678			1726,~~366~~156
Unbilled accounts receivable		1421,~~579~~129			1716,~~916~~118
Prepaid expenses and other current assets		138,~~985~~355			157,~~598~~266
Total current assets		~~100~~90,~~403~~067			90100,~~360~~992
Property and equipment, net		2,195			3,026
Equipment, net		2,491			2,132
Right-of-use asset, net		3,~~964~~802			—2,977
Intangible assets, net		10,~~518~~879			129,~~969~~531
Deferred income tax assets		69,~~957~~894			7,~~816~~195
Unbilled accounts receivable, net of current portion		21,~~710~~532			~~543~~847
Other assets		~~187~~2,601			~~489~~1,746
Goodwill		3440,~~144~~224			34,~~145~~095
Total Assets	$	161,~~078~~490		$	~~149~~159,~~348~~515
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Loan from bank-receivable financing and vehicle loan	$	53		$	442
Current portion of vehicle equipment and other loans	$	646		$	25
Lease liability		1,977			—
Current portion of finance lease obligation		127			—
Accounts payable		2,233			2,327
Lease liability		1,961			1,399
Accrued expenses and other current liabilities		27,382			34,871
Accounts payable		5,261			4,159
Deferred revenue		18,172			10,988
Accrued expenses and other current liabilities		19,596			22,746
Total current liabilities		49,817			48,628
Deferred revenue		20,993			20,553
Vehicle loan		52			109
Total current liabilities		48,584			48,882
Lease liability, net of current portion		2,026			—
Vehicle, equipment and other loans, net of current portion		204			68
Consideration payable for Exaxe Holdings Limited acquisition		2,931			2,951
Finance lease obligation, net of current portion		131			—
Other liabilities		1,208			1,089
Lease liability, net of current portion		1,631			1,611
Total Liabilities		56,034			52,777
Other liabilities		2,016			2,341
Total Liabilities		52,566			52,902
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of December 31, 2019 and March 31, 2019, and no shares issued and outstanding as of December 31, 2019 and March 31, 2019		—			—
Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of June 30, 2020 and March 31, 2020, and no shares issued and outstanding as of June 30, 2020 and March 31, 2020		—			—
Common stock, par value $0.002 per share – 450,000,000 shares authorized as of December 31, 2019 and March 31, 2019; 43,235,701 shares issued and outstanding as of December 31, 2019 and 42,846,273 shares issued and outstanding as of March 31, 2019		87			86
Common stock, par value $0.002 per share – 450,000,000 shares authorized, 43,349,678 shares issued (including 54,999 shares held as Treasury Stock) and 43,294,679 shares outstanding as of June 30, 2020 and 43,334,678 shares issued (including 49,250 shares held as Treasury Stock) and 43,285,428 shares outstanding as of March 31, 2020		87			87
Additional paid-in capital		~~125~~127,~~699~~383			~~122~~126,~~163~~643
Accumulated deficit		(2015,~~002~~098	)		(2616,~~499~~385	)
Accumulated other comprehensive loss		(~~740~~3,448	)		(~~412~~3,732	)
Total stockholders’ equity attributable to Majesco stockholders		105,044			95,338
Total Stockholders’ Equity		108,924			106,613
Non-controlling interests in consolidated subsidiaries		—			1,233
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	161,490		$	159,515
Total Stockholders’ Equity		105,044			96,571
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	161,078		$	149,348

See accompanying notes to the Consolidated Financial Statements.

Majesco and Subsidiaries

Consolidated Statements of Income (Unaudited)
(All amounts are in thousands of US Dollars except per share data and as stated otherwise)

	Three Months ended December 31, 2019			Three Months ended December 31, 2018			Nine Months ended December 31, 2019			Nine Months ended December 31, 2018
	Three Months ended June 30, 2020			Three Months ended June 30, 2019
Revenue	$	3741,~~175~~247		$	3537,~~820~~304		$	~~108,534~~		$	~~104,117~~
Cost of revenue		1921,~~323~~878			1817,~~293~~434			~~55,130~~			~~53,340~~
Gross profit	$	1719,~~852~~369		$	1719,~~527~~870		$	~~53,404~~		$	~~50,777~~
Operating expenses
Research and development expenses	$	43,~~712~~818		$	45,~~850~~470		$	~~14,639~~		$	~~14,381~~
Selling, general and administrative expenses		1011,~~027~~627			1011,~~303~~826			~~31,729~~			~~29,484~~
Total operating expenses	$	14,739		$	15,153		$	46,368		$	43,865
Merger and acquisition expenses		1,819			—
Income from operations	$	3,113		$	2,374		$	7,036		$	6,912
Total operating expenses		17,264			17,296
Interest income		141			7			491			32
Income from operations		2,105			2,574
Interest expense		(79	)		(114	)		(269	)		(342	)
Interest income		36			189
Other income (expenses), net		138			(57	)		578			553
Interest expense		(136	)		(89	)
Gain on reversal of accrued contingent liability		1,359			—			1,359			835
Other income (expenses), net		21			(11	)
Income before provision for income taxes	$	42,~~672~~026		$	2,~~210~~663		$	~~9,195~~		$	~~7,990~~
Provision for income taxes		~~797~~739			~~483~~1,381			~~3,130~~			~~2,543~~
Net Income	$	31,~~875~~287		$	1,~~727~~282		$	~~6,065~~		$	~~5,447~~
Earnings per share:
Basic	$	0.0903		$	0.0503		$	~~0.14~~		$	~~0.15~~
Diluted	$	0.0903		$	0.0403		$	~~0.14~~		$	~~0.14~~
Weighted average number of common shares outstanding
Basic		43,~~102~~348,~~144~~966			3642,~~664~~912,~~718~~982			~~42,992,839~~			~~36,633,300~~
Diluted		45,~~294~~050,~~983~~609			3844,~~725~~896,~~682~~086			~~45,167,708~~			~~38,814,422~~

See accompanying notes to the Consolidated Financial Statements.

Majesco and Subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)
(All amounts are in thousands of US Dollars)

	Three Months ended December 31, 2019			Three Months ended December 31, 2018		Nine Months ended December 31, 2019			Nine Months ended December 31, 2018
	Three Months ended June 30, 2020			Three Months ended June 30, 2019
Net Income	$	31,~~875~~287		$	1,~~727~~282	$	~~6,065~~		$	~~5,447~~
Other comprehensive income/(loss), net of tax:
Foreign currency translation adjustments		~~523~~(285	)		~~346~~66		~~(376~~	)		~~(892~~	)
Unrealized gains (losses) on cash flow hedges		93569			~~1,201~~117		47			~~(170~~	)
Other comprehensive income/(loss)	$	616		$	1,547	$	(329	)	$	(1,062	)
Other comprehensive income	$	284		$	183
Comprehensive Income	$	4,491		$	3,274	$	5,736		$	4,385
Comprehensive income	$	1,571		$	1,465

See accompanying notes to the Consolidated Financial Statements.

Majesco and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
(All amounts are in thousands of US Dollars except per share data and as stated otherwise)

	Preferred Stock		Common Stock (shares)		Stock Amount		Additional Paid-In Capital			Accumulated deficit			Accumulated Other Comprehensive Income			Non- Controlling Interests			Total Stakeholder Equity
	Common stock				Additional paid-in		Accumulated			Accumulated other comprehensive			Total Stakeholders’
Balance as of March 31, 2018 as reported		—		36,600,457	$	73	$	75,022		$	(30,283	)	$	361			—		$	45,173
	Shares		Amount		capital		deficit			income			equity
Net income		—		—		—		—		$	1,036			—			—		$	1,036
Balance as of April 1, 2020		43,285,428	$	87	$	126,643	$	(16,385	)	$	(3,732	)	$	106,613
Issue of stock under ESOP and ESPP		—		—		—	$	45			—			—			—		$	45
Net income		—		—		—		1,287			—			1,287
Stock based compensation		—		—		—	$	658			—			—			—		$	658
Issue of stock under ESOP and ESPP		9,023		—		61		—			—			61
Foreign currency translation adjustments		—		—		—		—			—		$	(579	)		—		$	(579	)
Stock based compensation		—		—		679		—			—			679
Unrealized gains on cash flow hedges		—		—		—		—			—		$	(659	)		—		$	(659	)
Foreign currency translation adjustments		—		—		—		—			(285	)		(285	)
Balance as of June 30, 2018		—		36,600,457	$	73	$	75,725		$	(29,247	)	$	(877	)		—		$	45,674
Unrealized gains on cash flow hedges		—		—		—		—			569			569
Net income		—		—		—		—		$	2,829			—			—		$	2,829
Balance as of June 30, 2020		43,294,451	$	87	$	127,383	$	(15,098	)	$	(3,448	)	$	108,924
Issue of stock under ESOP and ESPP		—		—		—	$	234			—			—			—		$	234
Stock based compensation		—		—		—	$	691			—			—			—		$	691
Foreign currency translation adjustments		—		—		—		—			—		$	(659	)		—		$	(659	)
Unrealized gains on cash flow hedges		—		—		—		—			—		$	(712	)		—		$	(712	)
Balance as of September 30, 2018		—		36,600,457	$	73	$	76,650		$	(26,418	)	$	(2,248	)		—		$	48,057
Net income		—		—		—		—		$	1,829			—			—		$	1,829
Net assets received on business combination		—		—		—		—			603			—			—			603
Acquisition of Exaxe Holdings Ltd. non-controlling interest		—		—		—		—		$	—			—		$	(1,238	)	$	(1,238	)
Issue of stock under ESOP and ESPP		—		—		—	$	190			—			—			—		$	190
Stock based compensation		—		—		—	$	804			—			—			—		$	804
Foreign currency translation adjustments		—		—		—		—			—		$	346			—		$	346
Unrealized gains on cash flow hedges		—		—		—		—			—		$	1,201			—		$	1,201
Balance as of December 31, 2018		—		36,600,457	$	73	$	77,644		$	(23,986	)	$	(701	)		(1,238	)	$	51,792

	Preferred Stock		Common Stock (shares)		Stock Amount		Additional Paid-In Capital			Accumulated deficit			Accumulated Other Comprehensive Income			Non- Controlling Interests			Total Stakeholder Equity
	Common Stock				Additional paid-in		Accumulated			Accumulated other comprehensive			Non-controlling			Total stakeholders’
Balance as of March 31, 2019 as reported		—		42,846,273	$	86	$	122,163		$	(23,792	)	$	(412	)	$	1,233		$	99,278
	Shares		Amount		capital		deficit			income			interests			equity
Net assets received on business combination		—		—		—		—		$	823			—			—		$	823
Balance as of April 1, 2019 as reported		42,846,273	$	86	$	122,163	$	(23,792	)	$	(412	)	$	1,233		$	99,278
Consideration paid on business combination		—		—		—		—		$	(3,530	)		—			—		$	(3,530	)
Net assets received on business combination		—		—		—		823			—			—			823
Balance as on March 31, 2019 as adjusted		—		42,846,273	$	86	$	122,163		$	(26,499	)	$	(412	)	$	1,233		$	96,571
Consideration payable on business combination		—		—		—		(3,530	)		—			—			(3,530	)
Net income		—		—		—		—		$	1,282			—			—		$	1,282
Balance as on April 1, 2019 as adjusted		42,846,273		86	$	122,163	$	(26,499	)	$	(412	)	$	1,233		$	96,571
Issue of stock under ESOP and ESPP		—		83,492		—	$	475			—			—			—		$	475
Net income		—		—		—		1,282			—			—			1,282
Stock based compensation		—		—		—	$	929			—			—			—		$	929
Issue of stock under ESOP and ESPP		83,492		—		475		—			—			—			475
Foreign currency translation adjustments		—		—		—		—			—		$	66			—		$	66
Stock based compensation		—		—		929		—			—			—			929
Unrealized gains on cash flow hedges		—		—		—		—			—		$	117			—		$	117
Foreign currency translation adjustments		—		—		—		—			66			—			66
Balance as of June 30, 2019		—		42,929,765	$	86	$	123,567		$	(25,217	)	$	(229	)	$	1,233		$	99,440
Unrealized gains on cash flow hedges		—		—		—		—			117			—			117
Net income		—		—		—		—		$	908			—			—		$	908
Balance as of June 30, 2019		42,929,765	$	86	$	123,567	$	(25,217	)	$	(229	)	$	1,233		$	99,440
Issue of stock under ESOP and ESPP		—		71,203		—	$	402			—			—			—		$	402
Stock based compensation		—		—		—	$	569			—			—			—		$	569
Acquisition of Exaxe Holdings Ltd. non-controlling interest		—		—		—		—		$	434			—		$	(1,233	)	$	(799	)
Foreign currency translation adjustments		—		—		—		—			—		$	(964	)		—		$	(964	)
Unrealized gains on cash flow hedges		—		—		—		—			—		$	(163	)		—		$	(163	)
Balance as of September 30, 2019		—		43,000,968	$	86	$	124,538		$	(23,875	)	$	(1,356	)	$	—		$	99,393
Net income		—		—		—		—		$	3,875			—			—		$	3,875
Issue of stock under ESOP and ESPP		—		134,733		—	$	489			—			—			—		$	489
Stock based compensation		—		100,000		1	$	672			—			—			—		$	673
Acquisition of Exaxe Holdings Ltd. non-controlling interest		—		—		—		—		$	(2	)		—		$	—		$	(2	)
Foreign currency translation adjustments		—		—		—		—			—		$	523			—		$	523
Unrealized gains on cash flow hedges		—		—		—		—			—		$	93			—		$	93
Balance as of December 31, 2019		—		43,235,701	$	87	$	125,699		$	(20,002	)	$	(740	)	$	—		$	105,044

See accompanying notes to the Consolidated Financial Statements.

Majesco and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)
(All amounts are in thousands of US Dollars)

	Nine Months ended December 31, 2019			Nine Months ended December 31, 2018
	Three Months ended June 30, 2020			Three Months ended June 30, 2019
Net cash flows from operating activities
Net income	$	61,~~065~~287		$	51,~~447~~282
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation on property and equipment		~~1,185~~409			~~1,142~~408
Amortization of intangibles		~~2,458~~986			~~1,853~~817
Amortization of right-of-use asset		1,918			—
Non-cash lease expense		580			629
Stock-based compensation		~~2,170~~679			~~2,154~~929
Gain on sale of property and equipment		(101	)		(4	)
Unrealized cash flow hedges		47569			—117
Deferred income taxes		~~840~~285			~~540~~825
Change in operating assets and liabilities:
Accounts receivable		(82,~~897~~123	)		(~~949~~888	)
Unbilled accounts receivable		1(4,~~180~~999	)		(13,~~642~~351	)
Prepaid expenses and other current assets		~~1,345~~(405	)		(12,~~396~~036	)
Other non-current assets		~~287~~(761	)		~~(283~~113	)
Accounts payable		~~(92~~850	)		~~(336~~343	)
Lease liability		(~~1,879~~629	)		—(617	)
Accrued expenses and other liabilities		(46,~~144~~888	)		5(6,~~643~~603	)
Deferred revenue and other non-current liabilities		7(1,~~293~~921	)		~~586~~1,070
Net cash provided by operating activities	$	9,766		$	12,755
Net cash used in operating activities		(12,082	)		(2,894	)
Net cash flows from investing activities
Purchase of property and equipment	$	(~~495~~688	)	$	(~~951~~77	)
Proceeds from the sale of property and equipment		101			574
Proceeds from sale of intangible assets		—			(21	)
Purchase of intangible assets		(54	)		—
Purchase consideration paid on acquisition of business (net of cash acquired)		(37,~~530~~422	)		(63,~~581~~530	)
Payment on purchase of balance 10% share of Exaxe Holdings Limited		(805	)		—
Purchase of investments		(6,591	)		(9,026	)
Purchase of investments		(22,412	)		(21,794	)
Proceeds from sale of investments		15,160			13,763
Proceeds from sale of investments		24,960			18,495
Net cash provided by investing activities		406			1,134
Net cash used in investing activities	$	(2,272	)	$	(10,795	)
Net cash flows from financing activities
Payment of capital lease obligations	$	—		$	(203	)
Proceeds from shares issued under ESPP and ESOP		61			475
Proceeds from share issued under ESPP and ESOP		1,366			—
Repayment of finance lease obligations		(59	)		—
Proceeds of loan from bank		—			76,075
Repayment of loans from bank		(225	)		(315	)
Repayment of term loans		—			(1,667	)
Net cash (used in)/provided by financing activities		(223	)		160
Repayment of loans from bank		(445	)		(74,304	)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(21	)		(96	)
Net cash provided by/(used in) financing activities	$	921		$	(99	)
Net decrease in cash and cash equivalents, and restricted cash		(11,920	)		(1,696	)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		251			172
Cash and cash equivalents, and restricted cash, beginning of the period		35,279			11,329
Net increase in cash and cash equivalents, and restricted cash	$	8,666		$	2,033
Cash, cash equivalents, and restricted cash at end of the period	$	23,359		$	9,633
Cash and cash equivalents, and restricted cash, beginning of the period		11,372			9,152
Cash, cash equivalents, and restricted cash at end of the period	$	20,038		$	11,185
Supplementary disclosure of cash flow information
Income taxes paid	$	3,186		$	2,119
Interest paid	$	136		$	89
Income taxes paid	$	370		$	341

See accompanying notes to the Consolidated Financial Statements.

Majesco and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)
(All amounts are in thousands of US Dollars except per share data and as stated otherwise)

1	DESCRIPTION OF BUSINESS

Majesco (the “Company” and, together with its subsidiaries, the “Group”) is a global leader of cloud insurance software solutions for insurance business transformation. We provide technology, expertise, and leadership that helps insurers modernize, innovate and connect to build the future of their business and the insurance industry at speed and scale. We do this by providing technology that connects people and businesses to insurance in ways that are innovative, hyper-relevant, compelling and personal. In addition to the United States, we operate in Canada, Mexico, the United Kingdom, Malaysia, Singapore, Ireland and India. With our CloudInsurer^® solutions, we offer cloud-based core insurance platforms, along with distribution management and data and analytics solutions. With our Digital1^st™solutions we offer a cloud-native, digital engagement and microservices platform-as-a-service for the insurance business and an ecosystem of partners with apps that provide innovative data sources and capabilities. These solutions enable Property & Casualty/General Insurance (“P&C”), and Life, Annuities, Pensions and Group/Voluntary Benefits (“L&A and Group”) providers to modernize and optimize their businesses across the end-to-end insurance value chain, better comply with policies and regulations, innovate with new business models, enter new markets, and launch new products and services for incumbents, greenfields and startups. Using this portfolio of solutions including our core P&C, L&A and Group and LifePlus insurance platforms, data and analytics, distribution management and Digital1^st Insurance, our customers can respond to evolving market needs, growth and innovation opportunities and regulatory changes, which enables agility, innovation and speed while improving the effectiveness and efficiency of their business operations.

Majesco’s customers are insurers, managing general agents and other risk providers from the P&C, L&A and Group insurance segments worldwide.

Majesco’s common stock was listed and began trading on the NYSE American on June 29, 2015. Effective on February 26, 2019, Majesco transferred the listing of its common stock and began trading on the Nasdaq Global Market under the symbol “MJCO.”

COVID-19 Pandemic

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus, COVID-19 originating in Wuhan, China (and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this Quarterly Report on Form 10-Q. As such, it is uncertain as to the full magnitude that the pandemic will have on Majesco’s financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation and its impact on Majesco’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, Majesco is not able to estimate the effects that the COVID-19 outbreak will have on its results of operations, financial condition, or liquidity for fiscal year 2021.

As of the date of this Quarterly Report on Form 10-Q the Company has not experienced any delays in securing new customers and related revenues, cancelations of existing contracts, or delays in payments from existing customers, however, the longer this pandemic continues there may be additional impacts.

Although Majesco cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on Majesco’s results of future operations, financial position, liquidity, and capital resources, and those of the third parties on which Majesco relies in fiscal year 2021.

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements reflect the Group’s financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”).

All inter-company balances and transactions have been eliminated in consolidation.

Certain employees of the Group participate in benefit and stock-based compensation programs of our parent company Majesco Limited. The consolidated balance sheets include the outstanding equity-based compensation program of Majesco and Majesco Limited which are operated for the benefit of our employees.

Significant Accounting Policies

For a description of all significant accounting policies, see Note 2, Summary of Significant Accounting Policies, of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019~~2020 (the “Annual Report”). There have been no material changes to our significant accounting policies since the filing of the Annual Report other than Accounting Standards Codification (“ASC”) 842 for Lease accounting which has been included under Note 3. Recent Accounting Pronouncements.

Principles of Consolidation

The Group’s consolidated financial statements include the accounts of Majesco and its subsidiaries, Majesco Canada Ltd., Majesco Software and Solutions Inc. (“MSSI”), Majesco Sdn. Bhd., Majesco UK Limited, Majesco Software and Solutions India Private Limited (“MSSIPL”), Majesco Asia Pacific Pte Ltd., Exaxe ~~Limited and Exaxe~~ Holdings Limited (“Exaxe”) and Majesco Software Solutions Ireland Limited, and, assince the date of ~~December~~their 31acquisition on April 1, ~~2019~~2020, InsPro Technologies Corporation, InsPro Technologies, LLC, Atiam Technologies, LP and InsPro Hosting Services, LLC.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, ~~and~~ marketable securities, accounts receivable, long-lived assets including goodwill, income taxes, ~~goodwill~~, and stock-based compensation.

6e. Cash and Cash Equivalents

The Company considers all short-term investments purchased with an original maturity date of three months or less to be cash equivalents.

3.	RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Developments

~~In February~~New ~~2016, the Financial~~ Accounting ~~Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)~~ ~~2016-02,~~Pronouncements Leases (“ASU 2016-02”). ASU 2016-02 supersedes the lease guidance under FASB ASC Topic 840, Leases, resulting in the creation of FASB ASC Topic 842, Leases. ASU 2016-02 requires a lessee to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the lease term from operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not toyet recognize lease assets and lease liabilities. In transition, lessees and lessors were originally required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, FASB issued ASU No. 2018-11, Targeted Improvements. This update still requires modified retrospective transition; however, it adds the option to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment in the current period instead of at the beginning of the earliest period presented. Under this option, comparative periods presented in the financial statements in which the new lease standard is adopted ~~will continue to be presented in accordance with prior guidance. The Company has adopted the new accounting standard using the modified retrospective alternative effective April 1, 2019.~~

~~The adoption~~In ofJune 2016, the ~~new~~FASB ~~standard~~issued ~~had~~Accounting aStandards ~~material~~Update ~~effect~~No. 2016-13, on“Financial ~~the~~Instruments ~~Company’s~~- ~~financial~~Credit ~~statements,~~Losses ~~with~~(Topic ~~the~~326)” ~~most~~(“ASU ~~significant~~2016-13”). ~~effects~~ASU 2016-13 revises the methodology offor ~~adoption~~measuring ~~relating~~credit tolosses ~~(1)~~on financial instruments and the ~~recognition~~timing of ~~new~~when ~~ROU~~such ~~assets~~losses ~~and~~are ~~lease~~recorded. ~~liabilities~~Originally, onASU ~~its~~2016-13 ~~balance~~was effective ~~sheet~~for fiscal years, and for ~~real~~interim ~~estate~~periods ~~operating leases;~~within ~~and~~those ~~(2)~~fiscal ~~providing~~years, ~~significant~~beginning ~~new~~after ~~disclosures~~December ~~about~~15, ~~its~~2019, ~~leasing~~with ~~activities~~early adoption permitted. ~~Upon~~In ~~adoption~~November 2019, ~~the~~FASB ~~Company~~issued ~~recognized~~ASU ~~operating~~2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives ~~lease~~and ~~liabilities~~Hedging of(Topic ~~approximately~~815), $5and Leases (Topic 842).8” ~~million~~This ~~based~~ASU ondefers the ~~present~~effective ~~value~~date of ASU 2016-13 for public companies that are considered smaller reporting companies as defined by the ~~remaining~~SEC ~~minimum~~to ~~rental~~fiscal ~~payments~~years ~~for~~beginning ~~existing~~after December 15, 2022, including ~~operating~~interim ~~leases~~periods within those fiscal years. The Company ~~also~~is ~~recognized~~planning ~~corresponding~~to ~~ROU~~adopt ~~assets~~this standard in the first quarter of ~~approximately~~fiscal $52023.8 The ~~million.~~Company ~~There~~ is nocurrently ~~impact~~evaluating tothe ~~stockholders’ equity~~potential ~~from~~effects of adopting the ~~adoption~~provisions of ASU No. 2016-13 on its consolidated financial statements, particularly its recognition of allowances for accounts receivable.

In ~~June~~ ~~2016~~December 2019, the FASB issued ASU ~~No. 2016~~2019-1312, ~~Financial~~“Income ~~Instruments~~Taxes ~~- Credit Losses~~ (Topic ~~326~~740): ~~(“ASU~~Simplifying ~~No.~~the ~~2016-13~~Accounting for Income Taxes”). as part of its initiative ~~ASU~~to Noreduce complexity in the accounting standards. ~~2016~~The standard eliminates certain exceptions related to the approach for intra-13period tax ~~revises~~allocation, the methodology for ~~measuring~~calculating ~~credit~~income ~~losses~~taxes onin ~~financial~~an ~~instruments~~interim period and the ~~timing~~recognition of ~~when~~deferred ~~such~~tax liabilities ~~losses~~for ~~are~~outside ~~recorded.~~basis ~~ASU No~~differences. ~~2016-13~~The ~~will~~standard bealso ~~effective~~clarifies ~~for~~and ~~the~~simplifies ~~Company~~other inaspects of the ~~first~~accounting ~~quarter~~for ofincome ~~fiscal~~taxes. ~~year~~The standard ~~2021,~~is ~~with~~effective ~~early~~for ~~adoption permitted~~fiscal years, and isinterim toperiods bewithin ~~applied~~those ~~using~~fiscal ayears, ~~modified~~beginning ~~retrospective~~after ~~approach~~December 15, 2020. Early adoption is permitted. The Company is currently evaluating the ~~potential~~impact ~~effects of~~that ~~adopting~~this ~~the~~guidance ~~provisions~~will ofhave ~~ASU~~upon ~~No.~~its ~~2016-13~~financial onposition and ~~its~~results ~~consolidated~~of ~~financial~~operations, ~~statements~~if any.

~~In January~~Recently ~~2017,~~adopted ~~the~~accounting ~~FASB~~pronouncements issued ASU No. 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which removes the requirement for an entity to calculate the implied fair value of goodwill (as part of step 2 of the current goodwill impairment test) in measuring a goodwill impairment loss. The standard will be effective for the Company in the first quarter of fiscal 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Based on its current assessment, the Company does not expect the adoption of this update to have a material impact on its consolidated financial statements.

