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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    March 31, 2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number
    001-14944
      MAD CATZ
    INTERACTIVE, INC. (Exact
    name of Registrant as specified in its charter)
      Canada

Not Applicable(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)7480 Mission Valley Road, Suite 101

92108San Diego, California

(Zip Code)(Address of principal executive
    offices)   Registrants telephone number, including area code:
 (619) 683-9830
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, no par value

American Stock Exchange
    Toronto Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
      o þ
  o þ
  þ o
  Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company þ   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





MAD CATZ
    INTERACTIVE, INC.
  ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED MARCH 31, 2008
  TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


24Item 2.


Properties


24Item 3.


Legal Proceedings


25Item 4.


Submission of Matters to a Vote of Security
    Holders


25PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


25Item 6.


Selected Financial Data


27Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


28Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


41Item 8.


Financial Statements and Supplementary Data


42Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


42Item 9A.


Controls and Procedures


42Item 9B.


Other Information


44PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


44Item 11.


Executive Compensation


44Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


44Item 13.


Certain Relationships and Related Transactions
    and Director Independence


44Item 14.


Principal Accountant Fees and Services


44PART IVItem 15.


Exhibits and Financial Statement Schedules


44EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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FORWARD
    LOOKING STATEMENTS
  Form 10-K
     1




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##### Table of Contents



PART I  Item 1.
    Business  Form 10-K,
            Corporate
    Structure
   2




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##### Table of Contents



(416) 360-8600. (619) 683-9830.
  Overview
    Our
    Products
  and/or
     3




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Mad
    Catz Strategy
   4




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Rock Band
    
    completing the full integration of Saitek into Mad Catz and
    expanding efforts initiated in fiscal 2008 to combine resources
    in product development, sales and marketing;
    launching our initial products under our Rock Bandlicense;
    continuing the discipline in working capital management and
    product placement profitability;
    continuing to expand our portfolio of licensed properties;
    continuing our efforts to maintain compliance with environmental
    regulations in all of the jurisdictions in which we do business;
    continuing to pursue video game publishing opportunities, with a
    particular emphasis on hardware-software bundles; and
    identifying strategic opportunities for the expansion of
    products in adjacent and compatible categories that will best
    optimize the Companys infrastructure.  Intellectual
    Property Needed to Produce our Products
          Product
    Development and Support
   5




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and/or
    Manufacturing
    Distribution
    Principal
    Markets
   6




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Customers
      Competitive
    Environment
        Employees
    LocationUnited States


82United Kingdom


47Germany


26France


7Hong Kong


24China


64Total


250    7




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Executive
    Officers of the Registrant
    Name

Position

AgeDarren Richardson

President, Chief Executive Officer and Director of Mad Catz
    Interactive, Inc. and MCI


47Stewart Halpern

Chief Financial Officer of Mad Catz Interactive, Inc. and MCI


51Whitney Peterson

Vice President Corporate Development and General Counsel of MCI


43Jon Middleton

Vice President Business Development of MCI


36   Darren Richardson
  Stewart Halpern
  Whitney Peterson
  Jon Middleton
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K www.madcatz.com
 8




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1-800-SEC-0330. www.sec.gov
  (http://www.sedar.com),
  Item 1A.
    Risk
    Factors  You should consider each of the following factors, as well as
    the other information in this Annual Report, and in our other
    filings with the SEC, before deciding whether to invest in or
    continue to hold our common stock. The risks and uncertainties
    described below are not the only ones we face. Additional risks
    and uncertainties not presently known to us or that we currently
    consider immaterial may also impair our business operations. If
    any of the following risks actually occur, our business and
    financial results could be harmed. In that case, the trading
    price of our common shares could decline. You should also refer
    to the other information set forth in this Annual Report,
    including our financial statements and the related notes.
  Risks
    Concerning Our Customers and Products
  A
    significant portion of our revenue is derived from a few large
    customers.
      One or
    more of our largest customers may directly import or manufacture
    private-label products that are identical or very similar to our
    products. This could cause a significant decline in our sales
    and profitability.
   9




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A
    significant portion of our revenue is derived from a few core
    product categories.
    Our
    financial results are dependent on timely introduction of new
    products, and any failure or delay in the introduction of new
    products to the marketplace may have a material adverse effect
    on our business, results of operations, financial condition and
    liquidity. Our product mix constantly changes.
      and/or
    We
    depend upon third parties to develop products and
    software.
   10




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New
    game platforms and development for multiple consoles create
    additional technical and business model uncertainties that could
    impact our business.
      Changes
    to current game platforms or introductions of new game platforms
    may result in our products becoming inoperable on some game
    platforms, which would reduce sales of our products and
    adversely affect our business, results of operations, financial
    condition and liquidity.
    We are
    subject to various environmental laws and regulations that could
    impose substantial costs upon us and may adversely affect our
    business, operating results and financial
    condition.
    Errors
    or defects contained in our products, failure to comply with
    applicable safety standards or a product recall could result in
    delayed shipments or rejection of our products, damage to our
    reputation and expose us to regulatory or other legal
    action.
   11




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If we
    do not accurately forecast demand for particular products, we
    could incur additional costs or experience manufacturing delays,
    which would reduce our gross margins or cause us to lose
    sales.
    
    If our forecasts of demand are too high, we may accumulate
    excess inventories of products, which could lead to markdown
    allowances or write-offs affecting some or all of such excess
    inventories. We may also have to adjust the prices of our
    existing products to reduce such excess inventories.
    If demand for specific products increases beyond what we
    forecast, our suppliers and third-party manufacturers may not be
    able to increase production rapidly enough to meet the demand.
    Our failure to meet market demand would lead to missed
    opportunities to increase our base of users, damage our
    relationships with retailers and harm our business.
    Rapid increases in production levels to meet unanticipated
    demand could result in increased manufacturing errors, as well
    as higher component, manufacturing and shipping costs, including
    increased air freight, all of which could reduce our profit
    margins and harm our relationships with retailers and consumers.  Our
    pricing and product return policies and other promotional
    activities may negatively impact our sales and profitability and
    harm our business, results of operations, financial condition
    and liquidity.
      We may
    not be able to comply with the terms of our license agreements,
    which may result in the loss of one or more of the
    licenses.
   12




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Some
    of our license agreements with video game console developers
    have expired or may expire within the next fiscal year, which
    could limit our product offerings and significantly reduce our
    revenues.
      The
    collectability of our receivables depends on the continued
    viability and financial stability of our retailers and
    distributors.
    Risks
    Concerning Our Suppliers
  The
    manufacture and supply of our products is dependent upon a
    limited number of third parties, and our success is dependent
    upon the ability of these parties to manufacture and supply us
    with sufficient quantities of our products and on the continued
    viability and financial stability of these third-party
    suppliers.
   13




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Production
    levels that do not match demand for our products could result in
    lost sales or a reduction in our gross margins.
    Any
    disruption of shipping and product delivery operations globally
    could harm our business.
    Risks of
    Doing Business Internationally
  Any
    loss of Chinas Normal Trade Relations NTR with
    the United States, or any changes in tariffs or trade policies,
    could increase our manufacturing expenses and make it more
    difficult for us to manufacture our products in China, if at
    all.
    Our
    manufacturing relationships in China may be adversely affected
    by changes in the political, economic and legal environment in
    China.
   14




