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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, 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, 2009ORo

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
    San Diego, California(Address of principal
    executive offices)

92108(Zip Code)   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 ExchangeToronto Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
      o þ
  o þ
  þ o
  Regulation S-T þ o
  Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    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, 2009
    TABLE OF CONTENTS
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


9Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 3.


Legal Proceedings


25Item 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.


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


26Item 6.


Selected Financial Data


28Item 7.


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


29Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


44Item 8.


Financial Statements and Supplementary Data


45Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


45Item 9A.


Controls and Procedures


45Item 9B.


Other Information


47PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


47Item 11.


Executive Compensation


47Item 12.


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


47Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


47Item 14.


Principal Accounting Fees and Services


47PART IVItem 15.


Exhibits, Financial Statement Schedules


47EX-10.18EX-10.19EX-10.20EX-10.21EX-10.22EX-10.23EX-10.24EX-10.25EX-10.26EX-10.27EX-10.28EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



FORWARD
    LOOKING STATEMENTS
  Form 10-K
  TRADEMARKS
    CURRENCY
   1




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##### Table of Contents



PART I  Item 1.
    Business  Form 10-K,
      Recent
    Acquisitions
      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
  Rock Band
    
    leveraging our global product development capabilities to
    increase the flow and timeliness of new products;
    seeking efficiencies to meaningfully lower our operating costs
    without impacting our ability to continue to grow our business; 4




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
    increasing market penetration of our PC products, particularly
    in North America;
    refining the market positioning of our brands to more
    effectively compete in all relevant categories and price-points;
    continuing our 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;
    identifying strategic opportunities for the expansion of
    products in adjacent and compatible categories, including
    transactions with companies for which products Mad Catz can
    leverage its global distribution capabilities;
    continuing to expand our range of AirDrives portable audio
    headset products and distribution for the AirDrives
    line; and
    continuing to pursue videogame publishing opportunities, with a
    particular emphasis on hardware-videogame bundles  Intellectual
    Property Needed to Produce our Products
        Rock Band
    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


70United Kingdom


43Germany


21France


7Hong Kong


30China


63Total


234    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


48Stewart Halpern

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


52Whitney Peterson

Vice President Corporate Development and General Counsel of MCI


44   Darren Richardson
  Stewart Halpern
  Whitney Peterson
  Available
    Information
  Form 10-K, Form 10-Q, Form 8-K www.madcatz.com 1-800-SEC-0330. www.sec.gov
  (http://www.sedar.com),
 8




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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.
    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.
   9




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and/or
    We
    depend upon third parties to develop products and
    videogames.
    New
    game platforms and development for multiple consoles create
    additional technical and business model uncertainties that could
    impact our business.
     10




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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.
    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.
   11




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
    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.
    Some
    of our license agreements with videogame console developers have
    expired or may expire within the next fiscal year, which could
    limit our product offerings and significantly reduce our
    revenues.
   12




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The
    collectibility 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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Funding
    for our future growth may depend upon obtaining new financing,
    which may be difficult to obtain given prevalent economic
    conditions and the general credit crisis.
    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.
    We
    have a substantial amount of goodwill on our balance sheet that
    may have the effect of decreasing our earnings or increasing our
    losses in the event that we are required to recognize an
    impairment charge to goodwill.
     18




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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;
    make large and immediate one-time write-offs and restructuring
    and other related expenses; 19




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
    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.
    Current
    economic, political and market conditions may adversely affect
    our revenue growth and operating results.
      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.
   20




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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.
   21




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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; 22




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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 videogame 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.
    Risk
    Factors Related to Our Internal Controls
  If we fail to maintain an adequate system of internal
    controls, we may not be able to accurately report our financial
    results, which could cause current and potential shareholders to
    lose confidence in our financial reporting and in turn affect
    the trading price of our common stock.
   23




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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.
   24




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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.
        1717-21, th
    Room 2201-2208,
        Item 3.
    Legal
    Proceedings  No. 37-2009-00081888
   25




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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 2009Fourth Quarter

$
0.45


$
0.15


$
0.50


$
0.20Third Quarter


0.61



0.25



0.62



0.25Second Quarter


0.80



0.45



0.85



0.48First Quarter


0.81



0.55



0.85



0.55Fiscal 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



0.83   Holders
    Dividends
   26




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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
  
  ASSUMES $100
    INVESTED ON MAR. 31, 2004
    ASSUMES DIVIDEND REINVESTED
    FISCAL YEAR ENDING MAR. 31, 2009
  Fiscal Year Ended3/31/2004


3/31/2005


3/31/2006


3/31/2007


3/31/2008


3/31/2009Mad Catz Interactive, Inc.