In ~~February~~ ~~2018~~January 2017, the FASB issued ASU ~~2018~~No. 2017-0204, “~~Income~~Intangibles — ~~Statement~~Goodwill -and ~~Reporting~~Other ~~Comprehensive Income~~ (Topic ~~220~~350): ~~Reclassification of~~Simplifying ~~Certain~~the ~~Tax~~Test ~~Effects~~for ~~from~~Goodwill ~~Accumulated Other Comprehensive Income~~Impairment,” ~~(“ASU 2018-02”),~~ which ~~permits~~removes the ~~reclassification~~ ofrequirement ~~stranded~~for an ~~tax~~entity ~~effects~~to ~~resulting~~calculate ~~from~~ the ~~Tax~~implied ~~Cuts~~fair ~~and~~value ~~Jobs~~of ~~Act~~goodwill (~~the~~as ~~“TCJA”~~part orof ~~“U.S.~~step ~~tax~~2 ~~reform”) from~~of ~~accumulated~~the ~~other~~current ~~comprehensive~~goodwill ~~income~~impairment ~~(loss~~test) toin ~~retained~~measuring a ~~earnings~~goodwill impairment loss. The ~~new~~ standard ~~became~~will be effective for the Company beginning ~~with~~April ~~the~~1, ~~first~~2020. ~~quarter~~Early ofadoption ~~fiscal~~is ~~2020~~permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this ~~guidance~~ pronouncement did not have a material impact on ~~the~~its ~~Company’s~~ consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, “Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which aligns the measurement and classification guidance for share-based payments to nonemployees with that for employees, with certain exceptions. It expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in the entity’s own operations and supersedes the guidance in ASC 505-50. The ASU retains the existing cost attribution guidance, which requires entities to recognize compensation cost for nonemployee awards in the same period and in the same manner (i.e., capitalize or expense) they would if they paid cash for the goods or services, but it moves the guidance to ASC 718. The guidance also allows nonpublic entities to account for nonemployee awards using certain practical expedients that are already available for employee awards, but the same accounting policies must be used for awards to both employees and nonemployees. The new standard became effective for the Company beginning with the first quarter of fiscal 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In ~~July~~ August 2018, the FASB issued ASU No. 2018-0913, Disclosure –Framework ~~Codification~~- ~~Improvements~~Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-0913”), which ~~facilitates~~amends ~~amendments to~~ASC ~~a variety of topics to clarify~~820, ~~correct~~Fair ~~errors~~Value ~~in, or make minor improvements to the accounting standards codification~~Measurement. ~~The effective~~ASU ~~date~~2018-13 ofmodifies the ~~standard~~disclosure isrequirements ~~dependent~~for onfair ~~the facts and circumstances of each amendment. Some amendments do not require transition~~value ~~guidance~~measurements ~~and~~by ~~will~~removing, bemodifying, ~~effective~~or ~~upon~~adding ~~the~~certain ~~issuance~~disclosures. ofThe ~~this~~new standard. ~~A majority of the amendments in ASU 2018-09~~ became ~~effective~~ effective for the Company beginning with the first quarter of fiscal ~~2020~~2021. The adoption of this guidance did not have a material ~~impact~~ impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which amends ASC 820, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The effective date is the first quarter of fiscal year 2021, with early adoption permitted for the removed disclosures and delayed adoption until fiscal year 2021 permitted for the new disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2018-13 on its consolidated financial statements.

Emerging Growth Company

We are an “emerging growth company” and “smaller reporting company” under the federal securities laws and are subject to reduced public company reporting requirements. We will remain an emerging growth company until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, ~~which~~as amended, which would occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the preceding three-year period and (d) the last day of our fiscal year containing the fifth anniversary of the date on which shares of our common stock were offered in connection with the completion of our merger with Cover-All, or March 31, 2021. Section 107 of the Jumpstart Our Business Startups Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have taken advantage of the extended transition period for complying with certain new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

4.	FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group’s financial instruments consist primarily of cash and cash equivalents, short term investments in time deposits, restricted cash, accounts receivable, unbilled accounts receivable, accounts payable, accrued liabilities and derivative financial instruments. The carrying amounts of cash and cash equivalents, short term investments in time deposits, restricted cash, accounts receivable, unbilled accounts receivable, accounts payable and accrued liabilities as of the reporting date approximate their fair market value due to the relatively short period of time of original maturity tenure of these instruments.

Basis of Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The current accounting guidance for fair value measurements defines a three-level valuation hierarchy for disclosures as follows:

	Level 1:	Unadjusted quoted prices in active markets for identical assets or liabilities.

	Level 2:	Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

	Level 3:	Unobservable inputs that are supported by little or no market activity, which require the Group to develop its own assumptions.

8The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of June 30, 2020 and March 31, 2020:

The following table sets forth the financial assets, measured at fair value, by level within the fair value hierarchy as of December 31, 2019 and March 31, 2019:

Assets and Liabilities
	June 30, 2020			March 31, 2020
Level 2
Derivative financial instruments (included in the following line items in the consolidated balance sheets)
Prepaid expenses and other current assets	$	138		$	71
Other liabilities		(419	)		(760	)
Other assets		42			23
Accrued expenses and other liabilities		(553	)		(1,092	)
	$	(792	)	$	(1,758	)
Level 3
Contingent consideration		(1,655	)		(1,599	)
	$	(1,655	)	$	(1,599	)
Total	$	(2,447	)	$	(3,357	)

Assets and Liabilities	As of
	December 31, 2019			March 31, 2019
Level 2
Derivative financial instruments (included in the following line items in the consolidated balance sheets)
Prepaid expenses and other current assets	$	470		$	132
Other liabilities		(101	)		(21	)
Other assets		155			436
Accrued expenses and other liabilities		(72	)		(136	)
	$	452		$	411
Level 3
Contingent consideration		(3,007	)		(4,884	)
	$	(3,007	)	$	(4,884	)
Total	$	(2,555	)	$	(4,473	)

The following table presents the change in level 3 instruments:

	As of and for the three months ended
	June 30, 2020			June 30, 2019
	December 31, 2019				December 31, 2018
Opening balance	$	(1,599)		$	—
Opening balance	$	(4,206	)		$	—
Total expense recognized in the consolidated statements of income		(56)			—
Partial payment of contingent consideration		—				—
Closing balance	$	(1,655)		$	—
Total gain recognized in the consolidated statements of income		1,199				—
Closing balance	$	(3,007	)		$	—

	As of and for the nine months ended
	December 31, 2019			December 31, 2018
Opening balance	$	(4,884	)	$	(835	)
Partial payment of contingent consideration		678			—
Total gain recognized in the consolidated statements of income		1,199			835
Closing balance	$	(3,007	)	$	—

~~The~~On November 27, 2018 (the “Agreement Date”) the Company ~~considers~~entered into a share purchase agreement (the “Exaxe Agreement”) for the acquisition of all ~~short-term~~the ~~investments~~issued ~~purchased~~share ~~with~~capital an(collectively, ~~original~~the ~~maturity~~“Securities”) of Exaxe Holdings Limited, a private limited company incorporated in Ireland (“Exaxe”). On the Agreement Date, the Company completed the purchase of 90% of the Securities. The Company agreed to purchase, and the sellers agreed to sell to the Company, the remaining 10% of the Securities on August 1, 2019. The effective date of ~~three~~the ~~months~~transaction orwas ~~less~~October 1, 2018 in which all economic activity was included. The Company also agreed to bemake ~~cash~~certain ~~equivalents~~earnout payments to the sellers if certain adjusted EBITDA (as defined in the Exaxe Agreement) targets for Exaxe are met.

~~Contingent~~ The contingent consideration ~~pertaining~~payable tofor the acquisition of the ~~consulting~~ business of ~~Agile~~Exaxe aswas ~~of December 31~~$1,655 ~~2015~~for ~~has~~the ~~been~~period ~~classified under~~ended ~~level~~June 330, as2020 ~~the~~and ~~fair~~$1,599 ~~valuation~~at ofMarch ~~such~~31, 2020. The long-term contingent consideration for ~~and~~Exaxe has been ~~calculated~~evaluated ~~using~~for ~~one~~fair orvalue. ~~more~~During ~~significant~~the ~~inputs which~~year ~~are~~ended ~~not~~March ~~based~~31, on2020, ~~observable~~the ~~market~~Group ~~data.~~and ~~The~~the ~~fair~~former ~~value~~founders of Exaxe determined that the ~~contingent~~year ~~consideration~~1 ~~was~~earn-out ~~estimated~~targets ~~using~~under athe ~~discounted cash~~Exaxe ~~flow~~share ~~technique~~purchase ~~with~~agreement ~~significant~~were ~~inputs~~not met and that ~~are~~no ~~not~~earn-out ~~observable~~was inpayable to them towards the ~~market~~year 1 earn-out. ~~The~~Accordingly, ~~significant~~the ~~inputs~~accrued ~~not~~deferred ~~supported~~payment byfor ~~market activity~~year ~~included~~1 ~~the~~was ~~Group’s~~reversed ~~probability~~in ~~assessments~~the consolidated statements of income ~~expected~~during ~~future~~the ~~cash~~quarter ~~flows~~ended ~~related~~December to31, ~~its~~2019. ~~acquisition~~During the fourth quarter of the ~~consulting~~fiscal year ended March 31, 2020, the Company again reviewed the business projections of ~~Agile~~Exaxe ~~during~~based on the ~~earn~~impact of COVID-~~out~~19. ~~period,~~During ~~appropriately~~this ~~discounted~~exercise ~~considering~~it was determined that one of the ~~uncertainties~~major ~~associated~~customers ~~with~~of Exaxe in the ~~obligation~~business of selling door to door insurance was impacted significantly by the pandemic, which ~~and~~would ~~calculated~~have ina ~~accordance~~negative impact on Exaxe’ s engagement with this customer going forward. Based on the ~~terms~~circumstances ofit was determined that Exaxe would not be able to meet the ~~asset~~full ~~purchase~~earn ~~agreement~~out (targets for the ~~“Agile~~remaining ~~Agreement”)~~two ~~dated~~years. ~~December 12,~~Majesco carried out a fair valuation ~~2014~~of the contingent consideration liability and reversed a further EUR 1,339 as(approximately ~~amended~~$1,473 onat ~~January 26~~exchange rates in effect at November 27, ~~2016~~2018). All Euros are in thousands unless otherwise indicated.

The total gain attributable to changes in the estimated contingent consideration payable for the acquisition of ~~the~~Exaxe ~~consulting~~was ~~business of Agile were~~ $02,832 ~~and $0~~ for the ~~three~~year ~~and nine months~~ ended ~~December~~March 31, 2020. The ~~2019,~~fair ~~respectively~~value ~~and~~of $0the ~~and~~liability ~~$835~~has ~~for~~been ~~the~~determined ~~three~~as ~~and nine~~per ~~months~~exchange ~~ended~~rates ~~December~~in ~~31,~~effect ~~2018,~~as ~~respectively.~~June ~~The~~30, ~~Group~~2020, ~~paid~~and noan ~~earn-out~~expense of ~~consideration~~$56 tohas ~~Agile~~been considered in the ~~fiscal year ended March 31~~selling, ~~2019.~~general ~~The~~and ~~Group~~administrative ~~paid~~expenses ~~$1,100~~in tothe ~~Agile~~consolidated asstatements ~~earn-out~~of ~~consideration~~income infor the first ~~fiscal~~quarter ~~year~~ ended ~~March 31~~June 30, ~~2018~~2020.

~~During the~~The ~~quarter~~fair ~~ended~~value ~~December~~of ~~31,~~derivative financial ~~2018,~~instruments ~~the~~is ~~Group~~determined ~~and~~based ~~the~~on ~~shareholders~~observable ofmarket ~~Agile~~inputs ~~determined~~and ~~that~~valuation ~~the~~models. ~~final~~The ~~earnout~~derivative ~~targets~~financial ~~under the~~instruments ~~Agile~~are ~~Agreement~~valued ~~would~~based ~~not~~on bevaluations ~~met~~received ~~and~~from ~~that~~the norelevant ~~further~~counterparty ~~contingent~~(i.e., ~~consideration~~bank). ~~would~~The ~~therefore~~fair bevalue ~~due~~of ~~under~~ the ~~Agile~~foreign ~~Agreement.~~exchange forward ~~Accordingly,~~contract ~~the~~and ~~accrued~~foreign ~~contingent~~exchange ~~consideration~~par forward contract has been ~~reversed~~determined inas the ~~consolidated~~difference ~~statements~~between ofthe ~~income~~forward ~~during~~rate on the ~~three~~reporting date and ~~nine~~the ~~months~~forward ~~period~~rate ~~ended~~on ~~December~~the 31original transaction, ~~2018~~multiplied by the transaction’s notional amount (with currency matching).

Contingent consideration pertaining to the acquisition of the stock of Exaxe as of March 31, 2019 has been classified under level 3 as the fair value of such contingent consideration has been calculated using one or more significant inputs which are not based on observable market data. The fair value of the contingent consideration was estimated using a discounted cash flow technique with significant inputs that are not observable in the market. The significant inputs not supported by market activity included the Group’s probability assessments of expected future cash flows related to its acquisition of the stock of Exaxe during the earn-out period, appropriately discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the share purchase agreement dated November 27, 2018 (the “Exaxe Agreement”).

The estimated contingent consideration payable for the acquisition of the stock of Exaxe was $3,007 at December 31, 2019 and $4,884 at March 31, 2019. The long-term contingent consideration has been evaluated for net present value. During the quarter ended December 31, 2019, the Group and the former founders of Exaxe determined that the year 1 earn-out targets under the Exaxe share purchase agreement were not met and that no earn-out was payable to them towards the year 1 earn-out. Accordingly, the accrued deferred payment for year 1 has been reversed in the income statement during the period ended December 31, 2019 and disclosed as a separate line item below the income from operations for the quarter. The total gain attributable to changes in the estimated contingent consideration payable for the acquisition of Exaxe were $1,359 and $1,359 for the three and nine months ended December 31, 2019.

The fair value of derivative financial instruments is determined based on observable market inputs and valuation models. The derivative financial instruments are valued based on valuations received from the relevant counter-party (i.e., bank). The fair value of the foreign exchange forward contract and foreign exchange par forward contract has been determined as the difference between the forward rate on the reporting date and the forward rate on the original transaction, multiplied by the transaction’s notional amount (with currency matching).

5.	BORROWINGS

MSSIPL Facilities

On May 9, 2017, MSSIPL and Standard Chartered Bank entered into an Export Invoice Financing Facility, Working Capital Overdraft Facility, Short Term Loans Facility, Bonds and Guarantees Facility and Pre Shipment Financing Under Export Orders Facility (the “Combined Facility”) pursuant to which Standard Chartered Bank agreed to a Combined Facility of up to 200 million Indian rupees (or approximately $2,~~801~~600 at exchange rates in effect on ~~December 31~~June 30, ~~2019~~2020). The Export Invoice Financing Facility is for the financing of MSSIPL’s sale of services, as evidenced by MSSIPL’s invoice to the customer. Each amount drawn is required to be repaid within 90 days. The interest on this facility is based on the marginal cost of funds based lending rate (the “MCLR”) plus a margin to be agreed with Standard Chartered Bank at the time of each drawdown. The MCLR is to be determined on the date of each disbursement and is effective until repayment. Interest will accrue from the utilization date to the date of repayment or payment of that utilization. The Working Capital Overdraft Facility and the Short -Term Loans Facility are for working capital purposes and subject to sub-limits. The ~~interest~~Pre-Shipment onFinancing ~~these~~Under ~~facilities is based on the MCLR plus a margin to be agreed with Standard~~Export ~~Chartered~~Orders ~~Bank~~Facility ~~at the time of each disbursement. The MCLR~~ is tofor ~~be determined on~~ the ~~date~~delivery of ~~each~~software ~~disbursement~~ready ~~and~~for ~~is effective until repayment or maturity~~sale. ~~Interest will accrue from the draw down date up to the repayment or maturity date.~~ The Bonds and Guarantees Facility is for the issuance of guarantees and subject to commissions as agreed with Standard Chartered Bank from time to ~~time. The Pre Shipment Financing Under Export Orders Facility is for the delivery of software ready for sale. The interest on this facility is based on the MCLR plus a margin~~ to ~~be agreed with Standard Chartered Bank at the~~ time ~~of each disbursement~~. ~~The MCLR is to be determined on the date of utilization and is effective until repayment. Interest will accrue from the utilization date up to the repayment date.~~

The interest on the Combined Facility is based on the marginal cost of funds-based lending rate (the “MCLR”) plus a margin to be agreed with Standard Chartered Bank at the time of each drawdown. The MCLR is to be determined on the date of each disbursement and is effective until repayment. Interest will accrue from the utilization date to the date of repayment or payment of that utilization. The interest under the Combined Facility may be changed by Standard Chartered Bank upon the occurrence of certain market disruption events. The Combined Facility is secured by a first pari passu security interest over the current assets of MSSIPL. MSSIPL was in compliance under the terms of this Combined Facility as of ~~December~~June 3130, ~~2019~~2020. There are no outstanding loans under this Combined Facility as of ~~December~~June 3130, ~~2019~~2020.

~~Term Loan Facility~~10

OnAuto ~~March 23, 2016, Majesco entered into a Loan Agreement (the “Loan Agreement”) with HSBC Bank USA, National Association (“HSBC”) pursuant to which HSBC agreed to extend~~ loans to Majesco in the amount of up to $10,000 and Majesco issued a promissory note to HSBC in the maximum principal amount of $10,000 or any lesser amount borrowed under the Loan Agreement (the “Note”, and together with the “Loan Agreement”, the “Facility”). The outstanding principal balance of the loan bore interest based on LIBOR plus a margin in effect on the first day of the relevant interest period. Until January 1, 2018, only interest was payable under the loan. Commencing on January 1, 2018, and on each January 1 and July 1 thereafter until July 1, 2020, installments of principal in the amount of $1,667 were due and payable semi-annually. All principal and interest outstanding under the Note was due and payable on March 1, 2021. The Facility was unsecured and supported by a letter of credit issued by a bank of $10,000, which was secured by a cash pledge of our parent company, Majesco Limited. On February 27, 2019, Majesco used a portion of the proceeds from its rights offering to repay the total amount outstanding under the Loan Agreement with HSBC and terminated this Facility.

MSSIPL has obtained vehicle loans from HDFC Bank for the purchase of vehicles. The loans bear interest at a rate of 8.75% per annum, are payable in 60 monthly installments over a 5-year period and are secured by a pledge of the vehicles. The outstanding balance of these vehicle loans as of June 30, 2020 was $86.

Receivable Purchase Facility

On January 13, 2017, Majesco and its subsidiaries MSSI, and Cover-All Systems, jointly and severally entered into a Receivable Purchase ~~Agreement~~ Agreement with HSBC pursuant to which HSBC may advance funds against receivables at an agreed advance rate. The outstanding aggregate ~~amount~~ amount of all advances may not exceed a $10,000 facility limit. The facility bears interest at 2% plus the 90 -day LIBOR rate. HSBC will also receive an arrangement fee equal to 0.20% of the facility limit and a facility review fee equal to 0.20% of the ~~facility~~ facility limit. Majesco ~~serves~~will serve as HSBC’s agent for the collection of receivables, and Majesco ~~collects~~will collect and otherwise enforce ~~enforces~~ payment of the receivables. HSBC has a security interest in accounts of MSSI and Cover-All Systems. The term of the Receivable ~~Purchase~~ Purchase Agreement is for a minimum period of 12 months and shall continue unless terminated by either party. Either party may ~~terminate~~ terminate the Receivable Purchase Agreement at any time upon 60 days’ prior written notice to the other party. The ~~Group expensed the discount, interest and other direct fees as incurred. The~~ Receivable Purchase Agreement will provide additional liquidity to the Group for working capital and other general corporate purposes.

OnAs ~~November~~of ~~29,~~June ~~2018~~30, ~~the Group amended the Receivable Purchase Agreement to increase its limit to $15~~2020,~~000~~ ~~until~~Majesco ~~March~~had ~~29, 2019, and~~ $~~10,000~~0 thereafter. HSBC received an arrangement fee of $10 in connection with this amendment. The amendment provided additional liquidity to Majesco for mergers and acquisitions and other general corporate purposes. There are no outstanding ~~loans~~ under this ~~facility~~ ~~as of December 31, 2019. Majesco used proceeds from this~~ facility ~~to repay existing indebtedness and for capital expenditures, working capital and other general corporate purposes~~.

Exaxe Facilities

~~Exaxe~~Majesco Software Solutions Ireland Limited ~~has~~(“Exaxe”) had a receivables purchase agreement with AIB Commercial Finance Limited (“AIB Commercial”) pursuant to which AIB Commercial ~~will~~would purchase up to €EUR 200 in receivables from ~~Exaxe~~Majesco Software Solutions Ireland Limited on a discounted basis. In addition, ~~Exaxe~~Majesco Software Solutions Ireland Limited ~~has~~ had an overdraft facility with Allied Irish Banks, p.l.c. (“AIB”) of up to €EUR 100. The facility ~~has~~had a variable interest rate and is payable on demand at any time. This facility iswas secured by the assets of ~~Exaxe~~Majesco Software Solutions Ireland Limited. As of ~~December~~June 3130, ~~2019~~ 2020, there ~~are~~were no outstanding balances under these facilities. Both facilities were terminated during the year ended March 31, 2020.

On July 17, 2019, Majesco’s Software ~~subsidiary~~Solutions ~~Exaxe~~Ireland Limited, and HSBC France, Dublin Branch ~~(“HSBC France”)~~, entered into a €EUR 400 ~~(or approximately $448 at exchange rates in effect on December 31, 2019)~~ overdraft facility ~~(the “HSBC France Facility”)~~. The ~~HSBC~~facility ~~France Facility~~ is for working capital purposes. ~~The~~and ~~HSBC France Facility~~ is subject to review from time to time~~, and in any event a review shall occur in May 2020~~. Exaxe ~~Limited~~ may terminate the ~~HSBC~~facility ~~France Facility~~ at any time without penalty. Interest under the ~~HSBC~~facility ~~France Facility~~ is payable at the rate of 3.5% per annum over the prevailing European Central Bank Rate on amounts up to €EUR 400 and 7% per annum over such rate on amounts over €EUR 400. The ~~HSBC~~facility ~~France Facility~~ is secured by ~~the~~a fixed and floating charge over certain assets of Exaxe ~~Limited~~. Exaxe ~~Limited~~ agreed to certain negative covenants under the ~~HSBC France Facility~~facility, including not to create or allow any mortgage or security over its assets or revenues. ~~All Euros are in thousands unless indicated otherwise.~~ As of ~~December~~June 3130, ~~2019~~2020, there ~~are~~were no outstanding balances under ~~the~~this ~~HSBC France Facility~~facility.

~~Vehicle loans~~InsPro Facilities

~~MSSIPL~~Equipment ~~has~~financing obtained vehicle loans from HDFC Bank for the purchase of vehicles. The loans bear interest at a rate of 8.75% per annum, are payable in 60 monthly installments over a 5-year period and are secured by a pledge of the vehicles. The outstanding balance of these vehicle loans as of December 31, 2019 is $52.obligations

On January 5, 2019, InsPro LLC entered into a financing arrangement with an unaffiliated company to finance the purchase of certain third-party perpetual software licenses and software subscription and maintenance. The amount financed was $802, which included $757 of cost of purchased software licenses and software subscription and maintenance services plus $45 of applicable sales tax. The financing arrangement commenced on January 5, 2019, has an annual interest rate of 6.1% and consists of 36 equal monthly payments of principal, interest and applicable sales tax of $24 commencing on February 1, 2019 and ending on January 1, 2022. The balance for this loan was $412 as of June 30, 2020. The Company’s right to use the purchased software licenses and software subscription and maintenance services is contingent on the Company remaining in compliance with the terms of this loan. As of June 30, 2020, the Company is in compliance with this loan. For the three months ended June 30, 2020, the interest expense on this loan was $7.

On February 28, 2019, InsPro LLC entered into a financing arrangement with an unaffiliated company to finance the purchase of perpetual software licenses for third party software products. The amount financed was $1,148. The financing arrangement has an annual interest rate of 7.13% and consists of 24 equal monthly payments of principal, interest of $51 which commenced in March 2019 and will end on February 1, 2021. The balance for this loan was $352 as of June 30, 2020. The Company’s right to use the purchased software licenses and software subscription and maintenance services is contingent on the Company remaining in compliance with the terms of this loan. As of June 30, 2020, the Company is in compliance with this loan. For the three months ended June 30, 2020, the interest expense on this loan was $8.

Finance lease obligations

The Company’s subsidiary, InsPro LLC, has entered into several finance lease obligations to purchase equipment used for operations (“Finance Leases”). The Company has the option to purchase the equipment at the end of each Finance Lease agreement for one dollar. The liability of these arrangements was $258 as of June 30, 2020.

6.	DERIVATIVE FINANCIAL INSTRUMENTS

The following table provides information of fair values of derivative financial instruments:

	Asset				Liability
	Noncurrent*		Current*		Noncurrent*		Current*
As of December 31, 2019
As of June 30, 2020
Designated as Cash Flow Hedges
Foreign exchange forward contracts	$	~~155~~42	$	~~470~~138	$	~~101~~419	$	72553
Total	$	~~155~~42	$	~~470~~138	$	~~101~~419	$	72553
As of March 31, 2019
As of March 31, 2020
Designated as Cash Flow Hedges
Foreign exchange forward contracts	$	~~436~~23	$	~~132~~71	$	21760	$	~~136~~887
	$	~~436~~23	$	~~132~~71	$	21760	$	~~136~~887

The non-current and current portions of derivative assets are included in ‘Other assets’ and ‘Prepaid expenses and other current assets,’ respectively, and the noncurrent and current portions of derivative liabilities are included in ‘Other liabilities’ and ‘Accrued expenses and other current liabilities,’ respectively, in our consolidated balance sheets.

Cash Flow Hedges and Other Derivatives

We use foreign currency forward contracts and par forward contracts to hedge our risks associated with foreign currency fluctuations related to certain commitments and forecasted transactions. The use of hedging instruments is governed by our policies which are approved by our Board of Directors. We designate these hedging instruments as cash flow hedges. Derivative financial instruments we enter into that are not designated as hedging instruments in hedge relationships are classified as financial instruments at fair value in the consolidated statements of income.

The outstanding forward contracts as of ~~December~~June 3130, ~~2019~~2020 mature between one month and 37 months. As of ~~December~~June 3130, ~~2019,~~2020 the Group ~~estimates~~ estimates that $47(592), net of tax, of the net (loss)/gains related to derivatives designated as cash flow hedges recorded in accumulated other comprehensive income (loss) is expected to be reclassified into earnings within the next 37 months.

The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

The ~~following~~related ~~table~~cash ~~provides~~flow ~~information~~impacts ~~on the amounts~~ of ~~pre-tax~~all ~~(losses) recognized in and reclassified from Accumulated Other Comprehensive Income (“AOCI”)~~ of our derivative ~~instruments~~activities ~~designated~~are reflected as cash ~~flow~~flows ~~hedges:~~from operating activities.