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and/or
      There
    are numerous risks associated with our international operations,
    any number of which could harm our business.
      
    unexpected changes in regulatory requirements, taxes, trade laws
    and tariffs;
    political instability and the potential reversal of current
    favorable policies encouraging foreign investment or foreign
    trade by host countries;
    differences in labor laws, labor unrest and difficulties in
    staffing and managing international operations;
    longer payment cycles;
    fluctuations in currency exchange rates;
    potential adverse tax consequences;
    limitations on imports or exports of components or assembled
    products, or other travel restrictions;
    differing intellectual property rights and protections;
    delays from doing business with customs brokers and governmental
    agencies; and
    higher costs of operations.   15




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Intellectual
    Property Risks
  We may
    be faced with legal challenges related to our products,
    including that our products infringe third parties
    intellectual property rights. These challenges could cause us to
    incur significant litigation or licensing expenses or could
    prohibit us from producing or marketing some or all of our
    products entirely.
    Our
    intellectual property rights may not prevent our competitors
    from using our technologies or similar technologies to develop
    competing products, which could weaken our competitive position
    and harm our financial results.
    If our
    products are copied or knocked-off, our sales of
    these products may be materially reduced and our profitability
    may be negatively affected.
    Financing
    Risks
  The
    amount of our outstanding debt may prevent us from taking
    actions we would otherwise consider in our best
    interest.
   16




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
    it may be difficult to generate sufficient capital to satisfy
    our obligations under the Saitek Notes and our outstanding
    credit facility;
    cash required to repay borrowings under our credit facility and
    the Saitek Notes, should such Saitek Notes not be converted into
    equity, may limit our ability to make necessary or desirable
    capital investments in our business and to take advantage of
    significant business opportunities, including acquisitions or
    divestitures;
    the amounts outstanding under the Saitek Notes and our credit
    facility may make it more difficult to obtain other debt
    financing in the future;
    shares issued upon conversion of the Saitek Notes will represent
    a large share of our outstanding common stock;
    the debt obligations represented by the Saitek Notes could make
    us more vulnerable to general adverse economic and industry
    conditions; and
    we could be at a competitive disadvantage to competitors with
    less debt.  We
    depend upon the availability of capital under our credit
    facility to finance our operations. Any additional financing
    that we may need may not be available on favorable terms, or at
    all.
       17




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Accounts
    receivable represent a large portion of our assets, a large
    portion of which are owed by a few customers. If these accounts
    receivable are not paid, we could suffer a significant decline
    in cash flow and liquidity which, in turn, could limit our
    ability to pay liabilities and purchase an adequate amount of
    inventory.
    Increases
    in interest rates may increase our interest expense and
    adversely affect our profitability and cash flow and our ability
    to service indebtedness.
    General
    Risk Factors
  Acquired
    companies can be difficult to integrate, disrupt our business
    and adversely affect our operating results. The benefits we
    anticipate may not be realized in the manner
    anticipated.
    
    difficulties in integrating operations, technologies, services
    and personnel of the acquired companies;
    potential loss of customers of the acquired companies;
    diversion of financial and management resources from existing
    operations;
    potential loss of key employees of the acquired companies;
    integrating personnel with diverse business and cultural
    backgrounds;
    preserving the development, distribution, marketing and other
    important relationships of the companies;
    assumption of liabilities of the acquired companies; and
    inability to generate sufficient revenue and cost savings to
    offset acquisition costs.    
    assume certain liabilities;
    incur additional debt, such as the debt we incurred to fund the
    acquisitions of Joytech and Saitek; 18




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
    make large and immediate one-time write-offs and restructuring
    and other related expenses;
    become subject to intellectual property or other
    litigation; and
    create goodwill or other intangible assets that could result in
    significant impairment charges
    and/or
    amortization expense.    We
    must stay at the forefront of technology and any inability to do
    so would have a material adverse effect on our results of
    operations, financial condition and liquidity.
    A
    decline in general economic conditions could have an adverse
    effect on our financial condition and results of
    operations.
    Natural
    disasters or other events outside of our control may damage our
    facilities or the facilities of third parties on which we depend
    for the manufacture and distribution of our
    products.
  third-party
 19




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Our
    operations are vulnerable because we have limited redundancy and
    backup systems. Any failure of our data information systems
    could negatively impact our financial results.
    Our
    business is seasonal and our financial results vary from period
    to period.
      We are
    constantly looking for opportunities to grow our business and
    diversify our product line. If we fail to successfully manage
    the expansion of our business, our sales may not increase
    commensurately with our capital investments, which would cause
    our profitability to decline.
    We may
    pursue additional acquisitions, which would subject our business
    to the risks associated with acquiring new
    business.
   20




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Our
    operating results are exposed to changes in exchange
    rates.
    Possible
    increase in value to Chinese currency vis-à-vis U.S.
    currency could have a material impact on the cost of our
    products.
      Failure
    to attract, retain and motivate skilled personnel would have a
    material adverse effect on our results of operations, financial
    condition or liquidity.
      Competition
    for market acceptance and retail shelf space and pricing
    competition affects our revenue
    and profitability.
    
    the availability of significant financial resources;
    the quality of products;
    reviews received for products from independent reviewers; 21




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
    access to retail shelf space;
    the success of the game console for which the products were
    developed;
    the price at which the products are sold; and
    the number of other competing products for the system for which
    the products were developed.      Any
    future terrorist attacks and other acts of violence or war may
    affect the demand for video game and PC accessories, which may
    negatively affect our operations and financial
    results.
    Volatility
    in the mass-market and consumer electronic retail sectors could
    have a material adverse effect on our sales.
    Risks
    Related to Our Internal Controls
  We have identified a material weakness in our internal
    control over financial reporting, which could continue to impact
    our ability to report our results of operations and financial
    condition accurately and in a timely manner.
   22




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Risk
    Factors Related to Our Shares
  Penny
    stock rules may negatively impact the liquidity of our common
    stock.
    Volatility
    of share price and absence of dividends.
    
    our or our competitors announcements of technological
    innovations or new products by us or our competitors;
    governmental regulatory actions;
    developments with our strategic alliances and collaborators;
    developments concerning our proprietary rights or the
    proprietary rights of our competitors (including litigation);
    period-to-period
    fluctuations in our operating results;
    changes in estimates of our performance by securities analysts;
    market conditions for consumer technology stocks in
    general; and
    other factors not within our control.    There
    can be no assurance that the holders or purchasers of our common
    stock will be able to resell their shares at prices equal to or
    greater than their cost.
   23




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##### Table of Contents



Investors
    may not be able to secure foreign enforcement of civil
    liabilities against management.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  92108-4406.
  91752-1188.
  90501-3302.
    118-122,
  1717-21, th
    Room 2201-2208,
       24




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Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    American Stock Exchange


Toronto Stock Exchange(U.S. $)


(Canadian $)High


Low


High


LowFiscal 2008Fourth Quarter

$
1.23


$
0.56


$
1.20


$
0.53Third Quarter


1.39



0.95



1.32



0.92Second Quarter


1.50



0.86



1.56



0.87First Quarter


1.65



0.76



1.75



0.83Fiscal 2007Fourth Quarter


0.89



0.57



0.98



0.64Third Quarter


0.71



0.47



0.80



0.52Second Quarter


0.56



0.30



0.63



0.34First Quarter


0.58



0.35



0.68



0.40   Holders
    Dividends
   25




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Issuer
    Purchases of Equity Securities
      COMPARISON
    OF 5-YEAR CUMULATIVE TOTAL RETURN
 AMONG MAD CATZ INTERACTIVE, INC., AMEX MARKET
 NDEX, S&P/TSX COMPOSITE INDEX AND SIC CODE INDEX
  
  Fiscal Year Ended3/31/2003


3/31/2004


3/31/2005


3/31/2006


3/31/2007


3/31/2008Mad Catz Interactive, Inc.