$
100.00


$
225.00


$
77.78


$
115.28


$
86.11


$
43.19SIC Code Index


100.00



107.70



101.10



130.59



116.41



77.93AMEX Market Index


100.00



104.76



128.58



138.27



135.45



88.87S&P/TSX Composite Total Return


100.00



113.93



146.32



163.04



169.56



114.58    27




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Item 6.
    Selected
    Financial Data  Form 10-K.
  Form 10-K. Form 10-K.
  Years Ended March 31,2009


2008


2007


2006


2005(In thousands of U.S. dollars, except share and per share
    data)Consolidated Statements of Operations Data:Net sales

$
112,563


$
87,737


$
99,797


$
100,945


$
112,146Cost of sales


80,558



58,841



74,703



88,147



85,225Gross profit


32,005



28,896



25,094



12,798



26,921Operating expenses:Sales and marketing


13,216



10,304



8,923



12,252



10,053General and administrative


14,968



11,004



8,244



7,915



6,998Research and development


1,076



1,516



1,406



1,605



897Goodwill impairment


27,887















Amortization


2,344



987











Total operating expenses


59,491



23,811



18,573



21,772



17,948Operating income (loss)


(27,486
)


5,085



6,521



(8,974
)


8,973Interest expense, net


(2,094
)


(1,156
)


(1,109
)


(1,395
)


(1,203
)Foreign exchange gain (loss), net


(462
)


1,703



256



(765
)


(582
)Other income


361



280



262



307



127Income (loss) before income taxes


(29,681
)


5,912



5,930



(10,827
)


7,315Income tax (expense) benefit


(2,933
)


(2,744
)


(2,225
)


4,174



(2,733
)Net income (loss)

$
(32,614
)

$
3,168


$
3,705


$
(6,653
)

$
4,582Net income (loss) per share  basic

$
(0.59
)

$
0.06


$
0.07


$
(0.12
)

$
0.09Net income (loss) per share  diluted

$
(0.59
)

$
0.06


$
0.07


$
(0.12
)

$
0.08Shares used in calculation:Basic


55,088,960



54,843,688



54,244,383



54,244,383



53,506,289Diluted


55,088,960



55,314,438



55,036,591



54,244,383



54,481,162Consolidated Selected Balance Sheet Data:Cash

$
2,890


$
5,230


$
2,350


$
1,607


$
1,085Working capital


4,697



8,789



14,351



6,089



15,601Goodwill and intangible assets, net


13,585



44,024



19,331



24,997



24,893Total assets


55,601



91,321



55,218



68,735



79,136Bank loan


13,272



11,470



1,345



8,581



12,100Convertible notes payable including interest


16,051



14,901











Total shareholders equity


6,417



41,315



37,227



36,852



42,903  28




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EBITDA
    RECONCILIATION (Unaudited)
    Years Ended March 31,2009


2008


2007


2006


2005(In thousands of US dollars)Net income (loss)

$
(32,614
)

$
3,168


$
3,705


$
(6,653
)

$
4,582Adjustments:Interest expense


2,094



1,156



1,109



1,395



1,203Income tax expense (benefit)


2,933



2,744



2,225



(4,174
)


2,733Depreciation and amortization


4,193



2,910



1,938



1,904



1,852EBITDA


(23,394
)


9,978



8,977



(7,528
)


10,370Goodwill impairment


27,887















Adjusted EBITDA

$
4,493


$
9,978


$
8,977


$
(7,528
)

$
10,370   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
   29




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Seasonality
    and Fluctuation of Sales
    Foreign
    Currency
    Critical
    Accounting Policies
    Revenue
    Recognition
  Revenue Recognition. 60-day
   30




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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
     31




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Inventory
    Valuation
      Valuation
    of Goodwill
  Goodwill and Other
    Intangible Assets
  Share-Based
    Payments
  Share-Based Payment,
 32




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Valuation
    of Deferred Income Taxes
       33




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RESULTS
    OF OPERATIONS
  Fiscal
    Year Ended March 31, 2009 Compared to Fiscal Year Ended
    March 31, 2008
  Net
    Sales
    Year Ended


Year EndedMarch 31, 2009


March 31, 2008


$


%Net Sales


% of Total


Net Sales


% of Total


Change


ChangeUnited States

$
65,003



58
%

$
52,129



59
%

$
12,874



24.7
%Europe


41,442



37
%


31,257



36
%


10,185



32.6
%Canada


1,974



2
%


2,806



3
%


(832
)


(29.7
)%Other countries


4,144



3
%


1,545



2
%


2,599



168.2
%Consolidated net sales

$
112,563



100
%

$
87,737



100
%

$
24,826



28.3
%           Year Ended


Year EndedMarch 31, 2009


March 31, 2008Net Sales


% of Total


Net Sales


% of Total1st

    quarter

$
23,226



21
%

$
14,631



17
%2nd

    quarter


25,750



23
%


16,876



19
%3rd

    quarter


40,817



36
%


34,316



39
%4th

    quarter


22,770



20
%


21,914



25
%Total

$
112,563



100
%

$
87,737



100
%   Rock Band Rock Band 2 Street
    Fighter IV Halo 3
 34




---



##### Table of Contents



Assassins Creed Mass
    Effect
    Year Ended March 31,2009


2008PC


31
%


15
%Xbox 360


19
%


17
%Handheld Consoles(a)