	Amount of Income (Loss) recognized in AOCI (effective portion)			Amount of (Loss) reclassified from AOCI to Statement of Operations (Revenue)
For the nine months ended December 31, 2019
Foreign exchange forward contracts	$	41		$	(30	)
Total	$	41		$	(30	)
For the nine months ended December 31, 2018
Foreign exchange forward contracts	$	(239	)	$	(517	)
Total	$	(239	)	$	(517	)

The following table provides information on the amounts of pre-tax income/(loss) recognized in and reclassified from Accumulated Other Comprehensive Income (“AOCI”) of derivative instruments designated as cash flow hedges:

	Amount of Income (Loss) recognized in AOCI (effective portion)		Amount of (Loss) reclassified from AOCI to Statement of Operations (Revenue)
For the three months ended June 30, 2020
Foreign exchange forward contracts	$	569	$	(285	)
Total	$	569	$	(285	)

For the three months ended June 30, 2019
Foreign exchange forward contracts	$	117	$	66
Total	$	117	$	66

7.	ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in accumulated other comprehensive income by component were as follows:

	Three months ended December 31, 2019									Three months ended December 31, 2018
	Three months ended June 30, 2020									Three months ended June 30, 2019
	Before tax			Tax effect			Net ~~of Tax~~			Before tax			Tax effect			Net ~~of Tax~~
Other comprehensive income
Foreign currency translation adjustments
Opening balance	$	(12,~~602~~570	)	$	—		$	(12,~~602~~570	)	$	(~~945~~703	)	$	—		$	(~~945~~703	)
Change in foreign currency translation adjustments		~~523~~(285	)		—			~~523~~(285	)		~~346~~66			—			~~346~~66
Closing balance	$	(12,~~079~~855	)	$	—		$	1(2,~~079~~855	)	$	(~~599~~637	)	$	—		$	(~~599~~637	)
Unrealized gains/(losses) on cash flow hedges
Opening balance	$	~~328~~(1,553	)	$	~~(83~~392	)	$	~~245~~(1,161	)	$	~~(1,838~~411	)	$	~~535~~(120	)	$	~~(1,303~~291	)
Unrealized gains/(losses) on cash flow hedges		~~130~~874			(33220	)		98654			~~1,954~~164			(~~569~~47	)		~~1,385~~117
Reclassified to Revenue		(6	)		2			(5	)		(259	)		75			(184	)
Reclassified to consolidated statements of income		(113	)		28			(85	)		—			—			—
Net change	$	~~124~~761		$	(31192	)	$	93(569	)	$	~~1,695~~164		$	(~~494~~47	)	$	~~1,201~~117
Closing balance	$	~~452~~(792	)	$	~~(114~~200	)	$	~~338~~(592	)	$	~~(143~~575	)	$	41(167	)	$	~~(102~~408	)

	Nine months ended December 31, 2019									Nine months ended December 31, 2018
	Before tax			Tax effect			Net of Tax			Before tax			Tax effect			Net of Tax
Other comprehensive income
Foreign currency translation adjustments
Opening balance	$	(703	)	$	—		$	(703	)	$	293		$	—		$	293
Change in foreign currency translation adjustments		(376	)		—			(376	)		(892	)		—			(892	)
Closing balance	$	(1,079	)	$	—		$	(1,079	)	$	(599	)	$	—		$	(599	)
Unrealized gains/(losses) on cash flow hedges
Opening balance	$	411		$	(120	)	$	291		$	96		$	(28	)	$	68
Unrealized gains/(losses) on cash flow hedges		71			(3	)		68			278			(80	)		198
Reclassified to Revenue		(30	)		9			(21	)		(517	)		149			(368	)
Net change	$	41		$	6		$	47		$	(239	)	$	69		$	(170	)
Closing balance	$	452		$	(114	)	$	338		$	(143	)	$	41		$	(102	)

8.	INCOME TAXES

The Group recognized income tax provisions of $~~797~~739 and $31,~~130~~381 for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019,~~2020 ~~respectively,~~ and ~~recognized~~June ~~income tax provisions of $483 and $2~~30,~~543~~ ~~for~~2019 ~~the three and nine months ended December 31, 2018,~~ respectively.

The effective tax rate is 25.6% and 38.4% for the three and nine months ended December 31, 2019, respectively, which differs from the statutory U.S. federal income tax rate of 21%, mainly due to the impact of different tax jurisdictions. 13

The effective tax rate is 36.5% and 51.9% for the three months ended June 30, 2020 and June 30, 2019 respectively, which differs from the statutory U.S. federal income tax rate of 21%, mainly due to the impact of different tax jurisdictions and disallowable expenses.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, which provides relief to taxpayers affected by the COVID-19. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The Company upon examining the provisions of the CARES Act and similar laws enacted internationally has applied for reliefs relating to deferment of social security payments, government assistance subsidies and certain other payroll and non-income tax credits granted, within and outside of the United States. Majesco has taken advantage of the FICA deferred tax program starting with the March 31, 2020 payroll and records the expense as incurred and maintains a payable in the amount of approximately $800 as of June 30, 2020. Taking advantage of this program does not impact our financial results or our financial position and is not anticipated to have a material impact on its business.

On July 20, 2020, the Treasury Department released final regulations under Internal Revenue Code Section 951A permitting a taxpayer to elect to exclude from its inclusion of global intangible low-taxed income (GILTI) items of income subject to the high effective rate of foreign tax. The final regulations adopt the threshold rate of foreign tax of 18.9% to determine whether an item is subject to “high tax”. The election can apply retroactively to tax years beginning after December 31, 2017. The Company continues to examine these new regulations but does not anticipate that it will have a material impact on its consolidated financial statements.

9.	EMPLOYEE STOCK OPTION PLAN

Employee Stock Option Scheme of Majesco Limited — Plan 1

Certain employees of the Group participate in the Group’s parent company, Majesco Limited’s, employee stock option plan. The plan, termed as “ESOP plan 1,” became effective June 1, 2015, the effective date of the demerger from Mastek Ltd. Group employees who were issued options in the earlier ESOP plans of Mastek Ltd. were given options of Majesco Limited following the demerger. Under the plan, Majesco Limited also grants newly issued options to the employees of MSSIPL from time to time. During the three months ended June 30, 2020, no options to purchase shares of common stock were granted under ESOP plan 1 of Majesco Limited.

As of June 30, 2020, the total future compensation cost related to non-vested options not yet recognized in the consolidated statements of income was $123, and the weighted average period over which these awards are expected to be recognized was 1.66 years. The weighted average remaining contractual life of options expected to vest as of June 30, 2020 is 8.67 years.

During the three months ended June 30, 2020, we recognized $46, in equity-based compensation expense in our consolidated financial statements compared to $171 during the three months ended June 30, 2019.

Majesco Limited calculates the fair value of each option grant on the date of grant using the Black-Scholes option-pricing method with the following assumptions:

	For the three Months ended June 30,
	2020		2019
Weighted-average volatility		—		36	%
Expected dividends		—		0	%
Expected term (in years)		—		2-5 years
Risk-free interest rate		—		6.60-7.10%

The summary of outstanding options of Majesco Limited as of June 30, 2020 is as follows:

	No. of Options Outstanding		Exercise Price Per Share		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
Tranche 1		474,853	$	0.10 - 3.00		5.14	1.12
Tranche 2		474,873	$	3.10 - 6.00		4.52	4.34
Tranche 3		110,000	$	6.10 - 9.00		8.19	6.85
Balance, June 30, 2020		1,059,726

Of the stock options of Majesco Limited outstanding and held by Group employees, an aggregate of 940,595 are exercisable as of June 30, 2020.

Majesco 2015 Equity Incentive Plan

During the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020, we recognized $~~617 and $1,883, respectively,~~ 633 in equity-based compensation expense in our consolidated financial statements compared to $~~684~~758 ~~and $1,542~~ during the three ~~and nine~~ months ended ~~December 31~~June 30, ~~2018, respectively~~2019.

In June 2015, Majesco adopted the Majesco 2015 Equity Incentive Plan (the “2015 Plan”). On May 9, 2018, the Board of Directors of Majesco approved an increase of 2,000,000 shares in the number of shares available for issuance under the 2015 Plan thereby increasing the number of shares available under such plan from 3,877,263 shares to 5,877,263 shares. This increase was approved by the shareholders of Majesco at the 2018 annual meeting of shareholders. Under the 2015 Plan, options, restricted stock and other equity incentive awards with respect to up to 5,877,263 shares may be granted by the Compensation Committee of the Board of Directors to our employees, consultants and directors at an exercise or grant price determined by the Compensation Committee of the Board of Directors on the date of grant. Options may be granted as incentive or nonqualified stock options with a term of not more than ten years. The 2015 Plan allows the grant of restricted or unrestricted stock awards or awards denominated in stock equivalent units or any combination of the foregoing, which may be paid in common stock or other securities, in cash, or in a combination of common stock or other securities and cash. As of ~~December~~June 3130, ~~2019~~2020, 21,~~001~~930,~~275~~893 shares were available for grant under the 2015 Plan.

Majesco uses the Black-Scholes-Merton option-pricing model (“Black-Scholes”) to measure fair value of the share-based awards. The Black-Scholes model requires us to make significant judgments regarding the assumptions used within the model, the most significant of which are the expected stock price volatility, the expected life of the option award, the risk-free interest rate of return and dividends during the expected term.

Expected volatility is based on peer entities as historical volatility data for Majesco’s common stock is limited.

In accordance with ASC 718, Majesco uses the simplified method for estimating the expected term when measuring the fair value of employee stock options using the Black-Scholes option pricing model. Majesco believes the use of the simplified method is appropriate due to the employee stock options qualifying as “plain-vanilla” options under the criteria established by Staff Accounting Bulletins Topic 14.

The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yields for an equivalent term at the time of grant.

Majesco does not anticipate paying dividends during the expected term.

	Unaudited For the Nine months ended December 31,
	Unaudited For the three months ended June 30,
Variables (range)	~~2019~~2020			~~2018~~2019
Expected volatility		41%–46	%		41%–5046	%
Weighted-average volatility		46	%		4146	%
Expected dividends		0	%		0	%
Expected term (in years)		3-5			3-5
Risk-free interest rate		1.9	%		2.5	%

1415

As of ~~December~~June 3130, ~~2019~~2020, there was $43,~~402~~568 of total unrecognized compensation costs related to non-vested share-based compensation arrangements previously granted by Majesco. That cost is expected to be recognized over a weighted-average period of 1.6331 years.

Stock Option Awards

A summary of the outstanding common stock options under the 2015 Plan is as follows:

	Shares			Exercise Price Per Share		Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price
Balance, April 1, 2019		3,259,267		$	4.79-7.72	8.08 years	$	5.49
Balance, April 1, 2020		2,865,874		$	4.79-10.02	6.2 years	$	5.68
Granted		~~160~~72,~~000~~882			85.0570-105.0283	9.5586 years		85.7177
Exercised		(317,434	)		4.79-7.53	—		4.24
Cancelled		(30,000	)	$	4.79-7.64			5.75
Cancelled		(209,292	)		4.79-7.25	—		5.29
Balance, June 30, 2020 (unaudited)		2,908,756		$	4.79-10.02	5.98 years	$	5.65
Balance, December 31, 2019 (unaudited)		2,892,541		$	4.79-10.02	7.76 years	$	5.68

Of the stock options outstanding, an aggregate of 2,~~057~~164,~~115~~532 were exercisable as of ~~December~~June 3130, ~~2019~~2020.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of our employee stock options.

We follow FASB ASC 718, Accounting for Stock Options and Other Stock-Based Compensation (“ASC 718”). Among other items, ASC 718 requires companies to record the compensation expense for share-based awards issued to employees and directors in exchange for services provided. The amount of the compensation expense is based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods. Our share-based awards include stock options and restricted stock awards. For restricted stock awards, the calculation of compensation expense under ASC 718 is based on the intrinsic value of the grant.

Restricted Stock Unit Awards

Restricted stock unit activity during the nine months ended December 31, 2019 was as follows:

	Number of RSUs			Weighted Average Grant-Date Fair Value
Balance, April 1, 2019		375,000		$	7.49
Vested		(100,000	)	$	7.55
Granted		105,000			8.51
Balance, December 31, 2019 (unaudited)		380,000		$	8.42

Warrants

As of December 31, 2019, there were warrants to purchase 25,000 shares of common stock outstanding. A summary of the terms of the outstanding warrants as of December 31, 2019 is as follows:

		Outstanding and Exercisable Warrants				Exercise Price Per Warrant				Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
Balance, December 31, 2019 (unaudited)			25,000			$	7.00			0.67 years		$	7.00

On September 1, 2015, Majesco issued to Maxim Partners LLC a five-year warrant to purchase 25,000 shares of common stock of Majesco at an exercise price of $7.00 per share. The warrant was issued in connection with the engagement of the holder to perform certain advisory services for the Group. The number of shares issuable upon exercise of the warrant may be reduced under certain circumstances of non-performance under the services agreement. The warrant may be exercised at any time after September 1, 2016 and will expire, if unexercised, on September 1, 2020. The warrant contains certain anti-dilution adjustment protection in case of certain future issuances of securities, stock dividends, split and other transactions affecting Majesco’s securities. The holder of the warrant is entitled to piggyback registration rights in case of certain registered securities offerings by Majesco.

Employee Stock Option Scheme of Majesco Limited — Plan 1

Certain employees of the Group participate in the Group’s parent company, Majesco Limited’s, employee stock option plan. The plan, termed as “ESOP plan 1,” became effective June 1, 2015, the effective date of the demerger from Mastek Ltd. Group employees who were issued options in the earlier ESOP plans of Mastek Ltd. were given options of Majesco Limited following the demerger. Under the plan, Majesco Limited also grants newly issued options to the employees of MSSIPL from time to time. During the nine months ended December 31, 2019, no options to purchase shares of common stock were granted under ESOP plan 1 of Majesco Limited.

As of December 31, 2019, the total future compensation cost related to non-vested options not yet recognized in the consolidated statements of income was $212, and the weighted average period over which these awards are expected to be recognized was 1.89 years. The weighted average remaining contractual life of options expected to vest as of December 31, 2019 is 8.76 years.

During the three and nine months ended December 31, 2019, we recognized $55 and $287, respectively, in equity-based compensation expense in our consolidated financial statements compared to $120 and $612 during the three and nine months ended December 31, 2018, respectively.

Majesco Limited calculated the fair value of each option grant on the date of grant using the Black-Scholes option-pricing method with the following assumptions:

	For the Nine Months ended December 31,
	2019			2018
Weighted-average volatility		44	%		-
Expected dividends	$	0.32			-
Expected term (in years)		4-8 Years			-
Risk-free interest rate		6.1% - 6.5	%		-

The summary of outstanding options of Majesco Limited as of December 31, 2019 is as follows:

	No. of Options Outstanding		Exercise Price Per Share		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
		668,904	$	0.10 - $3.00		5.52	1.13
		500,798	$	3.10 - $6.00		4.93	4.64
		115,500	$	6.10 - $9.00		8.67	7.37
Balance, December 31, 2019		1,285,202

Of the stock options of Majesco Limited outstanding and held by Group employees, an aggregate of 1,081,449 are exercisable as of December 31, 2019.

Majesco Performance Bonus Plan

Majesco established the Majesco Performance Bonus Plan (the “Performance Bonus Plan”). The Performance Bonus Plan is administered by the Compensation Committee of the Board of Directors of Majesco. The purpose of the Performance Bonus Plan is to benefit and advance the interests of the Group by rewarding select employees of the Group for their contributions to the Group’s financial success and thereby motivating them to continue to make such contributions in the future by granting them performance-based awards that are fully tax deductible to the Group.

During the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020, Majesco accrued $32,~~531~~553 ~~and $4,598, respectively,~~ in incentive compensation expense in its consolidated financial statements compared to $31,~~215~~034 ~~and $9,249~~ during the three ~~and nine~~ months ended ~~December~~ ~~31,~~June ~~2018~~30, ~~respectively~~2019.

Restricted Stock Unit Awards

Restricted stock unit activity during the three months ended June 30, 2020 was as follows:

	Number of RSUs			Weighted Average Grant-Date Fair Value
Balance, April 1, 2020		385,000		$	7.75
Exercised		(15,000	)		—
Balance, June 30, 2020 (unaudited)		370,000		$	7.75

Majesco Employee Stock Purchase Plan

Majesco established the Majesco Employee Stock Purchase Plan (the “ESPP”). The ESPP is intended to be qualified under Section 423 of the Internal Revenue Code. If a plan is qualified under Section 423, employees who participate in the ESPP enjoy certain tax advantages. The ESPP allows employees to purchase shares of Majesco common stock at a discount, without being subject to tax until they sell the shares, and without having to pay any brokerage commissions with respect to the purchases.

The purpose of the ESPP is to encourage the purchase of Majesco common stock by our employees, to provide employees with a personal stake in our business and to help us retain our employees by providing a long-range inducement for such employees to remain in our employ.

The ESPP provides employees with the right to purchase shares of common stock through payroll deductions. The total number of shares available for purchase under the ESPP is 2,000,000. The ESPP Plan became effective January 1, 2016. As of ~~December~~June 3130, ~~2019~~2020, we had issued and sold ~~144~~ 155,~~457~~580 shares under the ESPP.

Warrants

As of June 30, 2020, there were warrants to purchase 25,000 shares of common stock outstanding. A summary of the terms of the outstanding warrants as of June 30, 2019 and June 30, 2020 is as follows:

	Outstanding and Exercisable Warrants		Exercise Price Per Warrant		Weighted- Average Remaining Contractual Life		Weighted- Average Exercise Price
Balance, March 31, 2020		25,000	$	7.00		0.4 years	$	7.00
Granted		—		—		—		—
Balance, June 30, 2020 (unaudited)		25,000	$	7.00		0.17 years	$	7.00

On September 1, 2015, Majesco issued to Maxim Partners LLC a five-year warrant to purchase 25,000 shares of common stock of Majesco at an exercise price of $7.00 per share. The warrant was issued in connection with the engagement of the holder to perform certain advisory services for the Group. The warrant may be exercised at any time after September 1, 2016 and will expire, if unexercised, on September 1, 2020. The warrant contains certain anti-dilution adjustment protection in case of certain future issuances of securities, stock dividends, split and other transactions affecting Majesco’ s securities. The holder of the warrant is entitled to piggyback registration rights in case of certain registered securities offerings by Majesco.

Total employee stock option plans expenses

The total amount of compensation expense recognized in Majesco’s consolidated statements of income in respect of employee stock option plans is as follows:

	For the three months ended June 30,
	2020		2019

Cost of revenue		59		87
Research and development expenses		25		35
Selling, general and administrative expenses		595		807
Total		679		929

10.

EARNINGS PER SHARE

The basic and diluted earnings per share were as follows:

	Three months ended December 31,
	Three months ended June 30,
	2019		2018
	2020		2019
Net Income	$	31,~~875~~287	$	1,~~727~~282
Basic weighted average outstanding equity shares		43,~~102~~348,~~144~~966		3642,~~664~~912,~~718~~982
Adjustment for dilutive potential ordinary shares
Adjustment for dilutive potential common shares
Options under Majesco 2015 Equity Plan		21,~~192~~701,~~839~~642		21,~~060~~983,~~964~~104
Dilutive weighted average outstanding equity shares		~~45,294,983~~		~~38,725,682~~
		45,050,609		44,896,086
Earnings per share:
Basic	$	0.0903	$	0.0503
Diluted	$	0.0903	$	0.0403

	Nine months ended December 31,
	2019		2018
Net Income	$	6,065	$	5,447
Basic weighted average outstanding equity shares		42,992,839		36,633,300
Adjustment for dilutive potential ordinary shares
Options under Majesco 2015 Equity Plan		2,174,869		2,181,122
Dilutive weighted average outstanding equity shares		45,167,708		38,814,422
Earnings per share:
Basic	$	0.14	$	0.15
Diluted	$	0.14	$	0.14

Basic earnings per share amounts are calculated by dividing net income for the three months ended June 30, 2020 and 2019 attributable to common shareholders by the weighted average number of common shares outstanding during the same periods. Diluted earnings per share amounts are calculated by dividing the net income attributable to common shareholders by the sum of the weighted average number of shares of common stock outstanding during the three month periods plus the weighted average number of shares of common stock that would be issued upon the conversion of all the dilutive potential shares of common stock into shares of common stock as applicable pursuant to the treasury method.

17The calculation of diluted earnings per share excluded no shares and options for the three months ended June 30, 2020 and 2,000 shares and options for the three months ended June 30, 2019 granted to employees, as their inclusion would have been antidilutive.

Basic earnings per share amounts are calculated by dividing net income for the three and nine months ended December 31, 2019 and 2018 attributable to common shareholders by the weighted average number of common shares outstanding during the same periods.

Diluted earnings per share amounts are calculated by dividing the net income attributable to common shareholders by the sum of the weighted average number of shares of common stock outstanding during the three and nine month ended December 31, 2019 and 2018 plus the weighted average number of shares of common stock that would be issued upon the conversion of all the dilutive potential shares of common stock into shares of common stock as applicable pursuant to the treasury method.

The calculation of diluted earnings per share excluded 68,000 and 68,000 shares of common stock issuable upon exercise of options for the three and nine months ended December 31, 2019, respectively, and 449,209 and 449,209 shares of common stock issuable upon exercise of options for the three and nine months ended December 31, 2018, respectively, granted to employees, as their inclusion would have been antidilutive.

11.

RELATED PARTIES TRANSACTIONS

Reimbursement of Expenses

~~The~~On March ~~Group~~16, ~~reimbursed~~2020, MSSIPL, a subsidiary of Majesco, entered into a cost sharing agreement (the ~~insurance~~ ~~premium~~“Cost ~~paid~~Sharing byAgreement”) with Majesco Limited, ~~for~~Majesco’s controlling shareholder. Pursuant to the ~~insurance~~Cost ~~policies~~Sharing ~~maintained~~Agreement, ateffective as of April 1, 2019, a portion of the costs with respect to certain employees of Majesco Limited ~~group~~shall ~~level~~be charged to MSSIPL as payment for services rendered by such employees to Majesco and its subsidiaries. ~~During~~There will be no mark up and only a reimbursement for the proportion ~~three~~of ~~and~~the ~~nine~~actual ~~months~~costs. ~~ended~~The ~~December~~Cost ~~31,~~Sharing ~~2019~~Agreement ~~MSSIPL~~may ~~paid~~be $0terminated, ~~and~~among ~~$88~~other reasons, ~~respectively~~by ~~and~~either ~~during~~party ~~the~~upon ~~three~~60 ~~and~~days ~~nine~~prior written notice. During the three months ended ~~December~~ 31June 30, ~~2018~~2020, ~~MSSIPL~~we ~~paid~~recognized $043 ~~and~~as ~~$68,~~expense ~~respectively,~~in the consolidated financial statements compared to ~~Majesco~~$0 ~~Limited~~during ~~toward~~the ~~such~~three ~~insurance~~months ~~premium~~ended June 30, 2019.

Leases

MSSIPL entered into an operating lease for its operation facilities in Mahape, India, as lessee, with Majesco Limited, Majesco’s parent company, as lessor. The approximate aggregate annual rent payable to Majesco Limited under this lease agreement iswas $1,436. The lease isbecame effective on June 1, 2015 and ~~expires~~initially expired on May 31, 2020. MSSIPL may terminate the lease after three years with six months’ prior written notice to Majesco Limited. Majesco Limited may terminate the lease after five years with six months’ prior written notice to MSSIPL. On May 16, 2019, a new lease agreement between Majesco Limited and MSSIPL was signed for the leasing of additional office space by Majesco Limited to MSSIPL with effect from April 1, 2019, in continuation to the existing operating lease until May 31, 2020. The approximate aggregate annual rent payable to Majesco Limited under this additional lease agreement is was $42.

~~MSSIPL also~~On entered into a lease for its operations in Pune, India, with Mastek Ltd. as lessor. The approximate aggregate annual rent payable to Mastek Ltd. under this lease agreement is $237. The lease became effective on June 1, ~~2015 and expires on May 31~~2020, ~~2020.~~ MSSIPL ~~has also~~ entered into aan ~~supplementary~~amendment ~~lease~~to ~~for~~the ~~its~~lease ~~operations in Pune, India,~~ with ~~Mastek~~respect ~~Ltd.~~to asits ~~lessor. The approximate~~operation ~~aggregate~~facilities ~~annual~~in ~~rent~~Mahape ~~payable~~pursuant to ~~Mastek~~which, ~~Ltd.~~effective ~~under~~as ~~this~~of ~~supplementary~~June ~~lease agreement is $110. The lease became effective on April~~ 1, ~~2016~~ ~~and expires on May 31~~2020, ~~2020. MSSIPL may terminate~~ the lease ~~after~~term ~~three~~was ~~years~~extended ~~with six months’ prior written notice~~ to ~~Mastek~~November ~~Ltd. Mastek Ltd. may terminate the lease after five years. On June 1~~30, ~~2018,~~2020 ~~MSSIPL~~and ~~gave notice to Mastek Ltd. of its~~the ~~termination~~monthly ofrent ~~both~~was ~~leases~~approximately ~~with~~$94 an(at ~~effective~~exchange ~~termination~~rates ~~date~~in ofeffect ~~November~~at June 30, ~~2018~~2020).

	As of December 31, 2019		As of March 31, 2019
	As of June 30, 2020		As of March 31, 2020
Security deposits paid to Majesco Limited by MSSIPL for use of Mahape premises	$	~~591~~576	$	~~552~~576
Security deposits paid to Mastek Ltd. by MSSIPL for use of Pune premises	$	—	$	—

Rental expenses paid by MSSIPL to Majesco Limited for use of premises for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020 ~~was $354~~ and ~~$1,058,~~June ~~respectively~~30, ~~and~~2019 was $~~339~~308 and $1354,~~008~~ ~~for~~respectively. ~~the~~As ~~three~~per ~~and~~terms ~~nine~~of ~~months~~agreement ~~ended~~MSSIPL ~~December~~reimbursed ~~31,~~utility ~~2018,~~bills ~~respectively.~~amounting ~~Rental expenses paid by MSSIPL~~ to ~~Mastek~~$65 ~~Ltd.~~and ~~for~~$96 ~~use of premises~~ for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020 ~~was $0~~ and ~~$0,~~June ~~respectively~~30, ~~and~~ ~~$103 and $308 for the three and nine months ended December 31~~2019, ~~2018,~~ respectively.

Joint Venture Agreement

On September 24, 2015, MSSIPL and Mastek (UK) Limited, a wholly -owned subsidiary of Mastek Ltd. (“Mastek UK”), entered into a Joint Venture Agreement (the “Joint Venture Agreement”) pursuant to which the two companies agreed to work together to deliver services to third parties under the terms of the Joint Venture Agreement, which services comprise the delivery of development, integration and support services to third parties by use of Mastek Ltd.’s development, integration and support methodologies and tools. The Joint Venture Agreement is effective September 24, 2015 and will remain in force, unless terminated by either party upon three months’ notice in writing to the other of its intention to terminate the Joint Venture Agreement. The consideration for each party’s performance of its obligations under the Joint Venture Agreement is the performance of the other’s obligations under the same agreement, being services to the other. The services comprise in the case of Mastek Ltd., Mastek Ltd.’s development, integration and support methodologies and tools and business development services. In the case of MSSIPL, the services comprise the provision of leading edge technical expertise and advice. The parties will also exchange technical and business information.