$
100.00


$
114.29


$
257.14


$
88.89


$
131.75


$
98.41SIC Code Index


100.00



99.38



107.04



100.48



129.78



115.69AMEX Market Index


100.00



141.33



148.06



181.72



195.41



191.43S&P/TSX Composite Total Return


100.00



137.73



156.92



201.53



224.56



233.55    26




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Form 10-K. Form 10-K.
  Years Ended March 31,2008


2007


2006


2005


2004(In thousands of U.S. dollars, except share and per share
    data)Consolidated Statements of Operations Data:Net sales

$
87,583


$
99,721


$
100,768


$
112,071


$
102,143Cost of sales


58,841



74,703



88,147



85,225



80,607Gross profit


28,742



25,018



12,621



26,846



21,536Operating expenses:Sales and marketing


10,304



8,923



12,252



10,053



11,166General and administrative


11,004



8,244



7,915



6,998



6,459Research and development


1,516



1,406



1,605



897



1,079Amortization


987















Total operating expenses


23,811



18,573



21,772



17,948



18,704Operating income (loss)


4,931



6,445



(9,151
)


8,898



2,832Interest expense, net


(1,156
)


(1,109
)


(1,395
)


(1,203
)


(1,330
)Foreign exchange gain (loss), net


1,703



256



(765
)


(582
)


91Other income


434



338



484



202



98Income (loss) before income taxes


5,912



5,930



(10,827
)


7,315



1,691Income tax (expense) benefit


(2,744
)


(2,225
)


4,174



(2,733
)


(629
)Net income (loss)

$
3,168


$
3,705


$
(6,653
)

$
4,582


$
1,062Net income (loss) per share  basic

$
0.06


$
0.07


$
(0.12
)

$
0.09


$
0.02Net income (loss) per share  diluted

$
0.06


$
0.07


$
(0.12
)

$
0.08


$
0.02Shares used in calculation:Basic


54,843,688



54,244,383



54,244,383



53,506,289



53,286,248Diluted


55,314,438



55,036,591



54,244,383



54,481,162



53,983,127Consolidated Selected Balance Sheet Data:Cash

$
5,230


$
2,350


$
1,607


$
1,085


$
1,728Working capital


8,789



14,351



6,089



15,601



9,959Goodwill and intangible assets, net


44,024



19,331



24,997



24,893



24,206Total assets


91,321



55,218



68,735



79,136



65,923Bank loan


11,470



1,345



8,581



12,100



15,182Convertible notes payable including interest


14,901















Total shareholders equity


41,315



37,227



36,852



42,903



36,056  27




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EBITDA
    RECONCILIATION (Unaudited)
    Years Ended March 31,2008


2007


2006


2005


2004(In thousands of US dollars)Net income (loss)

$
3,168


$
3,705


$
(6,653
)

$
4,582


$
1,062Adjustments:Interest expense


1,156



1,109



1,395



1,203



1,330Income tax expense (benefit)


2,744



2,225



(4,174
)


2,733



629Depreciation and amortization


2,910



1,938



1,904



1,852



1,831EBITDA

$
9,978


$
8,977


$
(7,528
)

$
10,370


$
4,852   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This section contains forward-looking statements involving
    risks and uncertainties. Our actual results could differ
    materially from those anticipated in these forward-looking
    statements as a result of certain factors including those set
    out in Part I General Information, Item 1A Risk
    Factors elsewhere in this Annual Report. The following
    discussion should be read in conjunction with our consolidated
    financial statements and related notes contained elsewhere in
    this Annual Report.
  Overview
  Our
    Business
       28




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Seasonality
    and Fluctuation of Sales
    Continuing
    Transition to Current Generation Consoles
    Foreign
    Currency
    Critical
    Accounting Policies
    Revenue
    Recognition
  Revenue Recognition. 60-day
   29




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EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer
    (Including a Reseller of the Vendors Products)
  Customer
    Marketing Programs
      product-by-product
      Allowance
    for Doubtful Accounts
       30




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Inventory
    Valuation
      Valuation
    of Goodwill
  Goodwill and Other
    Intangible Assets
  Share-Based
    Payments
  Share-Based Payment,
   31




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RESULTS
    OF OPERATIONS
  Fiscal
    Year Ended March 31, 2008 Compared to Fiscal Year Ended
    March 31, 2007
  Net
    Sales
    Year Ended


Year EndedMarch 31, 2008


March 31, 2007


$


%Net Sales


% of Total


Net Sales


% of Total


Change


ChangeUnited States

$
51,975



59
%

$
71,092



71
%

$
(19,117
)


(26.9
)%Europe


31,257



36
%


22,163



22
%


9,094



41.0
%Canada


2,806



3
%


6,355



7
%


(3,549
)


(55.8
)%Other countries


1,545



2
%


111



0
%


1,434



1,291.9
%Consolidated net sales

$
87,583



100.0
%

$
99,721



100
%

$
(12,138
)


(12.2
)%             Year Ended


Year EndedMarch 31, 2008


March 31, 2007Net Sales


% of Total


Net Sales


% of Total1st
    quarter

$
14,578



17
%

$
18,141



18
%2nd
    quarter


16,853



19
%


25,788



26
%3rd
    quarter


34,274



39
%


36,458



37
%4th
    quarter


21,878



25
%


19,334



19
%Total

$
87,583



100
%

$
99,721



100
%   Halo Assassins Creed Mass Effect Real
 32




---



##### Table of Contents



World Golf 2 Gears of War
    Year Ended March 31,2008


2007PlayStation 2


12
%


27
%PlayStation 3


13
%


4
%Xbox


4
%


11
%Xbox 360


17
%


16
%GameCube


7
%


11
%Wii


6
%


2
%Handheld Consoles(a)


18
%


14
%PC


15
%


0
%All others


8
%


15
%Total


100
%


100
%     (a)
    
    Handheld consoles include Sony PSP and Nintendo Game Boy
    Advance, Game Boy Advance SP, DS, DS Lite and Micro.    Year Ended March 31,2008


2007Control pads


30
%


41
%Bundles


14
%


10
%Games(b)


4
%


13
%Accessories


17
%


13
%Steering wheels


3
%


5
%Memory


3
%


3
%Personal computer products


15
%


0
%All others


14
%


15
%Total


100
%


100
%   (b)
    
    Games include GameShark video game enhancement products in
    addition to video games with related accessories.  Gross
    Profit
   33




---



##### Table of Contents



Year Ended March 31,2008


2007% of





% of


$


%Amount


Net Sales


Amount


Net Sales


Change


ChangeNet sales

$
87,583



100.0
%

$
99,721



100.0
%

$
(12,138
)


(12.2
)%Cost of sales


58,841



67.2
%


74,703



74.9
%


(15,862
)


