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Mad Catz Interactive Inc Reports Operating Results (10-Q)

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Aug 05, 2010
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Mad Catz Interactive Inc (MCZ, Financial) filed Quarterly Report for the period ended 2010-06-30.

Mad Catz Interactive Inc has a market cap of $27.6 million; its shares were traded at around $0.5 with a P/E ratio of 7.1 and P/S ratio of 0.2. MCZ is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

On May 28, 2010, the Company acquired all of the outstanding stock of Tritton Technologies Inc. (Tritton), a private corporation incorporated under the laws of Delaware. Tritton is in the business of designing, developing, manufacturing (through third parties in Asia), marketing and selling videogame and PC accessories, most notably gaming audio headsets. We acquired all of Trittons net tangible and intangible assets, including trade names, customer relationships and product lines. Cash paid for the acquisition was approximately $1.4 million, subject to a working capital adjustment currently estimated to be $735,000. The Company is required to make additional cash payments to former Tritton shareholders of up to an aggregate of $8.7 million based on the achievement of certain specified performance measures. As a result of the acquisition, Tritton became a wholly-owned subsidiary of the Company and accordingly, the results of operations of Tritton are included in the Companys consolidated financial statements from the acquisition date. The Company financed the acquisition through borrowings under the Companys working capital facility. The acquisition was done in order to expand the Companys product offerings in the high growth gaming audio market and to further leverage the Companys assets, infrastructure and capabilities.

The $4.6 million purchase price for Tritton exceeded the value of the acquired tangible and identifiable intangible assets, and therefore the Company allocated $1.3 million to non tax deductible goodwill.

On May 28, 2010 in connection with the Tritton acquisition, the Company assumed two notes payable. The first note is in the amount of $333,000, accrues interest at 10%, and monthly interest payments are due on the first business day of each month and the remaining balance is due May 28, 2011. The second note is in the amount of $370,000, accrues interest at 10%, and $185,000 plus accrued interest is due on August 27, 2010 with the remaining balance including accrued interest due on November 29, 2010.

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