Services Agreements

On ~~August~~May 216, ~~2016,~~2019 ~~Majesco~~an ~~Limited~~agreement ~~and~~between MSSIPL ~~entered~~and ~~into~~Majesco aLimited ~~master~~was ~~service~~signed ~~agreement, effective as of June 30, 2016~~ pursuant to which MSSIPL ~~provided~~will ~~software~~provide ~~development~~administrative ~~services~~ support to Majesco Limited. ~~Under~~annually ~~this agreement, MSSIPL charges Majesco Limited cost plus a margin~~ for ~~the~~approximately ~~services rendered~~$4. ~~Software~~This ~~development~~services ~~charges charged by MSSIPL under the~~ agreement ~~for~~will ~~the~~terminate ~~three~~on ~~and nine~~March ~~months ended December~~ 31, ~~2019 was $0 and $0, respectively, and $247 and $941 for the three and nine months ended December 31, 2018, respectively~~2022. ~~This agreement was terminated on April 1, 2019 following the closing of the business transfer pursuant to the Transfer Agreement discussed below.~~

On July 25, 2018, Majesco Limited and MSSIPL entered into an Intra Group Services Agreement (the “Intra-Group Agreement”) pursuant to which Majesco Limited provides certain sales and marketing services to MSSIPL in the Asia Pacific region (collectively, the “Services”). In consideration for the Services, MSSIPL pays Majesco Limited all direct and indirect operating costs of Majesco Limited incurred for the provision of the Services and which shall be allocated to MSSIPL on the basis of gross revenues plus a 10% mark-up. The mark-up will be subject to a periodic review. The Intra-Group Agreement is effective as of April 1, 2018 and will remain in effect until terminated. Each party may terminate the Intra-Group Agreement at any time upon 60 days prior written notice to the other. Expenses charged by Majesco Limited under the Intra-Group Agreement for the three and nine months ended December 31, 2019 were $0 and $0, respectively, and $14 and $88 for the three and nine months ended December 31, 2018, respectively. This agreement was terminated on April 1, 2019 following the closing of the business transfer pursuant to the Transfer Agreement discussed below.

Guarantee

During the three and nine months ended December 31, 2019, Majesco paid $0 and $0, respectively, and $8 and $27 for the three and nine months ended December 31, 2018, respectively, to Majesco Limited as arrangement fees and guarantee commission for the guarantee given by Majesco Limited to HSBC and ICICI Bank for the facilities taken by Majesco and its subsidiaries. Both facilities have been repaid and were terminated on June 30, 2019.

Lease with Exaxe Sellers

On October 14, 2004, Exaxe Consulting Limited entered into a lease (the “Lease”) with Norman Carroll, (the Chief Executive Officer of Exaxe), Philip Naughton (the Executive Director – Business Development of Exaxe) and Luc Hemeryck (unrelated party) for certain real property facilities for a term which initially expired on October 13, 2025. Pursuant to a Deed of Assignment dated December 6, 2017 between Exaxe Consulting Limited and Majesco Software Solutions Ireland Limited (formerly Exaxe Limited), Exaxe Consulting Limited assigned ~~Exaxe~~ Majesco Software Solutions Ireland Limited the Lease for the balance of the term. Pursuant to a Deed of Variation of the Lease ~~and Deed of Renunciation~~ executed in ~~September~~July 2019, the term of the Lease is expected to terminate on ~~August~~September 3130, 2024. The ~~annual~~monthly rental fee under the Lease is € ~~106~~EUR ($10 ~~per month at exchange rates in effect on December 31, 2019)~~.

Business Transfer Agreement and Memorandum of Understanding

On April 1, 2019, MSSIPL entered into a Business Transfer Agreement (the “Transfer Agreement”) with Majesco Limited, Majesco’s controlling shareholder. Pursuant to the Transfer Agreement, on May 15, 2019, MSSIPL purchased all of Majesco Limited’s insurance software business in India in a slump sale transaction, which included, among other things, Majesco Limited’s customer contracts and certain employees servicing this business, for a total value of approximately 243,745,000 Indian Rupees (approximately $3~~,400~~.5 million at exchange rates in effect onat ~~December~~[May 3115, 2019]). The transaction did not include real ~~estate~~ estate properties of Majesco Limited used in the business which will continue to be rented by MSSIPL from Majesco Limited.

Effective as of May 16, 2019, MSSIPL and Majesco Limited entered into a Memorandum of Understanding (the “MOU”) in connection with the Transfer Agreement pursuant to which MSSIPL will have access to facilities including, but not limited to, hardware, software and administrative support services in consideration for 20,000 Indian rupees (or approximately $281 at exchange rates in effect on December 31, 2019). The term of the MOU commenced on May 15, 2019 and shall terminate on March 31, 2022.

This being a transaction between entities under common control, the Company has followed the guidance as per FASB Business Combinations Topic 805 and recorded the assets, liabilities and reserves at respective book values as on April 1, 2019 pertaining to the transferred business and recorded resultant negative capital reserve which is adjusted in accumulated deficit of $2,707.

Recognized amount of identifiable assets acquired and liabilities assumed

	Amount
Current assets	$	1,038
Current liabilities		(486	)
Fixed assets		271
Total net book value of assets acquired		823
Total purchase consideration		3,530
Retained Earnings	$	2,707

12.

SEGMENT INFORMATION

The Group operates in one segment as software solutions provider for the insurance industry. The Group’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM manages the Group’s operations on a consolidated basis for purposes of allocating resources. When evaluating the Group’s financial performance, the CODM reviews all financial information on a consolidated basis. A majority of the Group’s principal operations and decision-making functions are located in the United States.

The following table sets forth revenues by country based on the billing address of the customer:

	Three months ended December 31, 2019		Three months ended December 31, 2018
	Three months ended June 30, 2020 (unaudited)		Three months ended June 30, 2019
USA	$	3336,~~115~~836	$	2933,~~979~~023
UK		~~840~~1,497		1,~~813~~087
Canada		9371		~~144~~22
Ireland		1,~~263~~216		1,~~726~~261
Malaysia		~~1,217~~949		1,~~544~~289
Others		~~647~~678		~~614~~622
	$	3741,~~175~~247	$	3537,~~820~~304

	Nine months ended December 31, 2019		Nine months ended December 31, 2018
USA	$	96,561	$	90,208
UK		2,653		4,924
Canada		213		330
Ireland		3,399		1,726
Malaysia		3,772		4,461
Others		1,936		2,468
	$	108,534	$	104,117

The following table sets forth revenues by classification:

	Three months ended June 30, 2020 (unaudited)		Three months ended June 30, 2019

Property and Casualty	$	30,321	$	28,800
Life and Annuities		10,874		8,281
Others		52		223
	$	41,247	$	37,304

The following table sets forth the Group’s ~~property and~~ equipment, net, by geographic region:

	As of December 31, 2019 (unaudited)		As of March 31, 2019
	As of June 30, 2020 (unaudited)		As of March 31, 2020
USA	$	~~575~~1,198	$	~~892~~630
India		1,473		1,944
UK		7		6
Canada		1—		49—
UK		5		5
Ireland		30		33
Malaysia		8762		~~133~~70
Ireland		54		3
Others		1,194		1,393
	$	2,~~195~~491	$	32,~~026~~132

We provide a considerable volume of services to a number of significant customers. ~~Therefore~~However, ~~the~~ loss of a significant customer ~~could~~ could materially reduce our revenues. The Group had ~~one~~no customer accounting for more than 10% of revenues for the three ~~and nine~~ months ended June ~~December 31~~30, ~~2019~~2020 and ~~one~~June ~~customer accounting for more than 10% of revenues for the three and nine months ended December 31~~30, ~~2018~~2019. Presented in the table below is information about our top customer:

	Three months ended December 31, 2019 (unaudited)					Three months ended December 31, 2018 (unaudited)
	Three months ended June 30, 2020 (unaudited)					Three months ended June 30, 2019 (unaudited)
	Amount		% of Combined Category			Amount		% of Combined Category
Top Customer
Revenue	$	21,~~212~~722		64.2	%	$	52,~~796~~722		167.23	%
Accounts receivable and unbilled accounts receivable	$	51,~~765~~676		143.12	%	$	82,~~174~~621		267.0	%

	Nine months ended December 31, 2019 (unaudited)					Nine months ended December 31, 2018 (unaudited)
	Amount		% of Combined Category			Amount		% of Combined Category
Top Customer
Revenue	$	6,557		6	%	$	18,423		17.7	%
Accounts receivable and unbilled accounts receivable	$	5,765		14.1	%	$	8,174		26.0	%

The top customer for the three and nine months ended December 31, 2019 was the same customer for both periods. The top customer for the three and nine months ended December 31, 2018 was the same customer for both periods.

13.

COMMITMENTS

Capital Commitments

The Group had outstanding contractual commitments of $44939 and $90750 as of ~~December~~June 3130, ~~2019~~2020 and March 31, ~~2019~~2020, respectively, for capital expenditures relating to the acquisition of property, equipment and new network infrastructure.

Operating Leases

The Group leases certain office premises under operating leases. Many of these leases include a renewal option on a periodic basis at the Group’s option, with the renewal periods ranging from two to five years. Rental expense for operating leases amounted to $~~788~~747 ~~and $2,432~~ for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019,~~2020 ~~respectively,~~ compared to $~~858~~840 ~~and $2,465~~ for the three ~~and~~ ~~nine~~ months ended ~~December~~June 3130, ~~2018, respectively~~2019. The schedule for future minimum rental payments over the lease term in respect of operating leases is set forth below.

Year ending March 31,	Amount
2020	$	1,977
2021	$	1,637
2021		1,049
2022		1,161
2022		626
2023		595
2023		607
2024		455
2024		179
2025		107
Thereafter		0—
	$	43,~~438~~955
Less: Imputed interest		~~435~~364
Total minimum lease liability	$	43,~~003~~591
Lease liabilities, current portion		1,~~977~~961
Lease liabilities, net of current portion		21,~~026~~631
Total lease liabilities	$	43,~~003~~592

~~Facility Leases~~21

~~Our subsidiary~~Finance ~~in India, MSSIPL, has entered into a~~ lease for its operations in Mahape, India, as lessee, with Majesco Limited as lessor. The approximate aggregate annual rent payable to Majesco Limited under this lease agreement is $1,436. The lease became effective on June 1, 2015 and expires on May 31, 2020. MSSIPL paid Majesco Limited $354 and $1,058 in rent under the lease during the three and nine months ended December 31, 2019, respectively, and $339 and $1,008 during the three and nine months ended December 31, 2018, respectively. MSSIPL may terminate the lease after three years with six months’ prior written notice to Majesco Limited. Majesco Limited may terminate the lease after five years with six months’ prior written notice to MSSIPL. On May 16, 2019, a new lease agreement between Majesco Limited and MSSIPL was signed for the leasing of additional office space by Majesco Limited to MSSIPL, in continuation to the existing operating lease until May 31, 2020. The approximate aggregate annual rent payable to Majesco Limited under this additional lease agreement is $42.obligations

~~MSSIPL also entered into a lease for its operations in Pune, India, with Mastek Ltd. as lessor.~~ The ~~approximate aggregate annual rent~~Company’s ~~payable to Mastek Ltd. under this lease agreement is $237. The lease became effective on June 1~~subsidiary, ~~2015~~InsPro ~~and expires on May 31~~LLC, ~~2020. MSSIPL~~ has ~~also~~ entered into aseveral ~~supplementary~~finance lease ~~for~~obligations ~~its~~to ~~operations~~purchase inequipment ~~Pune,~~used ~~India,~~for ~~with~~operations ~~Mastek Ltd. as lessor. The approximate~~(“Finance ~~aggregate annual rent payable to Mastek Ltd~~Leases”). ~~under this supplementary lease agreement is $110.~~ The ~~lease~~Company ~~became~~has ~~effective on April 1, 2016 and expires on May 31, 2020. MSSIPL paid Mastek Ltd. $0 and $0 in rent under~~ the ~~leases~~option ~~during~~to ~~the~~purchase ~~three and nine months ended December 31, 2019, respectively, and $103 and $308 in rent under~~ the ~~leases~~equipment ~~during~~at the ~~three~~end ~~and~~of ~~nine~~each ~~months~~Finance ~~ended~~Lease ~~December 31,~~agreement ~~2018,~~for ~~respectively.~~one ~~MSSIPL may terminate the lease after three years with six months’ prior written notice to Mastek Ltd~~dollar. The ~~Mastek~~liability ~~Ltd. may terminate the lease after five years. On June 1, 2018, MSSIPL gave notice to Mastek Ltd.~~ of ~~its~~these ~~termination of~~arrangements ~~both~~was ~~leases~~$258 ~~with~~as ~~an effective termination date~~ of ~~November~~June 30, ~~2018~~2020.

Transition to ASC 842 Leases

ASC 842 Leases sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It introduces a single, on-balance sheet lease accounting model for lessees.

The Company has adopted ASC 842, effective annual reporting period beginning April 1, 2019 and applied the standard to its leases, under the modified retrospective method, with the cumulative effect of initially applying the Standard, recognized on the date of initial application (April 1, 2019). Accordingly, the Company has not restated comparative information.

For transition, the Company has elected not to apply the requirements of ASC 842 to leases which are expiring within 12 months from the date of transition by class of asset. The Company has also used the practical expedient provided by the standard when applying ASC 842 to leases previously classified as operating leases and therefore, has not reassessed whether a contract, is or contains a lease, at the date of initial application, excluded initial direct costs from measuring the right of use asset at the date of initial application and used hindsight when determining the lease term if the contract contains options to extend or terminate the lease. The Company has used a single discount rate to a portfolio of leases with similar characteristics.

On transition, the Company recognized a lease liability measured at the present value of the remaining lease payments. The ROU asset is recognized at its carrying amount as if the standard had been applied since the commencement of the lease, but discounted using the lessee’s incremental borrowing rate as at April 1, 2019. Accordingly, a ROU asset and a corresponding lease liability of $5,882 has been recognized.

Leases

We lease certain office space, equipment and vehicles. We consider various factors such as market conditions and the terms of any renewal options that may exist to determine whether we will renew or replace the lease. A majority of our leases have remaining lease terms of one to seven years, typically with the option to extend the leases. Some of our leases may include the option to terminate. In the event we are reasonably certain to exercise the option to extend a lease, we will include the extended terms in the operating lease ~~right-of-use~~ROU asset and operating lease liability. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are our obligations under the lease agreements. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and lease expense for these leases is recognized on a straight-line basis over the lease term. ~~All~~Leases ~~leases~~ included in our ~~right~~ROU ~~of use~~ asset and lease liability consist of operating leases and finance leases.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The gross amounts of assets and liabilities related to operating leases are as follows:

	Balance Sheet Caption	~~December~~June 3130, ~~2019~~2020
Assets:
Operating lease assets	~~right-of-use assets~~ROU, net	$	3,~~964~~601
Liabilities:
Current:
Operating lease liabilities	lease liability	$	1,~~977~~961
Long-term:
Operating lease liabilities	lease liability, net of current portion		21,~~026~~631
Total lease liabilities		$	4,003
Total operating lease liabilities		$	3,592

ROU assets represent the Group’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date of the lease based on the present value of the lease payments over the lease term. As our leases do not provide a readily determinable implicit rate, we use an incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term and included in selling, general and administrative expenses.

ROU, net also include lease assets of $201 of the Company’s subsidiary, InsPro LLC. InsPro LLC, has entered into several finance lease obligations to purchase equipment used for operations. The liability of these arrangements was $258 as of June 30, 2020, of which $127 is classified to current portion and the remaining $131 is classified to non-current portion.

Information related to the Company’s ROU assets and related lease liabilities were as follows:

	Three months ended
	December 31,
	June 30,
	2019 (Unaudited)
	2020 (Unaudited)
Cash paid for operating lease liabilities	$	~~714~~747
Right-of-use assets obtained in exchange for new operating lease obligations	$	—
ROU assets obtained in exchange for new operating lease obligations	$	487
Weighted-average remaining lease term		21.53 years
Weighted-average discount rate		56.19	%

	Nine months ended
	December 31,
	2019 (Unaudited)
Cash paid for operating lease liabilities	$	2,141
Right-of-use assets obtained in exchange for new operating lease obligations	$	—
Weighted-average remaining lease term		2.5 years
Weighted-average discount rate		5.1	%

Transfer Pricing

The Company’s India subsidiary, MSSIPL, received a Draft Assessment Order on December 26, 2018 for assessment year 2015 relating to MSSIPL ’s transfer pricing model. MSSIPL filed an application with the Dispute Resolution Panel (DRP) on January 24, 2019.

MSSIPL has filed an appeal against the DRP order to the Income Tax Appellate Tribunal (ITAT), for which a hearing was conducted on January 14 and 15, 2020. Further the Company has received a stay order on the Tax Demand. The Company believes it will be successful upon completion of the appeal process, but at this time cannot estimate the amount to be due, if any. The hearing scheduled on August 13, 2020 was adjourned to August 20, 2020.

14.

ACQUISITION

On November 27, 2018 (the “Effective Date”), the Company entered into a share purchase agreement (the “Agreement”) for the acquisition of all the issued share capital (collectively, the “Securities”) of Exaxe. On the Effective Date, the Company completed the purchase of 90% of the Securities. The Company purchased the remaining 10% of the Securities on August 1, 2019. The economic transfer date of Exaxe was October 1, 2018.INSPRO

InOn ~~consideration~~January ~~for~~30, 2020, the ~~purchase~~Company entered into an Agreement and Plan of Merger (the ~~Securities,~~“Merger onAgreement”) for the ~~Effective~~acquisition of ~~Date,~~InsPro ~~the~~Technologies ~~Company~~Corporation ~~paid~~(OTCBB: ~~the~~ITCC) ~~sellers~~(“InsPro”) €which 6is based in Eddystone,~~392~~ ~~(or~~PA. ~~approximately~~InsPro is software leader ~~$7,158~~in atthe ~~exchange~~life ~~rates~~and annuity insurance market and has experience in ~~effect~~the onaccident ~~December~~& 31health, ~~2019).~~long Interm ~~addition~~care, onMedicare ~~August~~supplement market 1,segments. ~~2019,~~The ~~the~~InsPro ~~Company~~Enterprise ~~paid~~platform ~~the~~is ~~sellers~~an €insurance administration and marketing system that supports group and individual ~~717~~business ~~(or~~lines, ~~approximately~~and ~~$803)~~efficiently ~~for~~processes ~~the~~agent, ~~remainder~~direct ofmarket, ~~the~~worksite ~~Securities~~and web site generated business.

2423

The ~~Company~~ ~~also~~transaction ~~agreed~~was structured ~~to make certain earnout payments to the sellers if certain adjusted EBITDA (~~as ~~defined~~a incash ~~the Agreement) targets~~ for ~~Exaxe~~stock ~~are~~merger met. If adjusted EBITDA for Exaxe for the period of January 1, 2019 through December 31, 2019 is at least equal to 75% of the adjusted EBITDA target for such year, the Company has agreed to pay € 625(or approximately $700 at exchange rates in effect on December 31, 2019) to the sellers and ~~an additional € 25(or approximately $28 at exchange rates in effect on December 31~~, ~~2019) for each full 1% increase above 75%, up to a maximum of 100% (with a maximum earn-out payment amount not to exceed € 1,250 (or approximately $1,400 at exchange rates in effect~~ on ~~December~~April ~~31, 2019)). During the quarter ended December 31, 2019, the Group and the former founders of Exaxe determined that the year~~ 1 ~~earn-out targets under the Exaxe share purchase agreement were not met and that no earn-out was payable to them towards the year 1 earn-outs of adjusted EBITDA for Exaxe for the period of January 1~~, 2020 ~~through December 31~~, ~~2020~~pursuant ~~is at least equal~~ to ~~75% of~~ the ~~adjusted~~Merger ~~EBITDA target for such year~~Agreement, ~~the~~ ~~Company~~InsPro ~~has~~merged ~~agreed~~with ~~to pay € 750 (or approximately $840 at exchange rates in effect on December 31, 2019) to the sellers~~ and aninto ~~additional € 30 (or approximately $34 at exchange rates in effect on December 31, 2019) for each full 1% increase above 75%, up to~~ a ~~maximum of 100% (with a maximum earn-out payment amount not to exceed €1,500 (or approximately $1,680~~wholly atowned ~~exchange~~subsidiary ~~rates in effect on December 31, 2019)). If adjusted EBITDA for Exaxe for the period~~ of ~~January~~Majesco 1, 2021 through December 31, 2021 is at least equal to 75% of the adjusted EBITDA target for such year, the Company has agreed to pay € 875 (or approximately $980 at exchange rates in effect on December 31, 2019) to the sellers and an additional € 35 (or approximately $40 at exchange rates in effect on December 31, 2019) for each full 1% increase above 75%, up to a maximum of 100% (with aInsPro ~~maximum~~surviving ~~earn-out payment amount not to exceed € 1,750 (or approximately $1,960 at exchange rates in effect on December 31, 2019)). In lieu of being paid to~~ the ~~sellers,~~merger ~~a portion of these earn-out payments will be paid to key employees~~ as ~~bonuses if they remain employed by Exaxe at the earnout payment date. The Company may also withhold 15% of any earn-out payment if~~ a ~~seller~~privately ~~who is a key employee leaves the employment of Exaxe prior to the end of the earn-out period (other than due to death~~held, ~~serious illness, compassionate grounds, by mutual agreement or termination for cause or misconduct). The Company will also be entitled to withhold and off set against any earn~~wholly-~~out~~owned ~~payment~~subsidiary ~~such~~of ~~amounts due and payable or which may become due and payable by~~ the ~~sellers to the~~ Company ~~with respect to claims under the agreement and related transaction documents~~.

The Company paid $11,457 (the “Merger Consideration”) ~~entire~~as ~~earn-out~~consideration ~~amount~~for the merger. The source of €funds 4was available cash on hand. Specifically,~~500~~ ~~(or~~holders ~~approximately~~of InsPro’s Series C Preferred Stock received $5~~,040~~.00 atper ~~exchange~~There ~~rates~~was inno ~~effect~~equity ontransferred ~~December~~or ~~31,~~issued ~~2019)~~by ~~(less~~the ~~any~~Company ~~portion already~~as ~~paid)~~part ~~will~~of ~~become~~the ~~due~~Merger ~~and~~Consideration. share ~~payable~~in ~~upon~~cash aand ~~sale~~holders of ~~beneficial~~InsPro’s ~~interests~~Series B Preferred Stock received $0.9747 per share in cash. As a ~~majority~~result of the ~~outstanding~~Merger Consideration ~~shares~~being substantially less than the aggregate liquidation preference of ~~Exaxe~~InsPro’s Series C Preferred Stock and orSeries ~~its~~B ~~subsidiary~~Preferred orStock awhich ~~sale~~were orentitled ~~other~~to ~~disposal~~the intwo ~~whole~~most orsenior ~~substantial~~liquidation ~~part~~preferences under InsPro’s Certificate of Incorporation, holders of InsPro’s common stock and Series A Preferred Stock did not receive any portion of the ~~undertaking~~Merger Consideration. Additionally, each InsPro option or ~~assets~~warrant outstanding immediately prior to the effective time of ~~Exaxe~~the merger, whether or ~~its~~not ~~subsidiary~~then ~~before~~vested ~~the~~and ~~end~~exercisable, ofwas cancelled without the ~~earn-out~~receipt ~~period~~of any consideration.

~~The~~We have included the ~~Company~~financial ~~will~~results ~~also~~of beInsPro ~~restricted~~in ~~from~~our ~~making~~consolidated ~~certain~~financial ~~changes~~statements tofrom the ~~business~~date of ~~Exaxe~~acquisition, orApril ~~diverting~~1, or2020. ~~redirecting~~In ~~Exaxe’s~~connection ~~orders,~~with ~~revenue,~~the ~~customers~~InsPro acquisition, ~~clients~~we have recorded $5,350 ~~suppliers~~of ornet ~~employees~~assets ~~during~~and ~~the~~$6,107 ~~earn-out~~of ~~period~~goodwill.

~~In connection~~The ~~with~~following ~~the transaction, on the Effective Date, Exaxe Limited, a subsidiary of Exaxe, entered into employment agreements~~table ~~with~~summarizes ~~each of Norman Carroll (~~the ~~Chief~~estimated ~~Executive~~amounts ~~Officer~~ of ~~Exaxe)~~identified ~~and~~assets ~~Philip~~acquired ~~Naughton (the Executive Director – Business Development of Exaxe) pursuant to which Norman Carroll~~ and ~~Philip~~liabilities ~~Naughton~~assumed ~~will~~at ~~act~~the asacquisition ~~SVP Ireland/UK Operations and Executive Director Business Development of Exaxe Limited, respectively~~date. The Company ~~agreed to grant Norman Carroll and Philip Naughton stock~~is ~~options~~in ~~awards~~the ~~with~~process ~~respect~~of toobtaining ~~such~~third-party ~~number~~valuations of ~~shares~~certain ofintangible ~~the~~assets; ~~Company’s~~thus, ~~common~~the ~~stock~~provisional ~~having~~measurements ~~an aggregate value~~ of ~~€ 1,000~~intangible ~~(or approximately $1~~assets,~~120~~ atgoodwill ~~exchange~~and ~~rates~~deferred inincome ~~effect~~tax onassets ~~December~~are ~~31,~~subject ~~2019) pursuant~~ to ~~the Company’s 2015 Plan~~change.

In addition, in connection with the transaction, the parties have entered into a revised lease agreement with certain sellers (including Norman Carroll and Philip Naughton) for certain real property facilities leased by Exaxe Limited.

We have included the financial results of Exaxe in our consolidated financial statements from the date of acquisition. The purchase price for Exaxe was approximately $12,329. In connection with the Exaxe acquisition, we have recorded $10,339 of net assets and $1,990 of goodwill.

The following table summarizes the amounts of identified assets acquired and liabilities assumed at the acquisition date:

Recognized amount of identifiable assets acquired and liabilities assumed

	Amount
Cash	$	~~297~~4,035
Accounts receivable		~~968~~1,392
Prepaid expenses and other current assets		~~498~~674
Property, plant and equipment		42303
Trade name		364
Intangible assets		1,023
Customer relationships		1,658
Operating lease ROU asset		623
Technology		7,314
Other non current assets		102
Deferred tax asset from prior net operating losses		167
Unbilled accounts receivable		684
Accounts payable and other liabilities		(883	)
Trade name and trademarks		196
Deferred revenue		(86	)
Customer relationships		673
Total fair value of assets acquired		10,339
Technology		304
Total purchase consideration		12,329
Deferred income tax assets, net		3,002
Goodwill	$	1,990
Accounts payable and other liabilities		(4,919	)
Deferred revenue		(2,080	)
Long term liabilities assumed		(662	)
Total fair value of assets acquired		5,350
Total purchase consideration		11,457
Goodwill	$	6,107

~~The~~Of the approximately ~~changes~~$7,300 inof acquired intangible assets, approximately $196 was provisionally assigned to registered trademarks (9-year useful life), acquired technology of approximately $304 (7-year useful life), customer relationships of approximately $673 (8-year useful life). As noted earlier, the ~~varying~~fair ~~amount~~value of ~~goodwill~~the ~~are~~acquired asidentifiable ~~follows:~~intangible assets is provisional pending receipt of the final valuations for these assets.

The goodwill of $6,107 recognized is attributable primarily to expected synergies and the assembled workforce of InsPro. None of the goodwill is expected to be deductible for income tax purposes.

The Company expensed acquisition related costs of approximately $2,500 of which approximately $1,800 were expensed in the current period and were included the consolidated income statements in the line item entitled merger and acquisition expenses.