(21.2
)%Gross profit

$
28,742



32.8
%

$
25,018



25.1
%

$
3,724



14.9
%     Operating
    Expenses
    March 31,


% of


March 31,


% of


$


%2008


Net Sales


2007


Net Sales


Change


ChangeSales and marketing

$
10,304



11.8
%

$
8,923



8.9
%

$
1,381



15.5
%General and administrative


11,004



12.5
%


8,244



8.3
%


2,760



33.5
%Research and development


1,516



1.7
%


1,406



1.4
%


110



7.8
%Amortization of intangibles


987



1.1
%






0.0
%


987



100
%Total operating expenses

$
23,811



27.1
%

$
18,573



18.6
%

$
5,238



28.2
%   Sales and Marketing Expenses. year-over-year
  General and Administrative.
 34




---



##### Table of Contents



Research and Development.
  Amortization of Intangibles.
  Interest
    Expense, Foreign Exchange Gain and Other Income
    March 31,


% of


March 31,


% of


$


%2008


Net Sales


2007


Net Sales


Change


ChangeInterest expense

$
(1,156
)


1.3
%

$
(1,109
)


1.1
%

$
(47
)


4.2
%Foreign exchange gain

$
1,703



1.9
%

$
256



0.3
%

$
1,447



565.2
%Other income

$
434



0.5
%

$
338



0.3
%

$
96



28.4
%     Provision
    for Income Taxes
    March 31,

Effective

March 31,

Effective

$

%2008

Tax Rate

2007

Tax Rate

Change

Change$2,744

46.4%

$2,225

37.5%

$519

23.3%    35




---



##### Table of Contents



Fiscal
    Year Ended March 31, 2007 Compared to Fiscal Year Ended
    March 31, 2006
  Net
    Sales
    Year Ended


Year EndedMarch 31, 2007


March 31, 2006


$


%Net Sales


% of Total


Net sales


% of Total


Change


ChangeUnited States

$
71,092



71
%

$
72,172



72
%

$
(1,080
)


(1.5
)%Europe


22,163



22
%


19,373



19
%


2,790



14.4
%Canada


6,355



7
%


8,892



9
%


(2,537
)


(28.5
)%Other countries


111



0
%


331



0
%


(220
)


(66.5
)%Consolidated net sales

$
99,721



100
%

$
100,768



100
%

$
(1,047
)


(1.0
)%           Year Ended


Year EndedMarch 31, 2007


March 31, 2006Net Sales


% of Total


Net Sales


% of Total1st
    quarter

$
18,141



18
%

$
14,792



15
%2nd
    quarter


25,788



26
%


23,744



23
%3rd
    quarter


36,458



37
%


44,989



45
%4th
    quarter


19,334



19
%


17,243



17
%Total

$
99,721



100
%

$
100,768



100
%  36




---



##### Table of Contents



Gears of War
    Year Ended March 31,2007


2006PlayStation 2


27
%


32
%PlayStation 3


4
%


0
%Xbox


11
%


22
%Xbox 360


16
%


4
%GameCube


11
%


12
%Wii


2
%


0
%Handheld Consoles(a)


14
%


15
%All others


15
%


15
%Total


100
%


100
%     (a)
    
    Handheld consoles include Sony PSP and Nintendo Game Boy
    Advance, Game Boy Advance SP, DS, DS Lite and Micro.    Year Ended March 31,2007


2006Control pads


41
%


48
%Bundles


10
%


13
%Games(b)


13
%


12
%Accessories


13
%


6
%Steering wheels


5
%


7
%Memory


3
%


5
%All others


15
%


9
%Total


100
%


100
%   (b)
    
    Games include GameShark video game enhancement products in
    addition to video games with related accessories.  Gross
    Profit
      Year Ended March 31,2007


2006% of





% of


$


%Amount


Net Sales


Amount


Net Sales


Change


ChangeNet sales

$
99,721



100.0
%

$
100,768



100.0
%

$
(1,047
)


(1.0
)%Cost of sales


74,703



74.9
%


88,147



87.5
%


(13,444
)


(15.3
)%Gross profit

$
25,018



25.1
%

$
12,621



12.5
%

$
12,397



98.2
%  37




---



##### Table of Contents



Operating
    Expenses
    March 31,


% of


March 31,


% of


$


%2007


Net Sales


2006


Net Sales


Change


ChangeSales and marketing

$
8,923



8.9
%

$
12,252



12.1
%

$
(3,329
)


(27.2
)%General and administrative


8,244



8.3
%


7,914



7.9
%


330



4.2
%Research and development


1,406



1.4
%


1,605



1.6
%


(199
)


(12.4
)%Total operating expenses

$
18,573



18.6
%

$
21,771



21.6
%

$
(3,198
)


(14.7
)%   Sales and Marketing Expenses.
  General and Administrative. Share-Based Payment
  Research and Development.
  Interest
    Expense, Foreign Exchange Gain (Loss) and Other Income
    March 31,


% of


March 31,


% of


$


%2007


Net Sales


2006


Net Sales


Change


ChangeInterest expense

$
(1,109
)


1.1
%

$
(1,395
)


1.4
%

$
286



20.5
%Foreign exchange gain (loss)

$
256



0.3
%

$
(765
)


0.8
%

$
1,021



133.5
%Other income

$
338



0.3
%

$
484



0.5
%

$
(146
)


(30.2
)%  38




---



##### Table of Contents



Provision
    for Income Taxes
    March 31,

Effective

March 31,

Effective

$

%2007

Tax Rate

2006

Tax Rate

Change

Change$2,225


37.5
%

$
(4,174
)


38.6
%

$
6,399



153.3
%     Impact
    of Recently Issued Accounting Standards
  Fair Value
    Measurements 157-2 (FSP 157-2). FSP 157-2 FSP 157-2
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115 Accounting for Certain
    Investments in Debt and Equity Securities
  Business Combinations
 39




---



##### Table of Contents



Liquidity
    and Capital Resources
  Sources
    of Liquidity
    Form 10-K.
  Form 10-K.
             40




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due ($000s)Less ThanTotal


1 Year


1-3 Years


3-5 YearsBank loan (excludes interest  see Note 7 of
    Notes to Consolidated Financial Statements)

$
11,470


$
11,470


$



$
Convertible notes payable (excludes interest  see
    Note 8 of Notes to Consolidated Financial Statements)


14,500







14,500



Operating leases


2,354



1,506



830



18Royalty, license and other commitments


781



597



156



28Total

$
29,105


$
13,573


$
15,486


$
46       Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market
    Risk
    Foreign
    Currency Exchange Rate Risk
   41




---



##### Table of Contents



Interest
    Rate Risk
    Item 8.
    Financial
    Statements and Supplementary Data  Page F-l
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(b)
  Managements
    Report on Internal Control over Financial Reporting
     42




---



##### Table of Contents



Changes
    in Internal Controls over Financial Reporting
    Remediation
    of Material Weakness
      
    We have begun to develop and implement new reporting
    instructions and checklists for the newly-acquired foreign
    subsidiaries accounting functions.
    We intend to pursue alternatives to upgrade our information
    technology tools to minimize the manual process currently
    required to record, process, summarize and report information
    required to be disclosed in our reports filed under the
    Securities Exchange Act of 1934, as amended.
    We will consider retaining additional senior accounting
    personnel with specific responsibilities to improve the
    oversight and review of financial reporting.
    We will consider additional management reviews of manually
    prepared schedules. 43