The amounts of revenue and earnings of InsPro included in the Company’s consolidated statements of income from the acquisition date to the period ending June 30, 2020 are as follows:

The period ending June 30, 2020
Revenue:	$	3,700
Earnings before tax: after expensing $1,000 towards acquisition related costs	$	(900	)

The following unaudited pro forma consolidated results of operations assume that the acquisition of InsPro was completed as of April 1, 2019:

Three months ended June 30, 2019
Revenue:	$	40,800
Earnings before tax:	$	2,000

The changes in the varying amount of goodwill for all acquisitions are as follows:

Changes in carrying amount of the goodwill

	Three months ended December 31, 2019		Nine months ended December 31, 2019
	As of June 30, 2020		As of March 31, 2020
Opening value	$	34,~~090~~095	$	34,145
Changes on account of currency fluctuation		5422		(150	)
Addition due to business combination		6,107		—
Impairment of Goodwill		—		—
Closing value	$	3440,~~144~~224	$	34,~~144~~095

	Three months ended December 31, 2018			Nine months ended December 31, 2018
Opening value	$	32,216		$	32,216
Changes on account of currency fluctuation		(26	)		(26	)
Impairment of Goodwill		—			—
Addition on account of business combination		2,536			2,536
Closing value	$	34,726		$	34,726

Goodwill represents the cost of the acquired businesses in excess of the estimated fair value of assets acquired, identifiable intangible assets and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually or as circumstances warrant. If impairment is indicated and carrying value of the goodwill of a reporting unit exceeds the implied fair value of that goodwill, then goodwill is written down. There are no indefinite-lived intangible assets.

Goodwill represents the cost of the acquired businesses in excess of the estimated fair value of assets acquired, identifiable intangible assets and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually or as circumstances warrant. If impairment is indicated and carrying value of the goodwill of a reporting unit exceeds the implied fair value of that goodwill, then goodwill is written-down. There are no indefinite-lived intangible assets.

The following table sets forth the major categories of the Group’s intangible assets and the weighted-average remaining amortization period for those assets that were not already fully amortized:

	December 31, 2019
	June 30, 2020
										Weighted
										Average
										Remaining
	Gross							Net		Amortization
	Carrying		Accumulated					Carrying		Period
	Amount		Amortization			Impairment		Amount		(Years)
Technology	$	10,664	$	4,801		$	—	$	5,863		6
Customer contracts	$	2,950	$	(2,950	)	$	—	$	—		—
Trade Name		352		45			—		307		9
Customer relationships		8,977		(5,066	)		—		3,911		4
Customer relationship		8,326		4,308			—		4,018		4
Trade Name		544		(68	)		—		476		5
Customer Contract		2,950		2,950			—		—		—
Technology		10,826		(5,474	)		—		5,352		2
Software		14,~~038~~864		~~708~~(3,724	)		—		~~330~~1,140		21
	$	2328,~~330~~161	$	12(17,~~812~~282	)	$	—	$	10,~~518~~879

2625

	March 31, 2019
	March 31, 2020
										Weighted
										Average
										Remaining
	Gross Carrying		Accumulated					Net Carrying		Amortization Period
	Amount		Amortization			Impairment		Amount		(Years)
Technology	$	10,672	$	3,118		$	—	$	7,554		6
Customer contracts	$	2,950	$	(2,950	)	$	—	$	—		—
Trade Name		353		18			—		335		9
Customer relationships		8,286		(4,784	)		—		3,502		4
Customer relationship		8,328		3,753			—		4,575		4
Trade Name		343		(53	)		—		290		8
Customer Contract		2,950		2,950			—		—		—
Technology		10,446		(4,967	)		—		5,479		3
Software		31,~~844~~011		~~3,339~~(751	)		—		~~505~~260		21
	$	2623,~~147~~036	$	(13,~~178~~505	)	$	—	$	129,~~969~~531

~~Changes~~Amortization expense inof $986 and $817 for the ~~net~~three ~~carrying~~months ~~amount~~ended June 30, 2020 and June 30, 2019, respectively, was recorded as expenses. The amortization expense of acquired intangible assets for each of the following five years and thereafter are expected to be as follows: recorded as cost of goods sold. The amortization expense of acquired intangible assets ~~were~~for each of the following five years and thereafter are expected to be as follows:

	Technology			Trade Name		Customer Relationship		Customer Contract		Software		Total
	Amortization
March 31, 2019	$	7,554		$	335	$	4,575	$	—	$	505	$	12,969
Twelve months ending June 30,	Expense
Amortization		1,566			29		567		—		296		2,458
2021	$	3,671
Addition-Business acquisition		—			—		—		—		37		37
2022		2,665
Foreign currency translation		(125	)		1		10		—		84		(30	)
2023		2,245
December 31, 2019 (Unaudited)	$	5,863		$	307	$	4,018	$	—	$	330	$	10,518
2024		641
2025		291
Thereafter		1,366
Total	$	10,879

Amortization expense of $822 and $2,458 for the three and nine months ended December 31, 2019, respectively, and $1,226 and $1,853 for the three and nine months ended December 31, 2018, respectively, was recorded as cost of goods sold. The amortization expense of acquired intangible assets for each of the following five years and thereafter are expected to be as follows:

	Amortization
Years ending March 31	Expense
2020	$	3,228
2021		2,919
2022		2,020
2023		1,954
Thereafter		2,848
Total	$	12,969

Details of identifiable intangible assets acquired are as follows:

	Weighted average amortization period (in years)		Amount assigned		Residual value
Technology		5	$	7,314		—
Trade name		10		364		—
Customer relationships		15		1,658		—
Total		6.96	$	9,336		—

15.

NON-CONTROLLING INTEREST

On November 27, 2018, the Company entered into athe ~~share~~Exaxe ~~purchase~~Agreement ~~agreement~~ for the acquisition of ~~all~~ the ~~issued~~ Securities of Exaxe. The Company completed the purchase of 90% of the Securities on November 27, 2018. The Company purchased, and the ~~remaining~~sellers sold to the Company, the remaining 10% of the Securities on August 1, 2019. ~~and~~The ~~there~~economic istransfer nodate of Exaxe was October 1, 2018. Accordingly, the share of non-controlling interest as ofon ~~December~~June 3130, ~~2019.~~2020 ~~The~~and ~~economic~~March ~~transfer~~31, ~~date~~2020 ~~of Exaxe~~ was ~~October~~$0 1and $0, ~~2018~~respectively.

16.

SUBSEQUENT EVENTS

~~On January 30, 2020,~~Termination ~~the Company, Majesco Merger Sub, Inc., a wholly-owned subsidiary~~ of ~~the~~Chief ~~Company~~Financial ~~(“Merger~~Officer Sub”) and InsPro Technologies Corporation (“InsPro”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, Merger Sub will merge with and into InsPro (the “Merger”) with InsPro surviving the Merger as a wholly-owned subsidiary of the Company. The Merger consideration to be paid by the Company on the closing date (the “Effective Time”) of the Merger, subject to certain adjustments as set forth in the Merger Agreement (including for cash and certain debt of InsPro), is $12 million in cash. Consummation of the Merger is subject to certain conditions, including, without limitation, adoption of the Merger Agreement by the requisite vote of InsPro’s stockholders, the accuracy of the representations and warranties (subject to customary materiality qualifiers), the absence of any Material Adverse Effect (as defined in the Merger Agreement) with respect to InsPro, InsPro’s compliance with its covenants and agreements contained in the Merger Agreement (subject to customary materiality qualifiers) and InsPro’s fairness advisor shall not have withdrawn, revoked or modified their fairness opinion, among others.

InOn ~~addition,~~July ~~pursuant to the Merger Agreement~~8, ~~The Co-Investment Fund II~~2020, ~~L.P. and Independence Blue Cross, LLC (collectively,~~ the ~~“Shareholders”)~~ ~~each~~Company ~~entered~~terminated ~~into~~without acause ~~voting agreement (~~the ~~“Voting~~services ~~Agreement”)~~of ~~with~~its ~~the~~Chief ~~Company~~Financial ~~and Merger Sub~~Officer. Pursuant to the ~~Voting Agreement,~~terms ~~the Shareholders agreed to vote their shares~~ of ~~InsPro’s~~his ~~common~~employment ~~stock~~agreement, he ~~Series~~received Atwo ~~Preferred~~weeks ~~Stock,~~of ~~Series~~notice Bpay ~~Preferred Stock~~ and ~~Series C Preferred Stock~~, inas ~~each case~~severance, insix ~~favor~~months of, ~~among~~his ~~other~~base ~~things~~salary, ~~the~~COBRA ~~adoption~~continuation ~~of the Merger Agreement~~ and ~~the consummation~~a ofprorated ~~the Merger and the other transactions contemplated by the Merger Agreement and against (i) any competing proposal~~portion ~~or competing transaction, (ii) the adoption~~ of ~~any~~his ~~competing~~annual ~~transaction~~bonus. ~~agreement~~Effective ~~and~~as ~~(iii) any other action that would in any manner (A) prevent, impede, frustrate or nullify any provision~~ of ~~the~~July ~~Merger Agreement~~8, ~~(B)~~2020 ~~change~~Farid ~~the~~Kazani ~~voting~~was ~~rights~~appointed ~~of any class of InsPro’s capital stock or (C) otherwise interfere with or delay the transactions contemplated by the Merger Agreement. In addition, the Shareholders have agreed not~~ to ~~(i)~~serve ~~subject to certain exceptions, transfer their shares of InsPro’s common stock and/or preferred stock,~~ as applicable, and (ii) solicit alternative transactions or enter into discussions concerning, or provide confidential information in connection with, any alternative transaction. The Voting Agreements will terminate upon the ~~earlier~~ ofInterim ~~the~~Chief ~~Effective~~Financial ~~Time or the termination of the Merger Agreement in accordance with its terms~~Officer.

28Acquisition of Majesco

Agreement and Plan of Merger

On July 20, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two entities affiliated with Thoma Bravo, L.P., Magic Intermediate, LLC (“Parent”) and Magic Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Parent, which was subsequently amended and restated on August 8, 2020 (as so amended and restated, the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as the surviving corporation and a wholly owned subsidiary of Parent. In the Merger, each share of common stock, par value $0.002 per share, of the Company that is issued and outstanding immediately prior to the effective time of the Merger, other than Excluded Shares (as defined in the Merger Agreement), will be converted into the right to receive $16.00 per share, subject to any required withholding of taxes.

The consummation of the Merger is subject to certain conditions described in the Merger Agreement, including, but not limited to, obtaining the approval of the members of Majesco Limited to the divestment of Majesco Limited’s shares of the Company’s common stock for the consideration provided in the Merger Agreement (the “Divestment”) and delivery of a written consent to the Merger by Majesco Limited, obtaining a No Objection Certificate (as defined in the Merger Agreement) from the Indian tax authorities, obtaining the consent of the Reserve Bank of India, terminating certain intercompany contracts between the Company and Majesco Limited, the accuracy of the representations and warranties (subject to customary materiality qualifiers) and the absence of any Material Adverse Effect (as defined in the Merger Agreement) with respect of the Company and its subsidiaries. As a result of the Merger, the Company’s common stock will cease to be publicly traded and will be delisted from The Nasdaq Global Market. On August 12, 2020 the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) with respect to the Merger and Parent’s pending acquisition of Majesco. With early termination granted under the HSR Act, the transaction has received all applicable antitrust approvals.

Support Agreement

In connection with the Merger Agreement, on July 20, 2020, the Company entered into a support agreement with Majesco Limited, Parent and Merger Sub, which was subsequently amended on August 8, 2020 (as so amended, the “Support Agreement”), pursuant to which, among other things, Majesco Limited agreed to (i) issue notice through postal ballot to its members for their approval of the Divestment (such approval, the “Limited Shareholder Approval”) no later than August 12, 2020; (ii) notify the parties to the Support Agreement of the result of the votes of its members pursuant to the postal ballot no later than September 13, 2020, (iii) deliver its written consent to the Merger within one business day following the publication through the stock exchange in India of the Limited Shareholder Approval; and (iv) subject to receipt of the Limited Shareholder Approval, at any meeting of the shareholders of the Company, to cause its shares to be consented in favor of the Merger Agreement and the transactions contemplated thereby, and against certain transactions including any other Acquisition Proposal (as defined in the Merger Agreement).

Promoter Support Agreement

In connection with the Merger Agreement, on July 20, 2020, the Company entered into a promoter support agreement with Majesco Limited, Parent and certain promoters of Majesco Limited and their families named in the Promoter Support Agreement (the “Promoter Group”), which was subsequently amended and restated on August 8, 2020 (as so amended and restated, the “Promoter Support Agreement”), pursuant to which, among other things, the Promoter Group will issue their assent to the Divestment.

The Promoter Group also agreed that if (i) the board of directors of Majesco Limited fails to issue the postal ballot notice seeking the approval of the shareholders to the Divestment pursuant to the Merger or fails to convene a general meeting of its shareholders seeking their approval to the Divestment pursuant to the Merger or (ii) for any reason whatsoever the general meeting so convened does not take place, then the Promoter Group will requisition the board of directors of Majesco to convene an extraordinary general meeting or issue a postal ballot notice for the approval by the shareholders of Majesco Limited to the Divestment pursuant to the Merger. If the board of directors of Majesco Limited fails to act on receipt of such requisition, then the Promoter Group will be obligated to call and hold the extraordinary general meeting within three months and issue its unconditional and irrevocable assent to the Divestment pursuant to the Merger at such meeting.

The Promoter Group further agreed that, in the event that the Merger Agreement is terminated in accordance with its terms under circumstances where a Company Termination Fee (as defined in the Merger Agreement) is payable to Parent, then the Promoter Support Agreement will only terminate (A) if Parent or its designee, as applicable, actually receives the Company Termination Fee and (B) only on the date that is seven months following such termination of the Merger Agreement, provided that the terms and conditions of the Promoter Support Agreement will apply only to 50% of the shares or voting rights held by the Promoter Group in Majesco Limited, on a pro rata basis during such seven month period.

Limited Guaranty

On July 20, 2020, Thoma Bravo Discover Fund II, L.P., Thoma Bravo Discover Fund II-A, L.P. and Thoma Bravo Discover Executive Fund II, L.P. (each, a “Guarantor” and, collectively, the “Guarantors”) entered into a Limited Guaranty with the Company, which was subsequently amended on August 8, 2020 (as so amended, the “Guaranty”), pursuant to which, among other things, each such Guarantor has unconditionally agreed to guarantee, on a several and not joint basis, subject to the terms and conditions set forth in the Guaranty, its pro rata portion of the obligations of Parent to pay the Parent Termination Fee (as defined in the Merger Agreement) and the expense reimbursement obligations of Parent set forth in the Merger Agreement (in any event other than payment of the Merger consideration), up to a maximum amount equal to each such Guarantor’s respective pro rata portion of the Parent Termination Fee. The maximum aggregate guaranteed amount is $52,011,693.24 in the aggregate and the maximum aggregate liability of each guarantor shall in no event exceed such Guarantor’s pro rata portion of such amount.

Letter Agreement

On July 20, 2020, the Company entered into a letter agreement with Majesco Limited, which was subsequently amended on August 8, 2020, pursuant to which Majesco Limited agreed to reimburse, indemnify and hold the Company harmless from and against any and all costs or disbursements incurred by the Company in the event that the Merger Agreement is terminated by the Parent and Merger Sub upon the occurrence of certain events.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with ~~“Selected Financial Data,” and~~ the consolidated financial statements and related notes included in our Annual Report on Form 10-K for our fiscal year ended March 31, ~~2019~~2020 and referred to herein as the “Annual Report,” and the consolidated financial statements and related notes for the quarter ended ~~December~~June 3130, ~~2019~~ 2020 included in Part I, Item I of this Quarterly Report on Form 10-Q. The statements in this discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described below in “Special Note Regarding Forward-Looking Statements” and in [Part II, Item 1A “Risk Factors.”] Our actual results may differ materially from those contained in or implied by any forward-looking statements.

All US dollar currency amounts in this MD&A are in thousands unless indicated otherwise. All Euros in this MD&A are in thousands unless indicated otherwise. Except where the context requires otherwise, references in this MD&A to “Majesco,” “Group,” “we” or “us” are to Majesco and its subsidiaries on a worldwide consolidated basis.

COVID-19 Pandemic

The full impact of the COVID-19 outbreak continues to evolve as of the date of this Quarterly Report on Form 10-Q. As such, it is uncertain as to the full magnitude that the pandemic will have on the Majesco’s financial condition, liquidity, and future results of operations. Management is actively monitoring the global situation and its impact on Majesco’s financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, Majesco is not able to estimate the effects that the COVID-19 outbreak will have on its results of operations, financial condition, or liquidity for fiscal year 2021.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. (the “Exchange Act”). All statements other than statements of historical fact could be deemed forward-looking statements. Statements that include words such as “may,” “will,” “might,” “projects,” “expects,” “plans,” “believes,” “anticipates,” “targets,” “intends,” “hopes,” “aims,” “can,” “should,” “could,” “would,” “goal,” “potential,” “approximately,” “estimate,” “pro forma,” “continue” or “pursue” or the negative of these words or other words or expressions of similar meaning may identify forward-looking statements. For example, forward-looking statements include any statements of the plans, strategies and objectives of management for future operations, including the execution of integration and restructuring plans and the anticipated timing of filings; any statements with respect to the merger (the “Merger”) of the Company with and into Magic Intermediate, LLC; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing.

These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and the other documents referred to and relate to a variety of matters, including, but not limited to, other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of management, are not guarantees of performance and are subject to significant risks and uncertainty. These forward-looking statements should not be relied upon as predictions of future events and Majesco cannot assure you that the events or circumstances discussed or reflected in these statements will be achieved or will occur. Furthermore, if such forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by Majesco or any other person that we will achieve our objectives and plans in any specified timeframe, or at all.

These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in “Item 1A. Risk Factors” in our Annual Report [and elsewhere in this Quarterly Report on Form 10-Q.] Important factors that could cause actual results to differ materially from those described in forward-looking statements contained herein include, but are not limited to:

●

our ability to achieve increased market penetration for our product and service offerings and obtain new customers;

●

our ability to raise future capital as needed to fund our growth and innovation plans;

●

growth prospects of the property & casualty and life & annuity insurance industry;

~~● the strength and potential of our technology platform and our ability to innovate and anticipate future customer needs;~~28

29● the strength and potential of our technology platform and our ability to innovate and anticipate future customer needs; ● our ability to protect our intellectual property rights;

● our ability to protect our intellectual property rights;

●

our ability to compete successfully against other providers and products;

●

our dependence on certain key customers and the risk of loss of these customers;

●

security breaches affecting our systems, software, applications, and products;

●

the unauthorized access, acquisition, disclosure, theft or compromise of proprietary or personal customer or consumer data and information;

●

the risk of telecommunication or technological disruptions;

●

our exposure to additional scrutiny and increased expenses as a result of being a public company;

●

our ability to identify and complete acquisitions, manage growth and successfully integrate acquisitions;

●

our financial condition, financing requirements and cash flow;

● market expectations regarding our potential growth and ability to implement our short and long-term strategies;

	●	market expectations regarding our potential growth and ability to implement our short and long-term strategies;
	●	uncertainties relating to the impact of COVID-19 on our business, operations and employees;

●

the risk of loss of strategic relationships;

●

the success of our research and development investments;

●

changes in economic conditions, political conditions and trade protection measures and licensing requirements in the United States and in the foreign jurisdictions in which we operate;

●

changes in laws or regulations affecting the insurance industry in particular;

● changes in tax laws, including to the international transfer pricing regime;

●

restrictions and changes in laws on immigration;

●

our inability to achieve sustained profitability;

●

our ability to obtain, use or successfully integrate third-party licensed technology;

●

our ability and cost of retaining and recruiting key personnel or the risk of loss of such key personnel;

● ~~the~~any adverse outcome of legal proceedings that may be commenced against us;

● the risk that our customers internally develop new competitive products; ~~and~~

● the impact of new accounting standards and changes we may need to make in anticipation or as a result of these standards; and ● the incurrence of unexpected costs, liabilities or delays relating to the Merger; the failure to satisfy the conditions to the Merger, including regulatory approvals; and the failure to obtain approval of the Merger by the shareholders of Majesco Limited.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We disclaim any obligation to publicly update or release any revisions to these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events, except as required by law.

3029

Overview

Majesco is a global leader of cloud insurance software solutions for insurance business transformation. We provide technology, expertise, and leadership that helps insurers modernize, innovate and connect to build the future of their business and the insurance industry at speed and scale. We do this by providing technology that connects people and businesses to insurance in ways that are innovative, hyper-relevant, compelling and personal. In addition to the United States, we operate in Canada, Mexico, the United Kingdom, Malaysia, Singapore, Ireland and India. With our CloudInsurer^® solutions, we offer cloud-based core insurance platforms, along with distribution management and data and analytics solutions. With our Digital1^st™solutions we offer a cloud-native, digital engagement and microservices platform-as-a-service for the entire insurance business and an ecosystem of partners with apps that provide innovative data sources and capabilities. These solutions enable Property & Casualty/General Insurance (“P&C”), and Life, Annuities, Pensions and Group/ Voluntary Benefits (“L&A and Group”) providers to modernize and optimize their businesses across the end-to-end insurance value chain, better comply with policies and regulations, innovate with new business models, enter new markets and launch new products and services for incumbents, greenfields and startups. Using this portfolio of solutions including our core P&C, L&A and Group and LifePlus insurance platforms, data and analytics, distribution management and Digital1^st Insurance, our customers can respond to evolving market needs, growth and innovation opportunities and regulatory changes, which enables agility, innovation and speed while improving the effectiveness and efficiency of their business operations.

Long-term, strong customer relationships are a key component of our success given the long-term nature of our contracts, opportunity for deeper relationships with our portfolio of solutions, and the importance of customer references for new sales. Our customers range from some of the largest global tier one insurance carriers in the industry to mid-market insurers, MGAs, startups and greenfields, including specialty, mutual and regional carriers. As of ~~December~~June 3130, ~~2019~~2020, we served approximately 200 insurance companies on a worldwide basis.

We generate revenue from our global IP led business as well as from engagements in the insurance services space. The IP business is primarily driven through either an on-premise deployment or deployment of the platform on the cloud. While the on-premise model generates revenues from the licensing of our proprietary software (perpetual or annual license fees), and support and maintenance fees pursuant to contracts with customers, we have been witnessing a significant shift in the business model with customers preferring the cloud model which offers a speed to value benefit together with low upfront investments. The revenues from the cloud model are primarily from monthly subscriptions once the platform is deployed for use. Additionally, we also generate revenues from professional fees for services that the customer may engage Majesco for under both modes of deployment. License fees, support and maintenance and cloud subscription fees are usually managed through multi-year agreements, typically over a period of five to seven years. Insurance services revenues is primarily driven by professional services offered in the areas of transformation consulting, data, digital, testing and application development and management.

Recent Developments

OnAcquisition ~~January 30, 2020, the Company, Majesco Merger Sub, Inc., a wholly-owned subsidiary~~ of the Company (“Merger Sub”) and InsPro Technologies Corporation (“InsPro”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which, Merger Sub will merge with and into InsPro (the “Merger”) with InsPro surviving the Merger as a wholly-owned subsidiary of the Company. The Merger consideration to be paid by the Company on the closing date (the “Effective Time”) of the Merger, subject to certain adjustments as set forth in the Merger Agreement (including for cash and certain debt of InsPro), is $12 million in cash. Consummation of the Merger is subject to certain conditions, including, without limitation, adoption of the Merger Agreement by the requisite vote of InsPro’s stockholders, the accuracy of the representations and warranties (subject to customary materiality qualifiers), the absence of any Material Adverse Effect (as defined in the Merger Agreement) with respect to InsPro, InsPro’s compliance with its covenants and agreements contained in the Merger Agreement (subject to customary materiality qualifiers) and InsPro’s fairness advisor shall not have withdrawn, revoked or modified their fairness opinion, among others.Majesco

~~In addition, pursuant to the Merger~~ Agreement~~, The Co-Investment Fund II, L.P. and Independence Blue Cross, LLC (collectively, the~~ ~~“Shareholders”) each entered into a voting agreement (the “Voting Agreement”) with the Company~~ and ~~Merger Sub.~~Plan ~~Pursuant to the Voting Agreement, the Shareholders agreed to vote their shares~~ of ~~InsPro’s common stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, in each case, in favor of, among other things, the adoption of the~~ Merger Agreement and the consummation of the Merger and the other transactions contemplated by the Merger Agreement and against (i) any competing proposal or competing transaction, (ii) the adoption of any competing transaction agreement and (iii) any other action that would in any manner (A) prevent, impede, frustrate or nullify any provision of the Merger Agreement, (B) change the voting rights of any class of InsPro’s capital stock or (C) otherwise interfere with or delay the transactions contemplated by the Merger Agreement. In addition, the Shareholders have agreed not to (i) subject to certain exceptions, transfer their shares of InsPro’s common stock and/or preferred stock, as applicable, and (ii) solicit alternative transactions or enter into discussions concerning, or provide confidential information in connection with, any alternative transaction. The Voting Agreements will terminate upon the earlier of the Effective Time or the termination of the Merger Agreement in accordance with its terms.

~~Three~~On ~~Months~~July ~~Ended~~20, ~~December~~2020, 31the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two entities affiliated with Thoma Bravo, ~~2019~~L.P., ~~Highlights~~Magic Intermediate, LLC (“Parent”) and Magic Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of Parent, which was subsequently amended and restated on August 8, 2020 (as so amended and restated, the “Merger Agreement”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as the surviving corporation and a wholly owned subsidiary of Parent. In the Merger, each share of common stock, par value $0.002 per share, of the Company that is issued and outstanding immediately prior to the effective time of the Merger, other than Excluded Shares (as defined in the Merger Agreement), will be converted into the right to receive $16.00 per share, subject to any required withholding of taxes.

AThe consummation of the ~~few~~Merger is subject to certain conditions as described in the Merger Agreement, including, but not limited to, obtaining the approval of ~~our~~the ~~highlights~~members of ~~our~~Majesco ~~three~~Limited ~~months~~to ~~ended~~the ~~December~~divestment 31of Majesco Limited’s shares of the Company’s common stock for the consideration provided in the Merger Agreement (the “Divestment”) and delivery of a written consent to the Merger by Majesco Limited, ~~2019~~obtaining ~~were:~~a No Objection Certificate (as defined in the Merger Agreement) from the Indian tax authorities, obtaining the consent of the Reserve Bank of India, terminating certain intercompany contracts between the Company and Majesco Limited, the accuracy of the representations and warranties (subject to customary materiality qualifiers) and the absence of any Material Adverse Effect (as defined in the Merger Agreement) with respect of the Company and its subsidiaries. As a result of the Merger, the Company’s common stock will cease to be publicly traded and will be delisted from The Nasdaq Global Market. On August 12, 2020 the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) with respect to the Merger and Parent’s pending acquisition of Majesco. With early termination granted under the HSR Act, the transaction has received all applicable antitrust approvals.

~~● Revenues of $37,175 with a gross profit of 48.0% of revenue;~~30

●Support ~~$4,712 (12.7% of revenue) in research and development (“R&D”) expenses;~~Agreement

●In ~~$10~~connection with the Merger Agreement,~~027~~ on July 20, 2020, the Company entered into a support agreement with Majesco Limited, Parent and Merger Sub, which was subsequently amended on August 8, 2020 (~~27.0~~as %so amended, the “Support Agreement”), pursuant to which, among other things, Majesco Limited agreed to (i) issue notice through postal ballot to its members for their approval of ~~revenue~~the Divestment (such approval, the “Limited Shareholder Approval”) no later than August 12, 2020; (ii) notify the parties to the Support Agreement of the result of the votes of its members pursuant to the postal ballot no later than September 13, 2020, (iii) deliver its written consent to the Merger within one business day following the publication through the stock exchange in ~~selling~~India of the Limited Shareholder Approval; and (iv) subject to receipt of the Limited Shareholder Approval, ~~general~~at any meeting of the shareholders of the Company, to cause its shares to be consented in favor of the Merger Agreement and ~~administrative~~the ~~expenses;~~transactions contemplated thereby, and against certain transactions including any other Acquisition Proposal (as defined in the Merger Agreement).

●Promoter ~~Net income of $3,875; and~~Support Agreement

●In ~~Adjusted~~connection ~~EBITDA~~with the Merger Agreement, on July 20, 2020, the Company entered into a promoter support agreement with Majesco Limited, Parent and certain promoters of $4Majesco Limited and their families named in the Promoter Support Agreement (the “Promoter Group”),~~985~~ which was subsequently amended and restated on August 8, ~~representing~~2020 13(as so amended and restated, the “Promoter Support Agreement”).4% pursuant ofto ~~revenue~~which, among other things, the Promoter Group will issue their assent to the Divestment.

Limited Guaranty

Letter Agreement

~~Nine~~ Three Months Ended ~~December~~June 3130, ~~2019~~ 2020 Highlights

A few of our highlights of our ~~nine~~three months ended ~~December~~June 3130, ~~2019~~2020 were:

● Revenues of $~~108~~41,~~534~~247 with a gross profit of 4947.20% of revenue;

● $143,~~639~~818 (139.53% of revenue) in research and development (“R&D”) expenses;

● $3111,~~729~~627 (2928.2 % of revenue) in selling, general and administrative expenses;

● Net income of $61,~~065~~287; and

● Adjusted EBITDA of $125,~~849~~998, representing 1114.85% of revenue.

Use of Non-GAAP Financial Measures

In evaluating our business, we consider and use EBITDA as a supplemental measure of operating performance. We define EBITDA as earnings before interest, taxes, depreciation and amortization. We present EBITDA because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance. We define Adjusted EBITDA as EBITDA before stock-based compensation, ~~a reversal of accrual for contingent liability~~ and mergers and acquisitions expenses.

The terms EBITDA and Adjusted EBITDA are not defined under U.S. generally accepted accounting principles (“U.S. GAAP”) and are not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA have limitations as an analytical tool, and when assessing our operating performance, investors should not consider EBITDA or Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, EBITDA and Adjusted EBITDA do not reflect our actual cash expenditures. Other companies may calculate similar measures differently than us, limiting their usefulness as comparative tools. We compensate for these limitations by relying on U.S. GAAP results and using EBITDA and Adjusted EBITDA only supplementary.

For an unaudited reconciliation of U.S. GAAP net income to EBITDA and Adjusted EBITDA for the three ~~and nine~~ months ended ~~December 31~~June 30, ~~2019~~2020 and ~~December~~June 3130, ~~2018~~2019, see “— Results of Operations — Three ~~and Nine~~ Months Ended ~~December~~June 3130, ~~2019~~ 2020 Compared to Three ~~and Nine~~ Months Ended ~~December~~June 3130, ~~2018~~2019 — Adjusted EBITDA”.

Agile Asset Acquisition

On January 1, 2015, we acquired substantially all of the insurance consulting business of Agile Technologies, LLC, a New Jersey limited liability company, a business and technology management consulting firm. Total consideration for the Agile asset acquisition amounted to approximately $8,500, including approximately $7,800 in earn-out payments over three years based on the satisfaction of certain time milestones and performance targets.

During the quarter ended September 30, 2018, we and the shareholders of Agile determined that the final earn-out targets under the Agile asset purchase agreement would not be met and that no further contingent consideration would therefore be due under the Agile asset purchase agreement. Accordingly, the accrued outstanding balance has been reversed in the income statement during the period ended September 30, 2018. We have no further obligations with respect to earn-out payments under the Agile asset purchase agreement.

Through this acquisition, we acquired the insurance-focused IT consulting business of Agile, as well as business process optimization capabilities and additional technology services including data architecture strategy and services. In connection with this acquisition, over 55 insurance technology professionals and other personnel formerly employed or engaged by Agile became our employees or independent contractors. This acquisition also resulted in the addition of approximately 20 customers to our customer base. In connection with this acquisition, we assumed office leases under which Agile was lessee in New Jersey, Georgia and Ohio, and acquired certain trademarks, service marks, domain names and business process framework of Agile.

Cover-All Merger

On June 26, 2015, Cover-All Technologies Inc., a provider of core insurance software and business analytics solution primarily focused on commercial lines for the property and casualty insurance industry listed on the NYSE American, merged with and into Majesco, with Majesco as the surviving corporation, in a stock-for-stock transaction. In the merger, each share of Cover-All common stock issued and outstanding immediately prior to the effective time of the merger (other than treasury shares) was automatically cancelled and extinguished and converted into the right to receive 0.21641 shares of common stock of Majesco. This exchange ratio resulted in holders of issued and outstanding Cover-All common stock and outstanding options and restricted stock units and other equity awards of Cover-All holding in the aggregate approximately 16.5% of the total capitalization of the combined company immediately following consummation of the merger.

Cover-All’s customers include insurance companies, agents, brokers and managing general agents throughout the United States and Puerto Rico. Cover-All’s software solutions and services are designed to enable customers to introduce new products quickly, expand their distribution channels, reduce costs and improve service to their customers. Cover-All’s business analytics solution enables customers to leverage their information assets for real time business insights and for better risk selection, pricing and financial reporting.

Exaxe Acquisition

On November 27, 2018 (the “Effective Date”), we entered into a share purchase agreement (the “Exaxe Agreement”) for the acquisition of all the issued share capital (collectively, the “Securities”) of Exaxe Holdings Limited, a private limited company incorporated in Ireland (“Exaxe”). Exaxe is an EMEA (Europe, the Middle East and Africa) based cloud software leader in the life, pensions and wealth management segment. Headquartered in Dublin, Ireland, Exaxe serves a growing list of top European insurers. This acquisition will strengthen and expand our software offerings in EMEA for the individual life, pensions and wealth management market while complementing the Group’s software and Group focused customer base in the UK. On the Effective Date, we consummated the purchase of 90% of the Securities. As agreed to, we purchased the remaining 10% of the Securities on August 1, 2019.

In consideration for the purchase of the Securities, on the Effective Date, we paid the sellers € 6,392 (or approximately $7,158 at exchange rates in effect on December 31, 2019) and € 717 (or approximately $803 at exchange rates in effect on December 31, 2019) for the remainder of the Securities on August 1, 2019.32

~~We also~~In ~~agreed~~consideration ~~to make certain earn-out payments to the sellers if certain adjusted EBITDA (as defined in the Exaxe Agreement) targets~~ for ~~Exaxe are met. If adjusted EBITDA for Exaxe for~~ the ~~period~~purchase of ~~January~~the 1Securities, ~~2019~~on ~~through December 31, 2019 is at least equal to 75% of~~ the ~~adjusted~~Effective ~~EBITDA target for such year~~Date, we ~~have~~paid ~~agreed~~the tosellers ~~pay~~ € ~~625~~6,392 (or approximately $~~700~~7,252 at exchange rates in effect on ~~December~~November 3127, ~~2019~~2018) ~~to the sellers~~ and ~~an additional~~ € 25717 (or approximately $28812 at exchange rates in effect on ~~December~~ ~~31,~~August ~~2019) for each full~~ 1~~% increase above 75%~~, ~~up to a maximum of 100% (with a maximum earn-out payment amount not to exceed € 1,250 (or approximately $1,400 at exchange rates in effect on December 31,~~ 2019)~~). During the quarter ended December~~ for ~~31, 2019, we and~~ the ~~former~~remainder ~~founders~~ of ~~Exaxe determined that~~ the ~~year~~Securities 1on ~~earn-out~~August ~~targets under the Exaxe share purchase agreement were not met and that no earn-out was payable to them towards the year~~ 1 ~~earn-outs. Accordingly~~, ~~the accrued deferred payment for year 1 has been reversed in the income statement during the period ended December 31,~~ 2019 ~~and disclosed as a separate line item below the income from operations for the quarter~~.

~~The~~We also agreed to ~~entire~~make certain earn-out ~~amount~~payments to the sellers if certain adjusted EBITDA (as defined in the Exaxe Agreement) targets for Exaxe are met. If adjusted EBITDA for Exaxe for the period of €January 41,~~500~~ 2019 through December 31, 2019 is at least equal to 75% of the adjusted EBITDA target for such year, we have agreed to pay € 625 (or approximately $~~5,040~~703 at exchange rates in effect on ~~December~~June 3130, ~~2019~~2020) ~~(less~~to ~~any~~the ~~portion already~~sellers ~~paid~~and an additional € 25 (or ~~written~~approximately ~~off~~$28 ~~for~~at ~~not~~exchange ~~meeting~~rates ~~requirements~~in ~~for~~effect aon ~~particular~~June 30, ~~period~~2020) ~~will~~for ~~become~~each ~~due~~full ~~and~~1% ~~payable~~increase ~~upon~~above 75%, up to a ~~sale~~maximum of ~~beneficial interests~~100% in(with a ~~majority~~maximum ofearn-out ~~the~~payment ~~outstanding~~amount ~~shares~~not ofto ~~Exaxe~~exceed € 1,250 (or ~~its~~approximately ~~subsidiary~~$1,406 orat aexchange ~~sale~~rates orin ~~other~~effect ~~disposal~~on inJune ~~whole~~30, or2020)). ~~substantial~~During the quarter ended June 30, 2020, ~~part~~we ofand the ~~undertaking~~former orfounders ~~assets~~ of Exaxe ordetermined ~~its~~that ~~subsidiary~~the ~~before~~year ~~the~~1 ~~end~~earn-out oftargets under the Exaxe share purchase agreement were not met and that no earn-out was payable to them towards the year 1 earn-outs. Accordingly, the accrued deferred payment for year 1 has been reversed in the Consolidated Statements of Income during the period ended June 30, 2020 and disclosed as a separate line item below the income from operations for the quarter.

During the fourth quarter of the fiscal year ended March 31, 2020, we again reviewed the business projections of Exaxe based on the impact of COVID-19. During this exercise we determined that one of the major customers of Exaxe in the business of selling door to door insurance was impacted significantly by the pandemic, which would have a negative impact on Exaxe’ s engagement with this customer going forward. Based on the circumstances we determined that Exaxe would not be able to meet the full earn out targets for the remaining two years. We carried out a fair valuation of the contingent consideration liability and reversed a further EUR 1,339 (approximately $1,473 at exchange rates in effect at November 27, 2018).

The total gain attributable to changes in the estimated contingent consideration payable for the acquisition of Exaxe was $2,832 for the year ended March 31, 2020. The fair value of the liability has been determined as per exchange rates in effect as June 30, 2020, and expense of $56 has been considered in the operating expense of the quarter ended June 30, 2020.

The entire earn-out amount of € 4,500 (or approximately $5,061 at exchange rates in effect on June 30, 2020) (less any portion already paid or written off for not meeting requirements for a particular period) will become due and payable upon a sale of beneficial interests in a majority of the outstanding shares of Exaxe or its subsidiary or a sale or other disposal in whole or substantial part of the undertaking or assets of Exaxe or its subsidiary before the end of the earn-out period.

We will also be restricted from making certain changes to the business of Exaxe, or diverting or redirecting Exaxe’s orders, revenue, customers, clients, suppliers or employees during the earn-out period.

In connection with the transaction, on the Effective Date, ~~Exaxe~~Majesco ~~Limited~~Software Solutions Ireland, a subsidiary of Exaxe, entered into employment agreements with each of Norman Carroll (the Chief Executive Officer of Exaxe) and Philip Naughton (the Executive Director – Business Development of Exaxe) pursuant to which Norman Carroll and Philip Naughton will act as SVP Ireland/UK Operations and Executive Director Business Development of ~~Exaxe~~Majesco ~~Limited~~Software Solutions Ireland, respectively. We agreed to grant Norman Carroll and Philip Naughton stock options awards with respect to such number of shares of our common stock having an aggregate value of € 1,000 (or approximately $1,~~120~~ 134 at exchange rates in effect on ~~December~~November 3127, ~~2019~~2018) pursuant to ~~our~~the 2015 ~~equity incentive plan~~Plan.

In addition, in connection with the transaction, we entered into a revised lease agreement with certain sellers (including Norman Carroll and Philip Naughton) for certain real property facilities leased by ~~Exaxe~~Majesco ~~Limited~~Software Solutions Ireland.

InsPro Acquisition

On January 30, 2020, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) for the acquisition of InsPro Technologies Corporation (OTCBB: ITCC) (“InsPro”) which is based in Eddystone, PA. InsPro is a software leader in the life and annuity insurance market and has experience in the accident & health, long term care, Medicare supplement market segments. The InsPro Enterprise platform is an insurance administration and marketing system that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated business. InsPro processes over 15 million policies for some of the leading blue-chip insurance carriers and third-party administrators in the United States, including several customers who process more than a million policies each. The expertise, talent and experience that the InsPro team brings is critical to meeting the demands of today’s digital customer and reinforces our commitment to creating a future of insurance that is agile, nimble and fast. InsPro also strengthens and supports our strategy to continue leading the industry with innovative, cloud-based solutions that help carriers take advantage of current market opportunities.

The transaction was structured as a cash for stock merger and on April 1, 2020 pursuant to the Merger Agreement, InsPro merged with and into our wholly owned subsidiary (the “Merger”). We paid approximately $11,457 (the “Merger Consideration”) as consideration for the Merger.

We always look at additional acquisitions to complement our service offerings and growth strategy. Our success, in the near term, will depend, in large part, on our ability to: (a) successfully integrate our acquisitions into our business, (b) build up momentum for new sales, (c) cross-sell to existing customers and (d) exceed customer satisfaction through our state of the art products and solutions.

Inflation

Although we cannot accurately determine the amounts attributable thereto, our net revenues and results of operations have been affected by inflation experienced in the U.S., Indian and other economies in which we operate through increased costs of employee compensation and other operational expenses during the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020 and ~~December~~June 3130, ~~2018~~2019. To the extent permitted by the marketplace for our products and services, we attempt to recover increases in costs by periodically increasing prices. However, there can be no assurance that we will be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Currency Fluctuations

We are affected by fluctuations in currency exchange rates with respect to our contracts. We hedge a substantial portion of our foreign currency exposure. For more information, see “— Quantitative and Qualitative Disclosures About Market Risk.”

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with U.S. GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies for us include revenue recognition, intangible assets and goodwill.

Revenue Recognition

Revenues are recognized based on the following general revenue recognition principles are met:

● Identify contract with a customer: There is an agreement between the company and a customer that creates enforceable rights and obligations. If required, the company combines two or more contracts and accounts for them as one contract for the purposes of revenue recognition.

● Identify performance obligations in the contract: Under the contracts the company establishes the different performance obligations. Determination of performance obligation is based on whether the customer can derive benefit from the product and services on its own or together with other resources and each of these benefits can be separately identified.

● Determine transaction price: The transaction price is the amount of consideration in the contract that the company expects to be entitled to receive in exchange for transferring the intellectual property and/or services to the customer. The company may enter in to fixed price contracts or variable priced contracts depending on the nature of the contract.

● Allocate transaction price to performance obligations in the contract: We allocate the transaction price to each performance obligation on the basis of the relative standalone selling price for each distinct deliverable.

● Recognize revenue when or as the company satisfies performance obligations: We recognize revenue when or as we satisfy each of the distinct performance by transferring the intellectual property or services that has been agreed upon with the customer. The revenue recognized is the amount allocated to that distinct obligation and the satisfaction of it. The obligation may be satisfied at a point of time or over a period of time. For performance obligations satisfied over a period of time, we recognize revenue based on the progress toward satisfaction of the obligation.

We have historically sold codebase solutions which required significant customization before the solution was ready for use by the customer and required us to provide continued services and support to ensure that the solution served the purposes of the customer. Over the years we have made significant investments in R&D and successfully transformed the codebase solution into a single package out of the box product, rich in functionality and content with easy and seamless upgrade capabilities. With this, on all our new sales and deployments, our obligation is now limited to the deployment of the contracted product on the environment for which it was sold (cloud-based or on-premise). The product is ready to use and the customer may choose to use the product as is, choose to retain our consultants to install, assist in implementation and customize the environment, contract with a third party to carry out this work or do it themselves with the toolkit that comes with the product. Revenues for license fees for sales of our out-of-the-box product offerings is recorded at the time of delivery as there is no significant ongoing service obligation after the point of sale. When our customers contract us for consulting and maintenance services, we account for the revenues from those standalone elements over the life of the contract.

In addition, we have made further investments to create a robust and market-leading cloud platform that is well positioned to take advantage of significant opportunities in the insurance marketplace. We invoice customers a subscription -based fee for our cloud platform. Revenue from subscription fees is recognized ratably over the life of the contract.

Time and Material Contracts — Professional services revenue consists primarily of revenue received for assisting with the implementation of our software, on-site support, and other professional consulting services. In determining how professional services revenue should be accounted, we review the nature of our software products; whether they are ready for use by the customer upon receipt; the nature of our implementation services and whether milestones or acceptance criteria exist that affect the realization of the services rendered. For all of our professional services arrangements that are billed on a time and materials basis revenue is recognized as the services are rendered as per the agreement. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. Payments received in advance of rendering professional services are deferred and recognized when the related services are performed. Work performed and expenses incurred in advance of invoicing are recorded as unbilled receivables. These amounts are billed in the subsequent month.

~~Time and~~Fixed ~~Material~~Price Contracts — For Professional services ~~revenue~~that ~~consists~~are ~~primarily~~performed ofunder ~~revenue~~a ~~received~~fixed ~~for~~price ~~assisting~~contract ~~with~~against ~~the development,~~measurable ~~implementation~~delivery ofmilestones ~~our software, on-site support, and other professional consulting services. In determining whether~~revenues ~~professional~~are ~~services~~recognized ~~revenue~~using ~~should be accounted for, we review~~ the ~~nature~~percentage of ~~our~~completion ~~software~~method. ~~products;~~Under ~~whether they are ready for use by~~ the ~~customer upon receipt; the nature~~ percentage-of ~~our~~completion ~~implementation services~~method, which ~~typically~~is dodeemed ~~involve~~a significant ~~customization~~ toestimate orby ~~development of~~ the ~~underlying~~Company, ~~software~~revenue ~~code;~~recognized ~~and~~is ~~whether~~equal ~~milestones~~to orthe ~~acceptance~~ratio ~~criteria~~of ~~exist~~costs ~~that~~expended ~~affect~~to ~~the~~date ~~realization of~~to the ~~services~~anticipated ~~rendered.~~total ~~Substantially~~contract ~~all~~costs, based ~~of our professional services arrangements are billed~~ on acurrent ~~time~~estimates ~~and~~of ~~materials~~costs ~~basis and,~~to ~~accordingly,~~complete ~~are recognized as~~ the ~~services are performed~~project. If there isare ~~significant~~milestones ~~uncertainty about the project completion~~ or ~~receipt~~acceptance ofprovisions ~~payment~~associated ~~for~~with ~~professional services~~the contract, ~~revenue is deferred until~~ the ~~uncertainty~~revenue isrecognized ~~sufficiently~~will ~~resolved.~~not ~~Payments received~~exceed inthe ~~advance~~most ofrecent ~~rendering~~milestone ~~professional~~achieved ~~services~~or ~~are~~acceptance ~~deferred~~obtained. ~~and~~If ~~recognized when~~ the ~~related~~total ~~services~~estimated costs ~~are~~to ~~performed.~~complete ~~Work performed~~a ~~and~~project ~~expenses~~exceed ~~incurred~~the intotal ~~advance~~contract ofamount, ~~invoicing~~indicating ~~are~~a ~~recorded~~loss, asthe ~~unbilled~~entire ~~receivables.~~anticipated ~~These~~loss ~~amounts~~would ~~are~~be ~~billed~~ recognized in the ~~subsequent~~ ~~months~~current period.

~~Fixed Price~~License Contracts - — For arrangements that do not qualify for separate accounting for the license and professional services revenues, ~~including arrangements~~ that ~~involve significant modification or customization of the software, that~~ include ~~milestones~~ milestones or customer specific acceptance criteria that may affect collection of the software license fees or where payment for the software license is tied to the performance of professional services, software license revenue is generally recognized together with the professional services revenue using the percentage-of-completion method. ~~Under~~as ~~the~~explained ~~percentage-of~~above. ~~completion~~This ~~method,~~is ~~revenue~~mainly ~~recognized~~relevant for isthe ~~equal~~legacy toversions of the ~~ratio~~Majesco ofplatform ~~costs~~which ~~expended~~required toheavy ~~date~~implementation/customization work to ~~the~~be ~~anticipated~~performed ~~total~~and ~~contract~~maintained for ~~costs,~~the ~~based~~software onto ~~current~~operate ~~estimates~~as ofdesired. ~~costs~~However, ~~to complete~~with the ~~project.~~new Ifversion ~~there~~of ~~are~~the ~~milestones~~software orwhich ~~acceptance~~is ~~provisions~~a ~~associated~~single ~~with~~package ~~the~~out ~~contract,~~of the ~~revenue~~box product, ~~recognized~~rich ~~will not~~in ~~exceed~~functionality ~~the~~and ~~most~~content ~~recent~~with ~~milestone~~easy ~~achieved~~and orseamless ~~acceptance~~upgrade ~~obtained.~~capabilities, Ifour ~~the~~obligation ~~total~~is ~~estimated~~now ~~costs~~limited to ~~complete~~the adeployment of ~~project~~the ~~exceed~~ contracted product on the ~~total~~environment ~~contract~~for ~~amount,~~which ~~indicating~~it awas ~~loss,~~sold. ~~the~~Revenues ~~entire~~for ~~anticipated~~license ~~loss~~fees ~~would~~for besales ~~recognized~~of inour out-of-the-box ~~current~~product offerings ~~period~~is recorded at the time of delivery.

Sales Commissions – In accordance with our compensation policy we pay one-time sales commissions for new business generated related to professional services contracts and subscription and subscription services. The majority of our commissions incurred in fiscal years 2020 and 2019 related to professional services contracts. Substantially all of our professional services contracts have durations of one year or less and as such commissions for these contracts are expensed as incurred. Commission costs related to subscription contracts were de minimis in fiscal year 2021 and 2020 and expensed as incurred.

Revenue is shown net of applicable service tax, sales tax, value added tax and other applicable taxes. We have accounted for reimbursements received for out of pocket expenses incurred as revenues in the Consolidated Statements of Income.

Goodwill and Other Intangible Assets

Goodwill ~~represents~~ represents the cost of the acquired businesses in excess of the estimated fair value of assets acquired, identifiable intangible assets and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually or as circumstances warrant. If impairment is indicated and carrying value of the goodwill of a reporting unit exceeds the implied ~~fair~~ fair value of that goodwill, then goodwill is written- down. There are no indefinite-lived intangible assets.

Intangible assets other than goodwill are amortized over their estimated useful lives on a straight line basis. The estimated useful life of an identifiable intangible asset is based on a number of factors, including the effects of obsolescence, demand, competition, the level of maintenance expenditures required to obtain the expected future cash flows from the asset and other economic factors (such as the stability of the industry, known technological advances, etc.).

The estimated useful lives of intangible assets are as follows:

Non-compete agreements	~~3 years~~	3 years
Leasehold benefit	~~Ascertainable life or primary period of lease, whichever is less~~	Ascertainable life or primary period of lease, whichever is less
Internal-use Software	1 – 5 years
Intellectual property rights		1 – 5 years
Intellectual Property Rights	1 – 5 years
Customer contracts		1 – 3 years
Customer Contracts	1 – 3 years
Customer relationships		6 – 15 years
Customer Relationships	6 – 15 years
Technology		5 – 7 years
Technology	6 years
Trademark		9 – 10 years
Trademark	10 years

Impairment of Long-Lived Assets and Intangible Assets

We review long-lived assets and certain identifiable intangible assets subject to amortization for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During this review, we re-evaluate the significant assumptions used in determining the original cost and estimated lives of long-lived assets. Although the assumptions may vary from asset to asset, they generally include operating results, changes in the use of the asset, cash flows and other indicators of value. Management then determines whether the remaining useful life continues to be appropriate or whether there has been an impairment of long-lived assets based primarily upon whether expected future undiscounted cash flows are sufficient to support the assets’ recovery. If impairment exists, we adjust the carrying value of the asset to fair value, generally determined by a discounted cash flow analysis.

Acquisition Accounting

We allocate the purchase price of an acquired business, using the acquisition method of accounting, to its tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess purchase price over fair value of net assets acquired is recorded as goodwill. Certain assumptions and judgements are used to estimate the fair value of acquired assets and liabilities. We engage outside appraisal firms to assist in the fair value determination of identifiable intangible assets. We may adjust the preliminary purchase price allocation, after the acquisition closing date and through the end of the measurement period of one year or less, as we finalize the valuation of acquired assets and liabilities. Changes in estimates used in the preliminary purchase price allocation could have a material effect on the final valuation and result in changes to goodwill and intangible assets. Additionally, if forecasts supporting the valuation of intangible assets or goodwill are not achieved, then an impairment charge could be recorded.

Property and Equipment

Property and equipment are stated at actual cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives. The cost and the accumulated depreciation for premises and equipment sold, retired or otherwise disposed of are removed from the stated values and the resulting gains and losses are included in the Consolidated Statements of Income.

35Maintenance and repairs are charged to Consolidated Statements of Income when incurred. Cost of assets not put to use before the balance sheet date are disclosed under the caption “capital work in progress.”

Maintenance and repairs are charged to combined Statements of Income when incurred. Cost of assets not put to use before the balance sheet date are disclosed under the caption “capital work in progress.”