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K.
    http://www.madcatz.com
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements
  page F-1.
  Financial Statement Schedules
   44




---



##### Table of Contents



Exhibits Regulation S-K)
    2
.1

Asset Purchase Agreement, dated as of September 6, 2007, by
    and between Mad Catz Interactive, Inc. and Take-Two Interactive
    Software, Inc.(1)2
.2

Stock Purchase Agreement dated as of November 14, 2007 by
    and between Guymont Services SA as trustee of The Winkler
    Atlantic Trust and Mad Catz Interactive, Inc., a company
    incorporated and existing under the laws of Canada.(2)3
.1

Articles of Incorporation and Amendments thereto.(3)3
.2

By-Laws of the Company, as amended to date.(4)3
.3

Amendment to By-Law No. 2.(5)10
.1

Guarantee from 1328158 Ontario Inc, to Congress Financial
    Corporation (Canada), dated September 25, 2000.(6)10
.2

General Security Agreement among and between Mad Catz, Inc., FX
    Unlimited, Inc., and Congress Financial Corporation (Central),
    dated September 25, 2000.(6)10
.3

Guarantee from Mad Catz, Inc. to Congress Financial Corporation
    (Central), dated September 25, 2000.(6)10
.4

Amended and Restated General Security Agreement by and among Mad
    Catz Inc., FX Unlimited, Inc. and Congress Financial Corporation
    (Central), dated as of November 30, 2001.(7)10
.5*

Amended and Restated Incentive Stock Option Plan of Mad Catz
    Interactive, Inc.(7)10
.6*

Form of Incentive Stock Option Plan.(7)10
.7*

Employment Agreement between Mad Catz, Inc. and Darren
    Richardson, dated May 18, 2000.(8)10
.8*

Amendment to Employment Agreement between Mad Catz Interactive,
    Inc. and Darren Richardson, dated April 1, 2004. Portions
    of this exhibit (indicated by asterisks) have been omitted
    pursuant to a request for confidential treatment pursuant to
    Rule 24b-2
    under the Securities Exchange Act of 1934.(9)10
.9

Xenon Game Peripheral Licensing Certification Agreement, made
    and entered into on May 12, 2005, by and between the
    Company and Microsoft Corporation. Portions of this exhibit
    (indicated by asterisks) have been omitted pursuant to a request
    for confidential treatment pursuant to
    Rule 24b-2
    under the Securities Exchange Act of 1934.(10)10
.10

Second Amended and Restated Loan Agreement dated as of
    October 30, 2006 by and between Wachovia Capital Finance
    Corporation (Central), formerly known as Congress Financial
    Corporation (Central), an Illinois corporation and Mad Catz,
    Inc.(11)10
.11*

Employment Agreement between Mad Catz Interactive, Inc. and
    Stewart Halpern, dated January 16, 2007.(12)10
.12*

Mad Catz Interactive, Inc. Stock Option Plan  2007(13)10
.13*

Stock Option Agreement under the Mad Catz Interactive, Inc.
    Stock Option Plan  2007(13)10
.14

Consideration Loan Note Instrument dated November 20, 2007
    by Mad Catz Interactive, Inc., a company incorporated and
    existing under the laws of Canada to and in favor of the Note
    holders named therein.(2)10
.15

Consideration Loan Note Instrument dated November 20, 2007
    by Mad Catz Interactive, Inc., a company incorporated and
    existing under the laws of Canada to and in favor of the Note
    holders named therein.(2)10
.16

First Amending Agreement dated as of November 20, 2007 by
    and between Mad Catz, Inc. and Wachovia Capital Finance
    Corporation (Central), an Illinois corporation.(2)10
.17

Pledge and Security Agreement dated November 20, 2007, by
    Winkler Atlantic Holdings Limited, a British Virgin Islands
    corporation to and in favor of Wachovia Capital Finance
    Corporation (Central), an Illinois corporation.(2)10
.18

Guarantee dated November 20, 2007, by Saitek Industries
    Limited, a Delaware corporation, in favor of Wachovia Capital
    Finance Corporation (Central), an Illinois corporation.(2)10
.19

General Security Agreement dated November 20, 2007 by
    Saitek Industries Limited, a Delaware corporation, in favor of
    and Wachovia Capital Finance Corporation (Central), an Illinois
    corporation.(2) 45




---



##### Table of Contents



21
.1

Subsidiaries of the Company.23
.1

Consent of KPMG LLP, Independent Registered Public Accounting
    Firm.23
.2

Consent of BDO Stoy Hayward LLP, Independent Registered Public
    Accounting Firm.31
.1

Certifications of Registrants Chief Executive Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certifications of Registrants Chief Financial Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
.1

Certifications of Registrants Chief Executive Officer
    pursuant to 18 U.S.C. Section 1350, as created by
    Section 906 of the Sarbanes-Oxley Act of 2002. These
    certifications are being furnished solely to accompany this
    Annual Report on
    Form 10-K
    and are not being filed for purposes of Section 18 of the
    Securities Exchange Act of 1934, as amended, and are not to be
    incorporated by reference into any filing of the Company.32
.2

Certifications of Registrants Chief Financial Officer
    pursuant to 18 U.S.C. Section 1350, as created by
    Section 906 of the Sarbanes-Oxley Act of 2002. These
    certifications are being furnished solely to accompany this
    Annual Report on
    Form 10-K
    and are not being filed for purposes of Section 18 of the
    Securities Exchange Act of 1934, as amended, and are not to be
    incorporated by reference into any filing of the Company.     (1)
    
    This document was filed as an exhibit to the Registrants
    Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission for the fiscal
    year ended September 11, 2007 and incorporated herein by
    reference.(2)
    
    This document was filed as an exhibit to the Registrants
    Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission for the fiscal
    year ended November 20, 2007 and incorporated herein by
    reference.(3)
    
    This document was filed as an exhibit to the Registrants
    Annual Report on
    Form 20-F
    filed with the Securities and Exchange Commission for the fiscal
    year ended March 31, 2001 and incorporated herein by
    reference.(4)
    
    This document was filed as an exhibit to the Registrants
    Registration Statement on
    Form 20-F,
    dated June 1, 1999, filed with the Securities and Exchange
    Commission on June 3, 1999 and incorporated herein by
    reference.(5)
    
    This document was filed as an exhibit to the Registrants
    Quarterly Report on
    Form 10-Q
    filed with the Securities and Exchange Commission for the
    quarterly period ended September 30, 2007 and incorporated
    herein by reference.(6)
    
    This document was filed as an exhibit to the Registrants
    Annual Report on
    Form 20-F
    filed with the Securities and Exchange Commission for the fiscal
    year ended March 31, 2000 and incorporated herein by
    reference.(7)
    
    This document was filed as an exhibit to the Registrants
    Annual Report on
    Form 20-F
    filed with the Securities and Exchange Commission for the fiscal
    year ended March 31, 2002 and incorporated herein by
    reference.(8)
    
    This document was filed as an exhibit to the Registrants
    Annual Report on
    Form 20-F
    filed with the Securities and Exchange Commission for the fiscal
    year ended March 31, 2003 and incorporated herein by
    reference.(9)
    
    This document was filed as an exhibit to the Registrants
    Annual Report on
    Form 20-F
    filed with the Securities and Exchange Commission for the fiscal
    year ended March 31, 2004 and incorporated herein by
    reference.(10)
    