The estimated useful lives of assets are as follows:

Leasehold Improvements		5 years or lease period, whichever is less
Computers		2 years
Plant and Equipment		2 – 5 years
Furniture and Fixtures		5 years
Vehicles		5 years
Office Equipment		2 – 5 years

Results of Operations

Three ~~and~~ ~~Nine~~ Months Ended ~~December~~June 3130, ~~2019~~ 2020 Compared to Three ~~and Nine~~ Months Ended ~~December~~June 3130, ~~2018~~2019

The following tables summarize our ~~consolidated~~Consolidated ~~statements~~Statements of ~~income~~Income for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020 and ~~December~~ 31June 30, ~~2018~~2019, including as a percentage of revenues:

Statements of Income Data

	Three Months Ended (Unaudited)
(U.S. Dollars; dollar amounts in thousands):	~~December~~June 3130, ~~2019~~2020			%			~~December~~June 3130, ~~2018~~2019			%
Total revenues	$	3741,~~175~~247					$	3537,~~820~~304
Total cost of revenues		1921,~~323~~878			5247	%		1817,~~293~~434			5153	%
Total gross profit		1719,~~852~~369						1719,~~527~~870
Operating expenses:
Research and development expenses		43,~~712~~818			119	%		45,~~850~~470			1415	%
Selling, general and administrative expenses		1011,~~027~~627			2928	%		1011,~~303~~826			2932	%
Total operating expenses		14,739						15,153
Merger and acquisition expenses		1,819						—
Income from operations		3,113						2,374
Total operating expenses		17,264						17,296
Interest income		141						7
Income from operations		2,105						2,574
Interest expense		(79	)					(114	)
Interest income		36						189
Other income (expenses), net		138						(57	)
Interest expense		(136	)					(89	)
Gain on reversal of accrued contingent liability		1,359						—
Other income (expenses), net		21						(11	)
Income before provision for income taxes		42,~~672~~026						2,~~210~~663
Income taxes		~~797~~739						~~483~~1,381
Net income	$	31,~~875~~287			83	%	$	1,~~727~~282			53	%

	Nine Months Ended (Unaudited)
(U.S. Dollars; dollar amounts in thousands):	December 31, 2019			%			December 31, 2018			%
Total Revenues	$	108,534					$	104,117
Total cost of revenues		55,130			49	%		53,340			52	%
Total gross profit		53,404						50,777
Operating expenses:
Research and development expenses		14,639			13	%		14,381			14	%
Selling, general and administrative expenses		31,729			30	%		29,484			27	%
Total operating expenses		46,368						43,865
Income from operations		7,036						6,912
Interest income		491						32
Interest expense		(269	)					(342	)
Other income (expenses), net		578						553
Gain on reversal of accrued contingent liability		1,359						835
Income before provision for income taxes		9,195						7,990
Income taxes		3,130						2,543
Net income	$	6,065			5	%	$	5,447			5	%

The following table represents revenues by each subsidiary and corresponding geographical region:

	Three Months Ended (Unaudited)
(U.S. Dollars; dollar amounts in thousands):	~~December~~June 3130, ~~2019~~2020		%			~~December~~June 3130, ~~2018~~2019		%
Geography: North America
Legal Entity
Majesco	$	108,~~790~~845		2922	%	$	10,~~476~~430		3028	%
Majesco Software and Solutions Inc.		2224,~~325~~439		6059	%		1322,~~260~~593		3761	%
Majesco Canada Ltd., Canada		9471		—	%		~~144~~22		—	%
Cover-All Systems, Inc.(1)		—		—	%		6,243		18	%
InsPro Technologies Inc.		3,745		9	%		–		—	%
	$	3337,~~209~~100		8990	%	$	3033,~~123~~045		8589	%
Geography: Europe
Legal Entity
Majesco UK Limited, UK	$	~~840~~1,497		24	%	$	1,~~813~~087		53	%
Exaxe Limited		1,263		3	%		1,726		5	%
Majesco Software Solutions Ireland Limited		1,216		3	%		1,261		3	%
		2,103		6	%		3,539		10	%
		2,713		7	%		2,348		6	%
Geography: Other
Legal Entity
Majesco Sdn. Bhd., Malaysia	$	~~1,217~~949		42	%	$	1,~~544~~289		4	%
Majesco Asia Pacific Pte Ltd., Singapore		~~114~~173		—	%		~~207~~116		0—	%
Majesco Software and Solutions India Private Limited, India		~~532~~312		1	%		~~407~~506		1	%
	$	1,~~863~~434		53	%	$	21,~~158~~911		5	%
Total Revenues	$	3741,~~175~~247				$	3537,~~820~~304

(1) Cover-All Systems, Inc. was merged into Majesco Software and Solutions Inc. on January 1. 2019.

	Nine Months Ended (Unaudited)
(U.S. Dollars; dollar amounts in thousands):	December 31, 2019		%			December 31, 2018		%
Geography: North America
Legal Entity
Majesco	$	30,933		29	%	$	31,189		30	%
Majesco Software and Solutions Inc.		65,628		60	%		39,304		38	%
Majesco Canada Ltd., Canada		213		—	%		474		0	%
Cover-All Systems, Inc.(1)		—		—	%		19,571		19	%
	$	96,774		89	%	$	90,538		88	%
Geography: Europe
Legal Entity
Majesco UK Limited, UK	$	2,653		3	%	$	4,924		5	%
Exaxe Limited		3,399		3	%		1,726		2	%
		6,052		6	%		6,650		7	%
Geography: Other
Legal Entity
Majesco Sdn. Bhd., Malaysia	$	3,772		4	%	$	4,461		4	%
Majesco Asia Pacific Pte Ltd., Singapore		338		—	%		916		1	%
Majesco Software and Solutions India Private Limited, India		1,598		1	%		1,552		1	%
	$	5,708		5	%	$	6,929		5	%
Total Revenues	$	108,534				$	104,117

(1) Cover-All Systems, Inc. was merged into Majesco Software and Solutions Inc. on January 1. 2019.

Revenues

Revenues for the three months ended ~~December~~June 3130, ~~2019~~2020 were $3741,~~175~~247 compared to $3537,~~820~~304 for the three months ended ~~December~~June 3130, ~~2018~~2019, reflecting an increase of 3of 10.86%. The increase ~~during~~in revenue is primarily from the ~~quarter~~inclusion ~~was~~of ~~primarily~~the onInsPro ~~account~~business. There has been a significant shift in the revenue mix of anthe ~~increase~~Company as well compared to the same period in the previous year. Product revenue (license fees, cloud subscription fees ~~revenues~~and ~~with~~support ~~projects~~& ~~going~~maintenance) now represents 48.2% of the revenue compared to 42.8% of the revenue during the same quarter ~~live~~in the previous year. The share of revenue from Services (delivery and ~~new~~consulting ~~business~~services) ~~additions~~has decreased from 57.2% of revenue in ~~P&C~~the same period in the previous year to 51.8% in the reported quarter.

Revenues for the nine months ended December 31, 2019 were $108,534 compared to $104,117 for the nine months ended December 31, 2018, reflecting an increase of 4.2%. The increase during the nine months ended December 31, 2019 was on account of the growth in the North America business, with significant increase in product revenues, and due to the additional two quarter of revenues from the acquisition of Exaxe.

Gross Profit

Gross profit was $1719,~~852~~ 369 for the three months ended ~~December~~June 3130, ~~2019~~2020 compared ~~with~~to $1719,~~527~~870 for the three months ended ~~December~~June 3130, ~~2018~~ 2019. Gross profit percentage for the three months ended ~~December~~June 3130, ~~2019~~2020 decreased to 4847.0% of revenue from 4953.03% of revenue for the three months ended ~~December~~June 3130, 2019. ~~2018~~The ~~mainly~~primary onreason ~~account~~for ofthe decline is that in the ~~inflationary~~period ~~impact~~ended June 30, 2019, there was a one-time license fee recognition due to ASC 606 accounting which impacted the ~~business~~gross ~~and~~margin. ~~investments~~In ~~being~~the period ended June 30, 2020, the gross margin has also been impacted ~~made~~due to ~~scale~~the inclusion of the InsPro business which has a lower gross margin compared to the organic Majesco business.

Gross profit was $53,404 for the nine months ended December 31, 2019 compared with $50,777 for the nine months ended December 31, 2018, representing an increase of 5.1%. The increase in margin has been primarily due to a better margin revenue mix. Gross profit percentage for the nine months ended December 31, 2019 increased to 49.2% of revenue from 48.8% of revenue for the nine months ended December 31, 2018.

Salaries and consultant fees were approximately $13,165 for the three months ended December 31, 2019 compared to $13,562 for the three months ended December 31, 2018. This represents a decrease of 3.0% in salaries and consultant fees due to a reduction in headcount. As a percentage of revenues, salaries and consultant fees decreased from 38.4% for the three months ended December 31, 2018 to 35.4% for the three months ended December 31, 2019.

Salaries and consultant fees were approximately $40,097 for the nine months ended December 31, 2019 compared to $38,816 for the nine months ended December 31, 2018. This represents an increase of 3.8% in salaries and consultant fees. As a percentage of revenues, salaries and consultant fees decreased from 37.5% for the nine months ended December 31, 2018 to 36.9% for the nine months ended December 31, 2019.

Operating Expenses

Operating ~~expenses~~ expenses were $1417,~~739~~264 for the three months ended ~~December~~June 3130, ~~2019~~2020 compared to $1517,~~153~~296 for the three months ended ~~December~~June 3130, ~~2018~~ 2019. ~~The~~As ~~decrease in operating expenses was primarily due to~~ a ~~decrease in R&D costs~~ percentage of ~~$138~~revenue ~~and~~operating aexpenses ~~decrease~~reduced infrom ~~selling,~~46.4% ~~general and administrative expenses~~ of ~~$376.~~revenue ~~The company continued to invest~~ in ~~R&D based on~~ the ~~product~~period ~~roadmap.~~ended ~~The~~June ~~continued~~30, ~~investment is~~2019 ~~maturing our products~~ to ~~being sold more as out of the box products~~41.9% ~~The decrease in selling, general and administrative expenses was primarily on account~~ of ~~significant~~revenue ~~marketing and branding activities that were undertaken~~ in the ~~previous year and a reduction~~period inended ~~amortization~~June of30, ~~equity incentives costs~~2020. AsThe abelow ~~percentage~~factors ofhave ~~revenues,~~impacted the operating expenses ~~decreased~~of ~~to 39.6% for~~ the ~~three months ended December 31, 2019 from 42.3% for the three months ended December 31, 2018.~~ Company:

~~Operating expenses~~● ~~were $46,368 for the nine months ended December 31, 2019 compared to $43,865 for the nine months ended December 31, 2018.~~ The ~~increase~~Company inhas ~~operating~~rationalized ~~expenses~~its ~~was primarily due to an increase in~~ R&D ~~costs~~investments ~~of $258 and an increase~~ in ~~selling, general and administrative expenses of $2,245. The increase in selling and general expenses was driven by~~ the ~~inclusion~~international ~~of the Exaxe~~ business~~, one-time~~ ~~expenses~~through ~~related~~transition tofrom ~~our~~a ~~customer~~geographical ~~conference,~~investment ~~and~~approach ~~the year~~ to ~~date~~a ~~impact~~more ofglobal ~~the~~product ~~new~~ management ~~roles~~ and ~~bandwidth~~development ~~created in~~structure ~~the~~and ~~company.~~repurposed Assome ~~a percentage~~ of ~~revenues,~~the ~~operating~~teams ~~expenses increased~~ to ~~42.7%~~deliver ~~for~~new ~~the nine months ended December 31, 2019 from 42.1% for the nine months ended December 31, 2018.~~ business

	●	The Company has made investments into SG&A by adding senior leadership roles and strengthening its sales and marketing engine but had significant cost savings in the period ended June 30, 2020 in travel and other variable operating expenses due to the COVID 19 pandemic

	●	In the period ended June 30, 2020 the Company incurred approximately $ 1,800 in one-time transaction expenses for the acquisition of InsPro

Income from Operations

Income from operations was $32,~~113~~105 for the three months ended ~~December~~June 3130, ~~2019~~2020 compared to $2,~~374~~574 for the three months ended ~~December 31~~June 30, ~~2018~~2019. As a percentage of revenues, net income from operations was 85.41% for the three months ended ~~December~~June 3130, ~~2019~~2020 compared to ~~a net gain of~~ 6.69% for the three months ended ~~December~~June 3130, ~~2018~~2019. Income from operations was ~~higher~~lower primarily due to ana ~~increase in~~one-time ~~revenue~~expense ~~together~~incurred ~~with~~on athe ~~change~~acquisition inof Inspro which was 4.4% of the revenue ~~mix~~for ~~with~~the ~~high~~period ~~margin~~ended ~~product~~June ~~revenues~~30, ~~increasing~~2020.

Income from operations was $7,036 for the nine months ended December 31, 2019 compared to $6,912 for the nine months ended December 31, 2018. As a percentage of revenues, net income from operations was 6.5% for the nine months ended December 31, 2019 compared to a net gain of 6.6% for the nine months ended December 31, 2018

Other Income

Other income (expense), net was $~~138~~21 for the three months ended ~~December~~June 3130, ~~2019~~2020 compared to $(5711) for the three months ended ~~December 31,~~June ~~2018. The increase is mainly due to an increase in currency exchange gain during the three months ended December 31~~30, 2019.

Other income (expense), net was $578 for the nine months ended December 31, 2019 compared to $553 for the nine months ended December 31, 2018.

Tax provision

We recognized an income tax provision of $~~797~~739 ~~and $3,130~~ for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019,~~2020 ~~respectively,~~ and ~~recognized~~ ~~an income tax provision of~~ $~~483 and $2~~1,~~543~~381 for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2018, respectively~~2019.

The effective tax rate is 2536.65% and 3851.49% for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020 and June 30, 2019 respectively, which differs from the statutory U.S. federal income tax rate of 21%, mainly due to the impact of different tax jurisdictions and disallowable expenses.

Net income

Net income was $31,~~875~~ 287 for the three months ended ~~December~~June 3130, ~~2019~~2020 compared to net income of $1,~~727~~282 for the three months ended ~~December 31~~June 30, ~~2018~~2019. Net income per share, basic and diluted, was $0.0903 and $0.0903, respectively, for the three months ended ~~December~~June 3130, ~~2019~~ ~~compared~~2020 ~~to net income per share, basic~~ and ~~diluted, of $0~~2019.~~05 and $0.04, respectively, for the three months ended December 31, 2018.~~

Net income was $6,065 for the nine months ended December 31, 2019 compared to net income of $5,447 for the nine months ended December 31, 2018. Net income per share, basic and diluted, was $0.14 and $0.14, respectively, for the nine months ended December 31, 2019 compared to net income per share, basic and diluted, of $0.15 and $0.14, respectively, for the nine months ended December 31, 2018.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP metric, was $45,~~985~~998 for the three months ended ~~December~~June 3130, ~~2019~~2020 compared to $4,~~830~~729 for the three months ended ~~December~~ ~~31,~~June ~~2018. Adjusted EBITDA~~30, ~~a non-GAAP metric, was $12,849 for the nine months ended December 31,~~ 2019 ~~compared to $12,607 for the nine months ended December 31, 2018~~.

The following is an unaudited reconciliation of U.S. GAAP net income to EBITDA and Adjusted EBITDA for the three ~~and nine~~ months ended ~~December~~ 31June 30, ~~2019~~2020 and ~~the three and nine months ended December 31~~June 30, ~~2018~~2019:

	Unaudited
	Three Months Ended (Unaudited)
	Three Months ended
(U.S. dollars, in thousands):	June 30, 2020			June 30, 2019
(U.S. dollars, in thousands):	December 31, 2019			December 31, 2018
Net Income	$	1,287		$	1,282
Net Income	$	3,875		$	1,727
Add:
Provision for income taxes		~~797~~739			~~483~~1,381
Depreciation and amortization		1,~~200~~395			1,~~201~~226
Interest expense		79136			~~113~~89
Less:
Interest income		(~~141~~36	)		(7189	)
Other income (expenses), net		(~~138~~21	)		5711
EBITDA	$	53,~~672~~500		$	3,~~574~~800
Add:
Stock-based compensation		~~672~~679			~~814~~929
Merger and acquisition expenses		—1,819			~~442~~—
Less:
Adjusted EBITDA	$	5,998		$	4,729
Reversal of accrual for contingent consideration liability		(1,359	)
Revenue	$	41,247		$	37,304
Adjusted EBITDA		4,985			4,830
Adjusted EBITDA as a % of Revenue		14.54	%		12.68	%
Revenue		37,175			35,820
Adjusted EBITDA as a % of Revenue		13.41	%		13.48	%

	Unaudited
	Nine Months ended
(U.S. dollars, in thousands):	December 31, 2019			December 31, 2018
Net Income	$	6,065		$	5,447
Add:
Provision for income taxes		3,130			2,543
Depreciation and amortization		3,643			3,075
Interest expense		269			342
Less:
Interest income		(491	)		(32	)
Other income (expenses), net		(578	)		(553	)
EBITDA	$	12,038		$	10,822
Add:
Stock-based compensation		2,170			2,178
Merger and acquisition expenses		—			442
Less:
Reversal of accrual for contingent consideration liability		(1,359	)		(835	)
Adjusted EBITDA		12,849			12,607
Revenue		108,534			104,117
Adjusted EBITDA as a % of Revenue		11.84	%		12.11	%

Liquidity and Capital Resources

Our cash, cash equivalents and restricted cash and short term investments position was $4530,~~580~~905 at ~~December~~June 3130, ~~2019~~2020 and $1411,~~527~~708 at ~~December~~ 31June 30, ~~2018~~2019.

Net cash ~~provided~~used byin operating activities ~~was~~amounted ~~$9,766~~to ~~for the nine months ended December 31, 2019 and~~ $(12,~~755~~082) for the ~~nine~~three months ended ~~December~~ ~~31,~~June ~~2018. We had accounts receivable of $26~~30,~~259~~ at2020 ~~December~~which ~~31,~~was ~~2019~~primarily ~~and~~driven ~~$17,366~~by atthe ~~March~~payment ~~31,~~of ~~2019.~~annual ~~Days outstanding~~bonuses ~~increased~~ to ~~101~~employees ~~days~~and atan ~~the~~increase ~~end~~in ofreceivables ~~December 31, 2019 as~~ compared to 85$(2,894) ~~days~~for at the ~~end~~three ofmonths ~~March~~ended 31June 30, 2019.

Net cash ~~used~~provided inby investing activities amounted to $~~(2,272)~~406 for the ~~nine~~three months ended ~~December~~June 3130, ~~2019~~2020 compared to $~~(10~~1,~~795)~~134 for the ~~nine~~ three months ended ~~December~~June 3130, ~~2018~~2019. During ~~primarily~~the ~~due~~three tomonths ended June 30, 2020, the payment of the purchase price for the acquisition of the ~~India~~InsPro ~~business from~~in ~~Majesco~~the ~~Limited~~amount of $11,457 ~~investments~~was inmade, ~~short~~along ~~term~~with ~~investment,~~regular ~~and~~ purchases of property, equipment and intangible assets. ~~during the~~These ~~nine~~payments ~~months~~were ~~ended~~made, ~~December~~mainly by ~~31,~~liquidating ~~2019~~short term investments.

~~Sale /~~Net cash (~~purchase)~~used ~~of investments~~ in)/provided by ~~mutual~~financing ~~funds,~~activities ~~acquisition of business and certificate of deposits (net)~~ was $(~~2,548~~223) for the ~~nine~~ three months ended ~~December~~June 3130, ~~2019~~2020 ~~and~~compared to $~~(3,299)~~160 for the ~~nine~~three months ended ~~December~~June 3130, 2019 ~~2018.~~mainly ~~Restricted~~due ~~cash~~to ~~was~~the ~~$42~~payment atof ~~December~~finance ~~31, 2019~~lease ~~and $50 at December 31, 2018~~obligations.

Net cash provided by / (used in) financing activities was $921 for the nine months ended December 31, 2019 compared to $(99) for the nine months ended December 31, 2018 mainly due to the proceeds from shares issued under the Majesco Employee Stock Purchase Plan.

On February 25, 2019, we completed a rights offering pursuant to which we received approximately $43,477 in gross proceeds from the sale of 6,123,463 shares of our common stock to shareholders who exercised their subscription rights (including both basic and over-subscriptions) in the rights offering. We used a portion of the proceeds from our rights offering to purchase the remaining 10% of the share capital of Exaxe and to repay $5,000, which constituted the total amount outstanding under our loan agreement with HSBC Bank USA, National Association, and terminated this facility. We expect to use the remaining proceeds from the rights offering to fund future acquisitions and for general corporate purposes, including to fund any earn-out payments under the Exaxe acquisition.

We believe that our cash flows from operations and available borrowings are sufficient to meet our liquidity requirements for the next twelve months, including capital expenditures.

Financing Arrangements

MSSIPL Facilities

On May 9, 2017, ~~our subsidiary, Majesco Software and Solutions India Pvt. Ltd. (“~~MSSIPL~~”),~~ and Standard Chartered Bank entered into an Export Invoice Financing Facility, Working Capital Overdraft Facility, Short Term Loans Facility, Bonds and Guarantees Facility and Pre Shipment Financing Under Export Orders Facility (the “Combined Facility”) pursuant to which Standard Chartered Bank agreed to a Combined Facility of up to 200 million Indian rupees (or approximately $2,~~801~~ 600 at exchange rates in effect on ~~December~~June 3130, ~~2019~~2020). The Export Invoice Financing Facility is for the financing of MSSIPL’s sale of services, as evidenced by MSSIPL’s invoice to the customer. Each amount drawn is required to be repaid within 90 days. ~~The interest on~~ ~~this facility is based on the marginal cost of funds based lending rate (the “MCLR”) plus a margin to be agreed with Standard Chartered Bank at the time of each drawdown.~~ The ~~MCLR is to be determined on the date of each disbursement and is effective until repayment. Interest will accrue from the utilization date to the date of repayment or payment of that utilization. The~~ Working Capital Overdraft Facility and the Short Term Loans Facility are for working capital purposes and subject to sub-limits. The ~~interest on~~Pre-Shipment ~~these~~Financing ~~facilities~~Under isExport ~~based~~Orders onFacility ~~the MCLR plus a margin to be agreed with Standard Chartered Bank at the time of each borrowing. The MCLR~~ is tofor ~~be determined on~~ the ~~date~~delivery of ~~each~~software ~~disbursement~~ready ~~and~~for ~~is effective until repayment or maturity~~sale. ~~Interest will accrue from the draw down date up to the repayment or maturity date.~~ The Bonds and Guarantees Facility is for the issuance of guarantees and subject to commissions as agreed with Standard Chartered Bank from time to time. The Pre Shipment Financing Under Export Orders Facility is for the purchase of raw material, processing, packing, transportation, warehousing and other expenses and overheads incurred by MSSIPL to ready goods for sale. The interest on this facility is based on the MCLR plus a margin to be agreed with Standard Chartered Bank at the time of each borrowing. The MCLR is to be determined on the date of utilization and is effective until repayment. Interest will accrue from the utilization date up to the repayment date.

The interest under the Combined Facility may be changed by Standard Chartered Bank upon the occurrence of certain market disruption events. The Combined Facility is secured by a first pari passu security interest over the current assets of MSSIPL. MSSIPL was in compliance under the terms of this Combined Facility as of December 31, 2019. There were no outstanding loans under this Combined Facility as of December 31, 2019.39

40The interest on the Combined Facility is based on the marginal cost of funds based lending rate (the “MCLR”) plus a margin to be agreed with Standard Chartered Bank at the time of each drawdown. The MCLR is to be determined on the date of each disbursement and is effective until repayment. Interest will accrue from the utilization date to the date of repayment or payment of that utilization. The interest under the Combined Facility may be changed by Standard Chartered Bank upon the occurrence of certain market disruption events. The Combined Facility is secured by a first pari passu security interest over the current assets of MSSIPL. MSSIPL was in compliance under the terms of this Combined Facility as of June 30, 2020. There are no outstanding loans under this Combined Facility as of June 30, 2020.

Term Loan Facility

On March 23, 2016, we entered into a Loan Agreement (the “Loan Agreement”) with HSBC Bank USA, National Association (“HSBC”) pursuant to which HSBC agreed to extend loans to us in the amount of up to $10,000 and we issued a promissory note to HSBC in the maximum principal amount of $10,000 or any lesser amount borrowed under the Loan Agreement (the “Note”, and together with the “Loan Agreement”, the “Facility”). The outstanding principal balance of the loan bore interest based on LIBOR plus a margin in effect on the first day of the relevant interest period. Until January 1, 2018, only interest was payable under the loan. Commencing on January 1, 2018, and on each January 1 and July 1 thereafter until July 1, 2020, installments of principal in the amount of $1,667 were due and payable semi-annually. All principal and interest outstanding under the Note was due and payable on March 1, 2021. The Facility was unsecured and supported by a letter of credit issued by a bank of $10,000, which was secured by a cash pledge of our parent company, Majesco Limited. On February 27, 2019, we used a portion of the proceeds from our rights offering to repay the total amount outstanding under the Loan Agreement with HSBC and terminated this facility.

Receivable Purchase Facility

On January 13, 2017, Majesco and its subsidiaries, ~~Majesco Software and Solutions Inc. (“~~MSSI”), and Cover-All Systems, jointly and severally entered into a Receivable Purchase Agreement with HSBC ~~(the “Receivable Purchase Agreement”)~~ pursuant to which HSBC may advance funds against receivables at an agreed advance rate. The outstanding aggregate amount of all advances may not exceed a $10,000 facility limit. The facility bears interest at 2% plus the 90 -day LIBOR rate. HSBC will also receive an arrangement fee equal to 0.20% of the facility limit and a facility review fee equal to 0.20% of the facility limit. Majesco ~~serves~~will serve as HSBC’s agent for the collection of receivables, and Majesco ~~collects~~will collect and otherwise ~~enforces~~enforce payment of the receivables. HSBC has a security interest in accounts of MSSI and Cover-All Systems. The term of the Receivable Purchase Agreement is for a minimum period of 12 months and shall continue unless terminated by either party. Either party may terminate the Receivable Purchase Agreement at any time upon 60 days’ prior written notice to the other party. The Receivable Purchase Agreement will provide additional liquidity to usthe Group for working capital and other general corporate purposes.

~~On November~~As ~~29,~~of ~~2018,~~June ~~we amended the Receivable Purchase Agreement to increase its limit to $15~~30,~~000~~ ~~until March 29~~2020, ~~2019, and $10,000~~ ~~thereafter.~~Majesco ~~HSBC~~had ~~received an arrangement fee of~~ $100 ~~in connection with this amendment. The amendment will provide additional liquidity to Majesco for mergers and acquisitions and other general corporate purposes. There are no~~ outstanding ~~loans~~ under this facility ~~as of December 31, 2019~~. WeMajesco used proceeds from this facility to repay existing indebtedness and for capital expenditures, working capital and other general corporate purposes.

Exaxe Facilities

~~Exaxe~~Majesco Software Solutions Ireland Limited ~~has~~(“Exaxe”) had a receivables purchase agreement with AIB Commercial Finance Limited (“AIB Commercial”) pursuant to which AIB Commercial ~~will~~would purchase up to €EUR 200 in receivables from ~~Exaxe~~Majesco Software Solutions Ireland Limited on a discounted basis. In addition, ~~Exaxe~~Majesco Software Solutions Ireland Limited ~~has~~ had an overdraft facility with Allied Irish Banks, p.l.c. (“AIB”) of up to €EUR 100. The facility ~~has~~had a variable interest rate and is payable on demand at any time. This facility iswas secured by the assets of ~~Exaxe~~Majesco Software Solutions Ireland Limited. As of ~~December~~March 31, ~~2019~~ 2020, there ~~are~~were no outstanding balances under these facilities. Both facilities were terminated during the year ended March 31, 2020.

On July 17, 2019, Majesco’s Software ~~subsidiary~~Solutions ~~Exaxe~~Ireland Limited, and HSBC France, Dublin Branch ~~(“HSBC France”)~~, entered into a €EUR 400 ~~(or approximately $448 at exchange rates in effect on December 31, 2019)~~ overdraft facility ~~(the “HSBC France Facility”)~~. The ~~HSBC~~facility ~~France Facility~~ is for working capital purposes. ~~The~~and ~~HSBC France Facility~~ is subject to review from time to time ~~and in any event a review shall occur in May 2020~~. Exaxe may terminate the ~~HSBC~~facility ~~France Facility~~ at any time without penalty. Interest under the ~~HSBC~~facility ~~France Facility~~ is payable at the rate of 3.5% per annum over the prevailing European Central Bank Rate on amounts up to €EUR 400 and 7% per annum over such rate on amounts over €EUR 400. The ~~HSBC~~facility ~~France Facility~~ is secured by a fixed and floating charge over certain assets of Exaxe. Exaxe agreed to certain negative covenants under the ~~HSBC France Facility~~facility, including not to create or allow any mortgage or security over its assets or revenues. As of ~~December 31~~June 30, ~~2019~~2020, there ~~are~~were no outstanding balances under this ~~HSBC France Facility~~facility.

Auto loans

InsPro Facilities

Equipment financing obligations

On January 5, 2019, InsPro LLC entered into a financing arrangement with an unaffiliated company to finance the purchase of certain third party perpetual software licenses and software subscription and maintenance. The amount financed was $802, which included $757 of cost of purchased software licenses and software subscription and maintenance services plus $45 of applicable sales tax. The financing arrangement commenced on January 5, 2019, has an annual interest rate of 6.1% and consists of 36 equal monthly payments of principal, interest and applicable sales tax of $24 commencing on February 1, 2019 and ending on January 1, 2022. The balance for this loan was $412 as of June 30, 2020. The Company’s right to use the purchased software licenses and software subscription and maintenance services is contingent on the Company remaining in compliance with the terms of this loan. As of June 30, 2020, the Company is in compliance with this loan. For the three months ended June 30, 2020, the interest expense on this loan was $7.

Finance lease obligations

The Company’s subsidiary, InsPro LLC, has entered into several finance lease obligations to purchase equipment used for operations (“Finance Leases”). The Company has the option to purchase the equipment at the end of each finance lease agreement for one dollar. The liability of these arrangements was $258 as of June 30, 2020.

Vehicle loans

Dividends and Redemption

We have not paid any dividends since we became a stand-alone public company in 2015. It has otherwise been our policy to invest earnings in growth rather than distribute earnings as common stock dividends. This policy is expected to continue but is subject to regular review by our Board of Directors.

Contractual Obligations

In the normal course of our business, we are party to a variety of contractual obligations as summarized in our Annual Report. These contractual obligations are considered by us when assessing our liquidity requirements. There have been no material changes to our contractual obligations as disclosed in the Annual Report, other than those which occur in the ordinary course of business. We had borrowed $0344 under our ~~the~~auto ~~Combined~~and ~~Facility,~~equipment $0loans ~~under~~as ~~our~~of ~~receivable~~June ~~purchase~~30, ~~facility~~2020 ~~and~~as ~~$52~~compared ~~under~~to ~~our~~$93 ~~auto~~as ~~loans~~of atJune ~~December 31~~30, 2019. In addition, ~~compared~~we tohave $0,764 ~~$415~~outstanding under ~~and~~equipment ~~$137,~~financing ~~respectively,~~lease obligations as of ~~March~~June 3130, ~~2019~~2020.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.

Emerging growth company

We are an “emerging growth company” and a “smaller reporting company” under the federal securities laws and are subject to reduced public company reporting requirements. In addition, Section 107 of the Jumpstart Our Business Startups Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act ~~of 1933, as amended,~~ for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have taken advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We are exposed to market risk primarily due to fluctuations in foreign currency exchange rates and interest rates, each as described more fully below. We do not hold or issue derivative financial instruments for trading or speculative purposes.

Interest Rate Sensitivity

Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents and investments. We do not use derivative financial instruments to hedge our interest rate exposure. Our cash and cash equivalents and short term investments as of ~~December 31~~June 30, ~~2019~~2020 were $1923,~~996~~320 and $257,~~542~~546, respectively.

We invest primarily in highly liquid, money market funds and bank fixed deposits. Because of the short-term nature of the majority of the interest-bearing securities we hold, we believe that a 10% fluctuation in the interest rates applicable to our cash and cash equivalents and investments would not have a material effect on our financial condition or results of operations.

The rate of interest on our Combined Facility, our receivable purchase facility and our auto loans which were in effect as of ~~December 31~~June 30, ~~2019~~2020, are variable and are based on LIBOR plus a fixed margin. AsWe had borrowed $344 under our auto and equipment loans as of ~~December~~June 3130, 2020 as compared to $93 as of June 30, 2019. In addition, we ~~had~~have $0764 ~~and~~outstanding $0under inequipment ~~borrowings~~financing ~~outstanding~~lease obligations as of June 30, 2020. Interest under ~~our~~the ~~receivable~~Exaxe ~~purchase~~overdraft facility ~~with~~is ~~HSBC~~variable and ~~our~~based ~~Combined~~on ~~Facility,~~prevailing ~~respectively.~~European AsCentral ofBank ~~December~~Rate. ~~31,~~We ~~2019, we~~ had ~~borrowed~~no amounts ~~$52~~outstanding under ~~our~~that ~~auto~~facility ~~loans~~at June 30, 2020. We believe that a 10% fluctuation in the interest rates applicable to our borrowings would not have a material effect on our financial condition or results of operations.

Foreign Currency Exchange Risk

Our reporting currency is the U.S. dollar. However, payments to us by customers outside the U.S. are generally made in the local currency. Accordingly, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, Canadian dollar, Indian rupee, British pound, Malaysian ringgit, Singapore dollar, Irish pound and Mexican peso. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.

We generated approximately 10% and 11% of our gross revenues outside of the United States for the three months ended ~~December~~June 3130, ~~2019~~ ~~and~~2020 ~~2018, respectively, compared to 11%~~ and ~~11% for the nine months ended December 31,~~ 2019 ~~and 2018~~, respectively. The effect of foreign exchange rate changes on cash and cash equivalents resulted in a ~~gain/(~~loss) of $~~240~~21 and $~~115~~96 for the three months ended ~~December~~June 3130, ~~2019~~2020 and ~~December~~June 3130, ~~2018, respectively, compared to gain of $251 and $172 for the nine months ended December 31,~~ 2019 ~~and December 31~~, ~~2018,~~ respectively. For the three months ended ~~December~~June 3130, ~~2019~~2020 and ~~December~~June 3130, ~~2018~~2019, we had a foreign exchange gain/(loss) of approximately $~~523 and $346, respectively, compared to a foreign exchange gain/~~(~~loss~~63) ~~of $(376)~~ and $~~(892) for the nine months ended December 31~~66, ~~2019 and December 31, 2018,~~ respectively.

The aggregate contracted USD notional amounts of the Group’s foreign exchange forward contracts outstanding amounted to $4143,~~300~~950 and $3142,~~100~~900 as of ~~December~~June 3130, ~~2019~~2020 and March 31, ~~2019~~2020, respectively. The ~~aggregate contracted Great Britain Pound (“GBP”) notional amounts of the Group’s foreign exchange forward contracts~~ outstanding ~~amounted to GBP 0 and GBP 0 as of December 31, 2019 and March 31, 2019, respectively. The outstanding~~ forward contracts as of ~~December~~June 3130, ~~2019~~2020 mature between one month and 37 months. As of ~~December~~June 3130, ~~2019~~2020, we estimate that $47(592), net of tax, of the net (loss)/gains related to derivatives designated as cash flow hedges recorded in accumulated other comprehensive income (loss) is expected to be reclassified into earnings within the next 37 months. The outstanding foreign exchange forward contracts in U.S. dollars as of ~~December~~June 3130, ~~2019~~2020 are designated as in hedge relationship and there will be no impact on our ~~statements~~Consolidated Statements of ~~income~~Income due to a strengthening or weakening of 10% in the foreign exchange rates.

The fair value of derivative financial instruments is determined based on observable market inputs and valuation models. The derivative financial instruments are valued based on valuations received from the relevant counterparty (i.e., bank). The fair value of the foreign exchange forward contract and foreign exchange par forward contract has been determined as the difference between the forward rate on reporting date and the forward rate on the original transaction, multiplied by the transaction’s notional amount (with currency matching). The following table provides information of fair values of derivative financial instruments:

Assets

Liability

Noncurrent*

Current*

Noncurrent*

Current*

As of December 31, 2019

As of June 30, 2020

Designated as hedging instruments under Cash Flow Hedges

Foreign exchange forward contracts

~~155~~42

~~470~~138

~~101~~419

72553

Total

~~155~~42

~~470~~138

~~101~~419

72553

* The noncurrent and current portions of derivative assets are included in ‘Other Assets’ and ‘Prepaid Expenses and Other Current Assets,’ respectively, and the noncurrent and current portions of derivative liabilities are included in ‘Other Liabilities’ and ‘Accrued Expenses and Other Current Liabilities,’ respectively in the Consolidated Balance ~~Sheet~~Sheets.

For more information on foreign currency translation adjustments and cash flow hedges and other derivative financial instruments, see Notes 6 and 7 to our consolidated financial statements for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2019~~2020.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”),~~ and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission ’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~December~~June 3130, ~~2019~~2020. Based on such evaluation, our ~~principal~~Chief ~~executive~~Executive ~~officer~~Officer and ~~principal~~Chief ~~financial~~Financial ~~officer~~Officer have concluded that, ~~as of December 31, 2019, our disclosure controls and procedures were not effective at the reasonable assurance level~~ due to the material weakness in our internal ~~control~~ controls over financial reporting ~~related~~for toincome ~~the~~taxes ~~preparation~~noted ofbelow, ~~the~~our ~~income~~disclosure ~~tax~~controls ~~provision~~and ~~described~~procedures ~~below~~were not effective at June 30, 2020.

In connection with management’s evaluation of disclosure controls and procedures, during the second quarter of fiscal 2020 as part of the preparation of our income tax returns, we identified a material weakness related to the application of certain provisions of the Internal Revenue Code. Management put in place a remediation plan to address the material weakness as further described below.

Material Weakness in Internal Control Over Financial Reporting

In connection with management’s assessment of internal controls over financial reporting during the second quarter of fiscal 2020 as part of the preparation of the Company’s income tax returns, we identified a material weakness related to the application of certain provisions of the Internal Revenue Code. Management has put in place a remediation plan to address the material weakness which includes engaging a prominent accounting firm with global tax expertise to assist in the final preparation of the Company’s March 31, 2019 tax return due January 15, 2020 and its quarterly provisions. During the third quarter, the prominent accounting firm was engaged to address the identified material weakness and continue to provide additional tax support to the Company going forward. Management believes the remediation of the material weakness will be completed during the fourth quarter of the Company’s fiscal year ending March 31, 2020.

Remediation of the identified material weakness and strengthening our internal control environment surrounding income taxes has been a priority for us since it was identified during the second quarter of fiscal 2020. With oversight from the Audit Committee, management designed and begun implementing changes in processes and controls to remediate the material weakness identified and has enhanced the Company’s internal control over financial reporting as follows:

●

Designed and implemented controls to ensure that data required to prepare tax provisions and annual income tax returns is complete and accurate. These controls include holding quarterly meetings with our third party tax provider to discuss changes in tax law, key aspects of our quarterly / annual provisions and required updates to provisions, deciding a course of action and documenting such actions, review and approval of the tax data by senior members of our finance team and final discussion, review and approval of third party prepared provisions and returns.

●

During the fourth quarter of fiscal 2020, we engaged an international accounting firm with global tax expertise as our new third-party tax advisor to prepare our tax provisions and domestic corporate income tax returns commencing with fiscal 2020 annual provision and returns.

●

During the fourth quarter of fiscal 2020, our tax advisor reconstructed the 2019 U.S. portion of our deferred income tax components which included conducting an E&P study using fiscal 2015 as the base year which coincides with the demerger of Majesco Limited.

●

During the first quarter of fiscal 2021, we engaged a global accounting firm with tax expertise as our global tax services provider. We believe this to be a significant step in our remediation process as it will strengthen the communication and coordination efforts of our domestic and international tax operations which will result in a more seamless process in preparing our quarterly and annual tax provisions and tax compliance requirements.

●

We intend to hire a global tax manager with that individual being responsible for managing our global tax processes and coordinating efforts between the Company, including our subsidiaries and our new tax advisor to ensure our tax compliance needs are met in a timely fashion.

We have commenced the testing of the new and enhanced controls which is expected to be completed in the third quarter of our fiscal year 2021.

Changes in Internal Control over Financial Reporting

Other than the controls implemente to remediate the material weakness ~~discussed~~ as noted above, there were no changes in our internal control over financial reporting ~~that~~ that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, ~~our~~ our internal control over financial reporting.

4445

PART II - OTHER INFORMATION

Item 1A. Risk Factors.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report. Except as set forth below, there have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

~~If we~~The ~~fail~~global ~~to comply with the rules under the Sarbanes~~COVID-~~Oxley~~19 ~~Act~~pandemic ofhas adversely ~~2002~~affected, ~~related to accounting controls~~ and ~~procedures~~may in the future~~, or,~~ ifadversely weaffect, ~~discover material weaknesses and other deficiencies in~~ our ~~internal control and accounting procedures~~business, ~~our~~results ~~stock~~of ~~price could~~operations ~~decline significantly~~ and ~~raising~~financial ~~capital could be more difficult~~condition.

~~Section 404~~In ofDecember ~~the~~2019, ~~Sarbanes~~COVID-~~Oxley~~19 began ~~Act~~to ~~requires~~impact ~~annual~~the ~~management~~population ~~assessments~~ of ~~the~~Wuhan, ~~effectiveness~~China. The continued spread of ~~our~~COVID-19 ~~internal~~globally ~~control~~has ~~over~~resulted ~~financial reporting.~~in Ifa wewidespread ~~fail~~health tocrisis that ~~comply~~is ~~with~~adversely affecting the ~~rules~~global ~~under~~economy ~~the~~and ~~Sarbanes-Oxley~~financial ~~Act~~markets. ~~related~~In tolight ~~disclosure~~of ~~controls~~the uncertain and ~~procedures~~rapidly inevolving ~~the~~situation ~~future,~~relating orto COVID-19, if we ~~discover~~have ~~material~~taken ~~weaknesses~~precautionary ~~and~~measures ~~other~~intended ~~deficiencies~~to inminimize ~~our~~the ~~internal~~risk ~~control~~of ~~and~~COVID-19 ~~accounting~~to ~~procedures~~our employees, our ~~stock~~customers, ~~price~~and ~~could~~the ~~decline~~communities ~~significantly~~in ~~and~~which ~~raising~~we ~~capital~~operate, which could benegatively ~~more~~impact ~~difficult~~our business. InNational, ~~connection~~state ~~with~~and ~~the~~local ~~review~~authorities ofhave recommended ~~our~~social ~~internal~~distancing ~~control~~ and ~~accounting~~imposed ~~procedures~~quarantine ~~for~~and ~~the~~isolation ~~quarter~~measures ~~ended~~on ~~September~~large ~~30,~~portions ~~2019~~of the population, ~~our~~including ~~management~~mandatory business ~~identified~~closures. aThese ~~material~~measures, ~~weakness~~although ~~related~~intended to ~~ineffective internal~~protect ~~control~~the ~~over~~population, ~~financial~~are ~~reporting~~having ~~related~~serious toadverse ~~the~~impacts ~~preparation~~on ofdomestic and ~~our~~foreign ~~income~~economies ~~tax~~of ~~provision~~uncertain inseverity ~~accordance~~and ~~with~~duration. ~~the~~As ~~provisions~~ of the ~~Internal~~date ~~Revenue~~of ~~Code. During~~this ~~the~~Quarterly ~~quarter~~Report ~~ended~~on ~~December~~Form 3110-Q, ~~2019,~~the ~~management~~COVID-19 outbreak has ~~already~~not ~~put~~caused inmaterial ~~place~~financial ~~remediation plans~~impact to ~~address~~our ~~the~~business. ~~material~~Financial ~~weakness,~~impacts ~~including~~associated ~~engaging~~with ~~a prominent accounting firm to assist in~~ the ~~final~~COVID-19 ~~preparation~~outbreak ofmay ~~the~~include, ~~Company’s~~but ~~March~~are ~~31,~~not ~~2019~~limited ~~tax~~to, ~~return.~~delays ~~Although~~in ~~management~~critical ~~expects~~development ~~that~~and ~~the~~commercialization ~~remediation~~activities ofand ~~the~~potential ~~material~~incremental ~~weakness~~costs ~~will be completed~~associated ~~during~~with mitigating the ~~fourth~~effects ~~quarter~~ of the ~~Company’s~~outbreak, ~~fiscal~~furloughs ~~year~~of ~~ending~~employees ~~March~~disruption ~~31,~~of ~~2020~~supply chains, nodemand ~~assurances~~for ~~can~~our beproduct ~~given~~and ~~that the material~~services, ~~weakness~~restrictions ~~will~~on bethe ~~timely~~movement ~~resolved~~of ~~within~~employees, ~~the~~and ~~fourth~~a ~~quarter.~~decline Inin ~~addition,~~value ifof ~~additional~~assets ~~material weaknesses~~held orby ~~significant~~us, ~~deficiencies~~including ~~are~~equipment. ~~discovered~~Although ~~or if~~ we ~~otherwise~~continue to ~~fail~~monitor tothe ~~achieve~~situation and ~~maintain~~may ~~the~~adjust ~~adequacy of~~ our ~~internal control,~~current wepolicies ~~may~~as ~~not~~more beinformation ~~able~~and topublic ~~ensure~~health ~~that~~guidance webecome ~~can~~available, ~~conclude~~the COVID-19 onoutbreak anis ongoing, ~~basis~~and ~~that~~its wedynamic ~~have~~nature, ~~effective~~including ~~internal~~uncertainties ~~controls~~relating ~~over~~to ~~financial reporting~~the inultimate ~~accordance~~spread ~~with Section 404~~ of the ~~Sarbanes-Oxley Act. Moreover~~virus, ~~effective~~the severity ~~internal~~of ~~controls~~the ~~are~~disease, ~~necessary~~the ~~for us~~duration toof ~~produce~~the ~~reliable~~outbreak ~~financial reports~~ and ~~are~~actions ~~important~~that tomay ~~helping~~be ~~prevent~~taken ~~financial~~by ~~fraud.~~governmental Ifauthorities weto ~~cannot~~contain ~~provide reliable financial~~the ~~reports~~outbreak or ~~prevent~~to ~~fraud,~~treat ~~our~~its ~~business~~impact, ~~and~~makes ~~operating~~it ~~results~~difficult ~~could~~to beaccurately ~~harmed,~~forecast ~~investors~~any ~~could~~effects ~~lose~~on ~~confidence in~~ our ~~reported financial~~results ~~information, and the trading price~~ of ~~our~~operations ~~common~~for ~~stock~~2021 ~~could drop significantly~~and beyond.

As a result of COVID-19 and the measures designed to contain the spread of the virus, we may not have the materials or capacity to continue our development efforts according to our schedule. Further, there may be logistics issues, including our ability and to quickly resume operations, if necessary, and transportation demands that may cause further delays. While the disruptions and restrictions on the ability to travel, quarantines, and reduced operation as well as general limitations on movement are expected to be temporary, the duration of the disruption, and related financial impact, cannot be estimated at this time. Should the disruption continue for an extended period of time, the impact on the development and commercialization of our technology could have a material adverse effect on our results of operations and cash flows.

The macro-economic environment in the United States and abroad has adversely affected, and may in the future adversely affect, our ability to raise capital, which may potentially impact our ability to grow our operations.

The outbreak of COVID-19 has caused significant disruptions to the global financial markets, which could increase the cost of capital and could impact our ability to raise additional capital, which could negatively affect our liquidity in the future. If we are unable to raise funds as and when we need them, this may impact the Company’s strategic and growth initiatives. Therefore, unfavorable macroeconomic conditions, including as a result of COVID-19 and any resulting recession or slowed economic growth, could have a negative impact on our business. It is not possible at this time to estimate the impact that COVID-19 could have on our business, as the impact will depend on future developments, which are highly uncertain.

If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We are required to furnish a report by management on, among other things, the effectiveness of internal control over financial reporting. This assessment will include disclosure of any material weaknesses identified by management in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from an issuer’s independent registered public accounting firm on the effectiveness of its internal control over financial reporting. However, for as long as we remain an emerging growth company under the JOBS Act, we may take advantage of the exemption permitting us not to comply with the independent registered public accounting firm attestation requirement.

Our compliance with Section 404 of the Sarbanes-Oxley Act may require that we incur substantial accounting expense and expend significant management efforts. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we may be unable to assert that our internal control over financial reporting is effective. In connection with management’s assessment of internal controls over financial reporting during the second quarter of fiscal 2020 as part of the preparation of the Company’s income tax returns, we identified a material weakness related to the application of certain provisions of the Internal Revenue Code. Management has put in place a remediation plan to address the material weakness as further set forth in Item 9A. Although we have put in place a plan to remediate our material weakness and expect it to be fully remediated by third quarter of our 2021 fiscal year, we cannot assure you that there will not be new material weaknesses or significant deficiencies in its internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines that we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, we could lose investor confidence in the accuracy and completeness of our financial reports, the value of our common stock could decline, and we could be subject to sanctions or investigations by regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We may fail to realize all of the anticipated benefits of the acquisition of InsPro, such benefits may take longer to realize than expected or we may encounter significant difficulties integrating InsPro’s business into our operations. If the acquisition does not achieve its intended benefits, our business, financial condition, and results of operations could be materially and adversely affected.

We believe that the acquisition of InsPro will result in certain benefits, including certain cost synergies, drive product innovations and operational efficiencies; however, to realize these anticipated benefits, the business of InsPro must be successfully combined with our business. The combination of two independent businesses is a complex, costly, and time-consuming process that will require significant management attention and resources. The integration process may disrupt the businesses and, if implemented ineffectively, would limit the expected benefits of this acquisition to us. The failure to meet the challenges involved in integrating the two businesses and to realize the anticipated benefits could cause an interruption of, or a loss of momentum in, our activities and could adversely affect our results of operations.

The overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer and other business relationships, and diversion of management’s attention. The difficulties of combining the operations of the companies include, among others:

●

the diversion of management’s attention to integration matters;

●

difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combination;

●

difficulties in the integration of operations and systems;

●

conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures between the two companies;

●

difficulties in the assimilation of employees and corporate cultures; and

●

challenges in attracting and retaining key personnel.

Many of these factors are outside of our control and any one of these factors could result in increased costs, decreases in the amount of expected revenues, and additional diversion of management’s time and energy, which could materially adversely impact our business, financial condition, and results of operations. In addition, even if the operations are integrated successfully, the full benefits, including the synergies, cost savings, revenue growth, or other benefits that are expected, may not be achieved within the anticipated time frame, or at all. Further, additional unanticipated costs may be incurred in the integration of our businesses. All of these factors could decrease or delay the expected accretive effect of the acquisition, and negatively impact our business, operating results, and financial condition. As a result, we cannot provide any assurance that the acquisition of Exaxe will result in the realization of the full benefits that we anticipate.

The announcement and pendency of our agreement to be acquired by funds affiliated with Thoma Bravo, L.P. (“Thoma Bravo”) may have an adverse effect on our business and operating results.

On July 20, 2020, we entered into the Merger Agreement with Magic Intermediate, LLC (“Parent”), which was amended and restated on August 8, 2020, pursuant to which Parent agreed to acquire us subject to the terms and conditions set forth therein. Our pending acquisition by Parent may have an adverse effect on our revenue in the near term if our customers delay, defer, or cancel purchases or orders pending completion of the transaction. In addition, the announcement and pendency of the transaction may cause reluctance by customers to begin or continue to do business with us due to potential uncertainty about the direction of our products and solutions following consummation of the transaction. We are subject to additional risks in connection with the announcement and pendency of the proposed transaction, including:

	●	difficulties maintaining existing and/or establishing business relationships, including relationships with significant customers, suppliers and partners;

	●	disruption to our business, including increased costs and diversion of management time and resources that could otherwise have been devoted to other opportunities that may have been beneficial to us;

	●	the restrictions imposed on our business and operations pursuant to certain covenants set forth in the Merger Agreement, which may prevent us from pursuing certain opportunities, responding to competitive pressures and industry developments, or taking certain actions without Thoma Bravo’s approval;

	●	adverse effects on our ability to attract, recruit, retain and motivate current and prospective employees who may be uncertain about their future roles following completion of the proposed transaction, and the possibility that our employees could lose productivity as a result of uncertainty regarding their employment following the proposed transaction;

	●	the outcome of the legal proceedings that may be instituted against us, our directors, executive officers and others relating to the proposed transaction; and

	●	the diversion of our employees’ attention due to activities related to the proposed transaction.

The failure to complete our pending acquisition by Parent may adversely affect our business, financial condition, operating results, and stock price.

Consummation of the Merger transaction with Parent remains subject to certain customary closing conditions, including, without limitation, adoption of the Merger Agreement by stockholders and the absence of legal impediments and regulatory clearances. There can be no assurance that these conditions to the completion of the Merger will be satisfied in a timely manner or at all. If the Merger is not completed, our stock price could fall to the extent its current price reflects an assumption that the acquisition will be completed. Furthermore, if the Merger is not completed, we may suffer other consequences that could adversely affect our business, financial condition, operating results, and stock price, including the following:

	●	any disruptions to our business resulting from the announcement and pendency of the proposed transaction, including adverse changes in our relationships with customers, suppliers, partners and employees, may continue or intensify in the event the acquisition is not consummated or is significantly delayed;

	●	we would have incurred significant costs, including professional services fees and other transaction costs, in connection with the proposed Merger that we would be unable to recover;

	●	we may have to pay Parent a termination fee of $25,500 under certain circumstances that give rise to the termination of the Merger Agreement;

	●	we may be subject to negative publicity or be negatively perceived by the investment or business communities;

	●	we may be subject to legal proceedings related to the transactions contemplated by the Merger Agreement;

	●	we may not be able to take advantage of alternative business opportunities or effectively respond to competitive pressures; and

	●	we may experience a departure of employees.

The Merger Agreement with Parent may limit our ability to pursue alternative transactions, which could deter a third party from proposing an alternative transaction.

The Merger Agreement contains provisions that may limit our ability to pursue an alternative acquisition transaction. These or other provisions may discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us from considering or proposing an acquisition or might result in a potential competing acquirer proposing to pay a lower per share price to acquire us than it might otherwise have proposed to pay.

Item 6. Exhibits.

Exhibit No.		Description
10.1		Lease Amendment, dated as of June 1, 2020, by and between Majesco Software and Solutions India Pvt. Ltd. and Majesco Limited (Incorporated by refence to Exhibit 10.1 to Majesco’s Current Report on Form 8-K, filed with the SEC on June 2, 2020)
10.2+		Amendment to Employment Agreement between Majesco and Manish Shah dated June 22, 2020 (Incorporated by refence to Exhibit 10.1 to Majesco’s Current Report on Form 8-K, filed with the SEC on June 23, 2020)
31.1*		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith. + Denotes a management contract or compensatory plan

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SIGNATURES

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
Date: February 10, 2020	By:	/s/ Adam Elster
Date: August 14, 2020	By:	/s/ Adam Elster
		Adam Elster, Chief Executive Officer (Principal Executive Officer)
Date: February 10, 2020	By:	/s/ Wayne Locke
Date: August 14, 2020	By:	/s/ Farid Kazani
		Wayne Locke, Chief Financial Officer (Principal Financial and Accounting Officer)
		Farid Kazani, Interim Chief Financial Officer (Principal Financial and Accounting Officer)

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