    This document was filed as an exhibit to the Registrants
    Annual Report on
    Form 10-K
    filed with the Securities and Exchange Commission for the fiscal
    year ended March 31, 2005 and incorporated herein by
    reference.(11)
    
    This document was filed as an exhibit to the Registrants
    Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission on
    November 3, 2006 and incorporated herein by reference.(12)
    
    This document was filed as an exhibit to the Registrants
    Quarterly Report on
    Form 10-Q
    filed with the Securities and Exchange Commission for the
    quarterly period ended December 31, 2006 and incorporated
    herein by reference.(13)
    
    This document was filed as an exhibit to the Registrants
    Current Report on
    Form 8-K
    filed with the Securities and Exchange Commission for the fiscal
    year ended October 9, 2007 and incorporated herein by
    reference.*
    
    Denotes management contract or compensatory plan or arrangement. 46




---



##### Table of Contents



SIGNATURES
    MAD CATZ INTERACTIVE, INC.
  By:
    /s/  Darren
    Richardson  Darren Richardson
 President and Chief Executive Officer
      Signature

Title

Date/s/  Darren
    RichardsonDarren
    Richardson

President and Chief Executive Officer (Principal Executive
    Officer)

June 30, 2008/s/  Stewart
    HalpernStewart
    Halpern

Chief Financial Officer (Principal Financial Officer and
    Principal Accounting Officer)

June 30, 2008/s/  Thomas
    BrownThomas
    Brown

Director

June 30, 2008/s/  Robert
    MolyneuxRobert
    Molyneux

Director

June 30, 2008/s/  William
    WoodwardWilliam
    Woodward

Director

June 30, 2008/s/  John
    DeRuigJohn
    DeRuig

Director

June 30, 2008  47




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS   
 Index to Consolidated Financial Statements


F-1Reports of Independent Registered Public
    Accounting Firms


F-2Consolidated Balance Sheets


F-4Consolidated Statements of Operations


F-5Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss)


F-6Consolidated Statements of Cash Flows


F-7Notes to Consolidated Financial Statements


F-8Consolidated Financial Statement Schedule II


F-28   F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm  
        Share-Based Payments, Considering the Effects of Prior Year Misstatements on
    Current Year Financial Statements
  KPMG
    LLP
    F-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
        ,
      F-3




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated
    Balance Sheets
 March 31,
    2008 and 2007
  2008


2007(In thousands of U.S. dollars, except share data)ASSETSCurrent assets:Cash

$
5,230


$
2,350Accounts receivable, net of allowances of $4,514 and $3,583 at
    March 31, 2008 and 2007, respectively


14,567



14,405Other receivables


583



74Inventories


20,554



12,804Deferred tax assets


1,591



2,009Prepaid expense and other current assets


1,369



700Total current assets


43,894



32,342Deferred tax assets


978



1,801Other assets


324



86Property and equipment, net


2,101



1,658Intangible assets, net


8,320



1,848Goodwill


35,704



17,483Total assets

$
91,321


$
55,218LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Bank loan

$
11,470


$
1,345Accounts payable


16,280



13,509Accrued liabilities


6,859



2,653Income taxes payable


496



484Total current liabilities


35,105



17,991Convertible notes payable and accrued interest


14,901



Total liabilities


50,006



17,991Shareholders equity:Common stock, no par value, unlimited shares authorized;
    54,973,549 and 54,244,383 shares issued and outstanding at
    March 31, 2008 and 2007, respectively


47,717



47,105Accumulated other comprehensive income


2,923



2,615Accumulated deficit


(9,325
)


(12,493
)Total shareholders equity


41,315



37,227Total liabilities and shareholders equity

$
91,321


$
55,218    F-4




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated
    Statements of Operations
 Years
    Ended March 31, 2008, 2007 and 2006
  2008


2007


2006(In thousands of U.S. dollars, exceptshare and per share data)Net sales

$
87,583


$
99,721


$
100,768Cost of sales


58,841



74,703



88,147Gross profit


28,742



25,018



12,621Operating expenses:Sales and marketing


10,304



8,923



12,252General and administrative


11,004



8,244



7,915Research and development


1,516



1,406



1,605Amortization


987







Total operating expenses


23,811



18,573



21,772Operating income (loss)


4,931



6,445



(9,151
)Interest expense, net


(1,156
)


(1,109
)


(1,395
)Foreign exchange gain (loss), net


1,703



256



(765
)Other income


434



338



484Income (loss) before income taxes


5,912



5,930



(10,827
)Income tax (expense) benefit


(2,744
)


(2,225
)


4,174Net income (loss)

$
3,168


$
3,705


$
(6,653
)Net income (loss) per share:Basic

$
0.06


$
0.07


$
(0.12
)Diluted

$
0.06


$
0.07


$
(0.12
)Number of shares used in per share computations:Basic


54,843,688



54,244,383



54,244,383Diluted


55,314,438



55,036,591



54,244,383    F-5




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated
    Statements of Shareholders Equity and Comprehensive Income
    (Loss)
 Years
    Ended March 31, 2008, 2007 and 2006
  AccumulatedOther





TotalCommon Stock


Comprehensive


Accumulated


ShareholdersShares


Amount


Income


Deficit


Equity(In thousands of U.S. dollars, except share data)Balance at March 31, 2005


54,244,383


$
46,746


$
6,514


$
(10,357
)

$
42,903Comprehensive loss:Net loss














(6,653
)


(6,653
)Foreign currency translation adjustment










602







602Total comprehensive loss


















(6,051
)Balance at March 31, 2006


54,244,383



46,746



7,116



(17,010
)


36,852Cumulative effect of adjustments from the adoption of
    SAB 108, net of taxes










(4,880
)


812



(4,068
)Stock-based compensation






359











359Comprehensive income:Net income














3,705



3,705Foreign currency translation adjustment










379







379Total comprehensive income


















4,084Balance at March 31, 2007


54,244,383



47,105



2,615



(12,493
)


37,227Stock option exercises


729,166



345











345Stock-based compensation






267











267Comprehensive income:Net income














3,168



3,168Foreign currency translation adjustment










308







308Total comprehensive income


















3,476Balance at March 31, 2008


54,973,549


$
47,717


$
2,923


$
(9,325
)

$
41,315    F-6




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated
    Statements of Cash Flows
 Years
    Ended March 31, 2008, 2007 and 2006
  2008


2007


2006Cash flows from operating activities:Net income (loss)

$
3,168


$
3,705


$
(6,653
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


2,910



1,938



1,904Amortization of deferred financing fees


34



8



Increase in sales reserves


6,271



7,937



15,759(Gain) loss on sale or disposals of property and equipment






2



(5
)Stock-based compensation


267



359



Foreign exchange (gains) losses






(256
)


765Provision (benefit) for deferred income taxes


1,489



1,592



(1,711
)Changes in operating assets and liabilities, net of effects of
    Joytech and Saitek acquisitions in 2008:Accounts receivable


1,194



(9,303
)


(10,425
)Other receivables


431



355



1,375Inventories


146



5,973



8,318Prepaid expense and other current assets


(472
)


973



(766
)Other assets


(147
)






Accounts payable


(7,690
)


(6,071
)


360Accrued liabilities


(1,395
)


(517
)


412Income taxes receivable/payable


12



1,746



(2,765
)Net cash provided by operating activities


6,218



8,441



6,568Cash flows from investing activities:Purchases of property and equipment


(794
)


(385
)


(1,703
)Cash paid for Joytech acquisition


(2,983
)






Cash paid for Saitek acquisition, net of cash acquired


(10,214
)






Net cash used in investing activities


(13,991
)


(385
)


(1,703
)Cash flows from financing activities:Borrowing (repayment) on bank loan


10,125



(7,236
)


(3,519
)Payment of financing fees


(125
)


(94
)


Proceeds from exercise of stock options


345







Net cash provided by (used in) financing activities


10,345



(7,330
)


(3,519
)Effects of foreign exchange on cash


308



17



(824
)Net increase in cash


2,880



743



522Cash, beginning of year


2,350



1,607



1,085Cash, end of year

$
5,230


$
2,350


$
1,607Supplemental cash flow information:Income taxes paid

$
1,340


$
186


$
270Interest paid

$
809


$
1,148


$
1,407Supplemental disclosures of noncash investing and financing
    activities:Convertible notes payable issued in conjunction with Saitek
    acquisition

$
14,500


$



$
Note payable issued in conjunction with acquisition






126



Fair value of assets and liabilities acquired in acquisitions:Accounts receivable and other assets


13,753







Inventories


7,896







Property and equipment


899



5



Assumed liabilities


(13,554
)






In process research and development






121



Intangible assets


8,132







Goodwill


18,221







Restructuring and transaction costs


2,910    F-7




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes
    to Consolidated Financial Statements
 (In U.S.
    dollars)
  (1)
    Organization
    and Description of Business      (2)
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Use of
    Estimates
    Concentration
    of Credit Risk
   F-8




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Fair
    Value of Financial Instruments
    Revenue
    Recognition
  Revenue Recognition. 60-day
  01-9, Accounting for Consideration Given by a Vendor to a Customer
    (Including a Reseller of the Vendors Products)
    Allowance
    for Doubtful Accounts and Other Allowances
      Inventories
  first-in, first-in,
 F-9




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Property
    and Equipment
    Molds

3 yearsComputer equipment and software

3 yearsManufacturing and office equipment

3 - 5 yearsFurniture and fixtures

5 yearsLeasehold improvements

Shorter of estimated useful life or remaining lease term     Intangible
    Assets
    Goodwill
  Goodwill and Other Intangible Assets,
  Impairment
    of Long-Lived Assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets,
  Royalties
    and Intellectual Property Licenses
    Research
    and Development and Advertising
   F-10




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Income
    Taxes
      Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
  Foreign
    Currency Translation
      Net
    Income (Loss) per Share
   F-11




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Years Ended March 31,2008


2007


2006Basic weighted average common shares outstanding


54,843,688



54,244,383



54,244,383Effect of dilutive securities  options


470,750



792,208



Diluted weighted average common and potential common shares
    outstanding


55,314,438



55,036,591



54,244,383     Stock-Based
    Compensation
  Share-Based Payment Accounting for Stock Issued to Employees,
      Comprehensive
    Income (Loss)
   F-12




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Reclassifications
    Adoption
    of SAB 108
  Considering the Effects of Prior Year Misstatements when
    Quantifying Misstatements on Current Year Financial
    Statements 10-K
  Recent
    Accounting Pronouncements
  Fair
    Value Measurements 157-2 (FSP 157-2). FSP 157-2 FSP 157-2
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115 Accounting for Certain
    Investments in Debt and Equity Securities
 F-13




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Business Combinations
  (3)
    Acquisitions  Saitek
      No. 95-3, Recognition of Liabilities in Connection with a Purchase
    Business Combination
 F-14




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Cash paid

$
14,956Issuance of convertible notes


14,500Transaction costs


2,000Restructuring costs


910Total purchase price

$
32,366       Fair value of net tangible assets acquired and liabilities
    assumed:Accounts receivable and other current assets, excluding
    inventories

$
13,506Inventories


5,970Property, plant & equipment


524Deferred tax assets


248Accounts payable and other liabilities


(13,553
)$
6,695Fair value of identifiable intangible assets acquired:Product lines


3,200Customer relationships


3,100Trademarks and tradenames


1,100Other intangibles


507,450Goodwill






18,221Total purchase price





$
32,366     Year EndedMarch 31,


March 31,2008


2007Revenue

$
114,701


$
136,926Net income


249



(160
)Net income per share:Basic

$
0.00


$
0.00Diluted

$
0.00


$
0.00    F-15




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Joytech
        Cash paid for Joytech business

$
2,932Transaction costs


51Total purchase price

$
2,983       Fair value of tangible assets acquired and liabilities assumed:Property and equipment

$
375Inventories


1,9262,301Fair value of identifiable intangible assets acquired:Product lines


61Customer relationships


302Trademarks


257Other intangibles


62682Total fair value of assets acquired

$
2,983   (4)
    Inventories    March 31,2008


2007Raw materials

$
816


$
1,618Finished goods


19,738



11,186Inventories

$
20,554


$
12,804  F-16




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (5)
    Property
    and Equipment    March 31,2008


2007Molds

$
4,121


$
3,597Computer equipment and software


2,264



1,859Manufacturing and office equipment


1,181



641Furniture and fixtures


406



247Leasehold improvements


429



3648,401



6,708Less: Accumulated depreciation and amortization


(6,300
)


(5,050
)Property and equipment, net

$
2,101


$
1,658     (6)
    Intangible
    Assets and Goodwill    2008


2007Accumulated


Net Book


Net Book


Useful LifeCost


Amortization


Value


Value


(Years)Trademarks

$
5,469


$
3,002


$
2,467


$
1,762


4 - 15Customer relationships


3,402



261



3,141






3 - 6Product lines


3,261



614



2,647






2 - 3Copyrights


514



514







86


5Website


457



457










4Other


112



47



65






1 - 3Intangible assets

$
13,215


$
4,895


$
8,320


$
1,848     Foreign Currency Translation
 F-17




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (7)
    Bank
    Loan    (8)
    Convertible
    Notes Payable    (9)
    Stock-Based
    Compensation     F-18




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007


2006Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseOptions


Price


Options


Price


Options


PriceOutstanding, beginning of year


3,605,500


$
0.54



2,099,333


$
0.99



2,268,983


$
1.02Granted


1,425,000



1.18



2,880,000



0.45



Exercised


(729,166
)


0.49











Expired/canceled


(466,000
)


0.97



(1,373,833
)


1.08



(169,650
)


1.44Outstanding, end of year


3,835,334


$
0.80



3,605,500


$
0.54



2,099,333


$
0.99Exercisable, end of year


1,978,386


$
0.66



2,248,000


$
0.55



1,899,333


$
1.00     Options Outstanding


Options ExercisableWeighted








WeightedAverage


Weighted





Average


WeightedRemaining


Average





Remaining


AverageNumber


Contractual


Exercise


Number


Contractual


ExerciseRange of Exercise Price

Outstanding


Life in Years


Price


Exercisable


Life in Years


Price$0.45 - 0.76


2,042,500



8.5


$
0.53



1,265,052



8.5


$
0.49$0.90 - 1.06


734,500



3.7



0.93



600,000



2.4



0.93$1.10 - 1.57


1,058,334



9.2



1.22



113,334



8.6



1.203,835,334



7.8


$
0.80



1,978,386



6.7


$
0.66        F-19




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008

2007Assumptions:Expected volatility

74% - 75%

72% - 76%Risk-free interest rate

4.37% - 4.78%

4.73% - 4.85%Forfeitures

7%

4%Dividend yield



Expected term

1 - 4 years

2 - 4 years       Net income (loss) as reported

$
(6,653
)Stock based compensation using the fair value method


(121
)Pro forma net income (loss)

$
(6,774
)Net income per common share:Basic  as reported

$
(0.12
)Basic  pro forma

$
(0.12
)Diluted  as reported

$
(0.12
)Diluted  pro forma

$
(0.12
)    F-20




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (10)
    Income
    Taxes    Years Ended March 31,2008


2007


2006Income (loss) before income taxes:Domestic (U.S.)

$
3,987


$
3,865


$
(12,516
)Foreign


1,925



2,065



1,689$
5,912


$
5,930


$
(10,827
)Income tax expense (benefit):Current:Federal (U.S.)

$
511


$
19


$
(2,402
)State (U.S.)


27



20



(420
)Foreign


717



596



359Total current


1,255



635



(2,463
)Deferred:Federal (U.S.)


884



1,200



(1,340
)State (U.S.)


538



354



(481
)Foreign


67



36



110Total deferred


1,489



1,590



(1,711
)Income tax expense (benefit)

$
2,744


$
2,225


$
(4,174
)     Years Ended March 31,2008


2007


2006Income tax expense (benefit) using the Companys Canadian
    statutory tax rates

$
2,096


$
2,142


$
(3,911
)Income taxed in jurisdictions other than Canada


(174
)


(263
)


(608
)Temporary differences not tax-benefited


831



346



345Other


(9
)






$
2,744


$
2,225


$
(4,174
)  F-21




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    March 31,2008


2007Deferred tax assets:Tax loss carryforwards

$
15,370


$
15,476Difference between book and tax basis of inventories


809



701Difference between book and tax basis of accounts receivables


487



238Deferred fees not currently deductible


96



275Accruals and reserves not currently deductible


687



Difference between book and tax basis of intangible assets,
    property & equipment


615



519Unclaimed depreciation on property and equipment


339



373Unclaimed scientific research expenditures


225



248Goodwill and intangibles






1,210Other


390



42319,018



19,463Less valuation allowance


15,217



15,308Net deferred tax assets

$
3,801


$
4,155Deferred tax liabilities:Federal liability on state tax loss

$
82


$
203Prepaid liabilities


258



98Goodwill and intangibles


745



Other


147



44Net deferred tax liabilities

$
1,232


$
345Net deferred tax assets

$
2,569


$
3,810    F-22




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
            Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
    Unrecognized Tax Benefits  Opening Balance


NoneGross increases/(decreases)  tax positions in prior
    period


NoneGross increase  current-period tax positions


NoneSettlements


NoneLapse of statute of limitations


NoneUnrecognized Tax Benefits  Ending Balance


None      F-23




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      (11)
    Commitments
    and Contingencies  Leases
    Year ending March 31:2009

$
1,5062010


6562011


1742012


172013


1Thereafter


$
2,354   Other
    Commitments
    Year ending March 31:2009

$
1772010


15Thereafter


$
192   Royalty
    and License Agreements
   F-24




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Legal
    Proceedings
  Electro Source, LLC v. Fire
    International, Ltd., et al.
  Freedom Wave
    LLC. v. Mad Catz, Inc. et al.,
  Konami Corporation v.
    Roxor Games, Inc., No. 02-05cv-173.
  (12)
    Employee
    Savings Plan   F-25




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (13)
    Geographic
    Data    2008


2007


2006Net sales:United States

$
51,975


$
71,092


$
72,172Europe


31,257



22,163



19,373Canada


2,806



6,355



8,892Other countries


1,545



111



331$
87,583


$
99,721


$
100,768       2008


2007Accounts receivableUnited States


8,279



8,912Europe


5,801



5,253Canada


474



240Other countries


13



14,567



14,405   2008


2007Property and equipment:United States

$
1,084


$
1,516Europe


183



42Canada






2Other countries


834



982,101



1,658  F-26




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (14)
    Quarterly
    Financial and Market Information (Unaudited)  Quarter EndedJune 30


Sept. 30


Dec. 31


Mar 31(Amounts in thousands, except per share data)Fiscal 2008 Consolidated:Net sales

$
14,578


$
16,853


$
34,274


$
21,878Gross profit


4,679



4,953



12,661



6,449Operating income (loss)


(168
)


1,231



5,523



(1,654
)Net income (loss)


(181
)


872



3,310



(832
)Net income (loss) per share  basic


(0.00
)


0.02



0.06



(0.02
)Net income (loss) per share  diluted


(0.00
)


0.02



0.06



(0.02
)Common stock price per share:High


1.65



1.50



1.39



1.23Low


0.76



0.86



0.95



0.56Fiscal 2007 Consolidated:Net sales

$
18,141


$
25,788


$
36,458


$
19,334Gross profit


3,547



5,570



10,277



5,624Operating income (loss)


(1,156
)


639



5,495



1,467Net income (loss)


(876
)


196



3,689



696Net income (loss) per share  basic


(0.02
)


0.00



0.07



0.01Net income (loss) per share  diluted


(0.02
)


0.00



0.07



0.01Common stock price per share:High


0.58



0.56



0.71



0.89Low


0.35



0.30



0.47



0.57  F-27




---



##### Table of Contents



SCHEDULE II
    Mad Catz Interactive, Inc.
    Valuation and Qualifying Accounts
    Years Ended March 31, 2008, 2007 and 2006
  AdditionsBalance atBeginning of


Revenue


Expenses and





Balance atDescription

Period


Reductions(A)


Other Costs(B)


Deductions(C)


End of Period(In thousands of U.S. dollars)Year Ended March 31, 2008Allowance for Doubtful Accounts, Cooperative Advertising, Price
    Protection and Sales Returns

$
(3,583
)

$
(4,933
)

$
(3,271
)

$
7,273


$
(4,514
)Year Ended March 31, 2007Allowance for Doubtful Accounts, Cooperative Advertising, Price
    Protection and Sales Returns

$
(5,198
)

$
(5,426
)

$
(2,511
)

$
9,552


$
(3,583
)Year Ended March 31, 2006Allowance for Doubtful Accounts, Cooperative Advertising, Price
    Protection and Sales Returns

$
(6,329
)

$
(10,017
)

$
(5,742
)

$
16,890


$
(5,198
)     (A)
    
    Includes increases in allowances for sales returns, price
    protection and other sales allowances including volume
    discounts. Included in the additions is $1,923,000, which
    represents the beginning balance of Saitek upon acquisition.(B)
    
    Includes increases in allowances for doubtful accounts and
    cooperative advertising. Amounts reflect the translation effect
    of using the average exchange rate for expense items and the
    year-end exchange rate for the balance sheet item (allowance
    account). Included in the additions is $10,000, which represents
    the beginning balance of Saitek upon acquisition.(C)
    
    Includes actual write-offs of uncollectible accounts receivable,
    sales returns and price protection credits issued, net of
    recoveries and the reversal of unused cooperative advertising
    funds.   F-28