17
%


18
%Wii


15
%


6
%PlayStation 3


8
%


13
%PlayStation 2


3
%


12
%GameCube


2
%


7
%Xbox


1
%


4
%All others


4
%


8
%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 31,2009


2008Personal computer products


31
%


15
%Accessories


29
%


17
%Control pads


23
%


30
%Bundles


7
%


14
%Games(b)


1
%


4
%Steering wheels


1
%


3
%Memory


1
%


3
%All others


7
%


14
%Total


100
%


100
%   (b)
    
    Games category includes GameShark videogame enhancement products
    in addition to videogames with related accessories.  Gross
    Profit
   35




---



##### Table of Contents



Year Ended March 31,2009


2008% of





% of


$


%Amount


Net Sales


Amount


Net Sales


Change


ChangeNet sales

$
112,563



100.0
%

$
87,737



100.0
%

$
24,826



28.3
%Cost of sales


80,558



71.6
%


58,841



67.1
%


21,717



36.9
%Gross profit

$
32,005



28.4
%

$
28,896



32.9
%

$
3,109



10.8
%     Operating
    Expenses
    March 31,


% of


March 31,


% of


$


%2009


Net Sales


2008


Net Sales


Change


ChangeSales and marketing

$
13,216



11.7
%

$
10,304



11.8
%

$
2,912



28.3
%General and administrative


14,968



13.3
%


11,004



12.5
%


3,964



36.0
%Research and development


1,076



1.0
%


1,516



1.7
%


(440
)


(29.0
)%Goodwill impairment


27,887



24.8
%










27,887



100.0
%Amortization of intangibles


2,344



2.1
%


987



1.1
%


1,357



137.5
%Total operating expenses

$
59,491



52.9
%

$
23,811



27.1
%

$
35,680



149.8
%   Sales and Marketing Expenses.
  General and Administrative.
  Research and Development.
 36




---



##### Table of Contents



Goodwill Impairment.
  Amortization of Intangibles.
  Interest
    Expense, Foreign Exchange Gain and Other Income
    March 31,


% of


March 31,


% of


$


%2009


Net Sales


2008


Net Sales


Change


ChangeInterest expense

$
(2,094
)


1.9
%

$
(1,156
)


1.3
%

$
(938
)


(81.1
)%Foreign exchange (loss) gain

$
(462
)


0.4
%

$
1,703



1.9
%

$
(2,165
)


(127.1
)%Other income

$
361



0.3
%

$
280



0.3
%

$
81



28.9
%     Provision
    for Income Taxes
    March 31,

Effective

March 31,

Effective

$

%2009

Tax Rate

2008

Tax Rate

Change

Change$2,933

(9.9)%

$2,744

46.4%

$189

6.9%     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

$
52,129



59
%

$
71,168



71
%

$
(19,039
)


(26.8
)%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

$
87,737



100
%

$
99,797



100
%

$
(12,060
)


(12.1
)%  37




---



##### Table of Contents



Year Ended


Year EndedMarch 31, 2008


March 31, 2007Net Sales


% of Total


Net Sales


% of Total1st

    quarter

$
14,631



17
%

$
18,163



18
%2nd

    quarter


16,876



19
%


25,797



26
%3rd

    quarter


34,316



39
%


36,474



37
%4th

    quarter


21,914



25
%


19,363



19
%Total

$
87,737



100
%

$
99,797



100
%   Halo Assassins Creed Mass Effect Real World Golf 2 Gears of War
 38




---



##### Table of Contents



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 includes GameShark videogame enhancement products in
    addition to videogames with related accessories.  Gross
    Profit
      Year Ended March 31,2008


2007% of





% of


$


%Amount


Net Sales


Amount


Net Sales


Change


ChangeNet sales

$
87,737



100.0
%

$
99,797



100.0
%

$
(12,060
)


(12.1
)%Cost of sales


58,841



67.1
%


74,703



74.9
%


(15,862
)


(21.2
)%Gross profit

$
28,896



32.9
%

$
25,094



25.1
%

$
3,802



15.2
%  39




---



##### Table of Contents



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.
  Research and Development.
  Amortization of Intangibles.
 40




---



##### Table of Contents



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

$
280



0.3
%

$
262



0.3
%

$
18



6.9
%     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
%     Impact
    of Recently Issued Accounting Standards
  FAS 157-2, Fair
    Value Measurements 157-2
  FAS 157-3, FAS 157-3 FAS 157-3
  FAS 157-4, FAS 157-4 157-4
 41




---



##### Table of Contents



Business Combinations FAS 141R-1, FAS 141R-1 FAS 141R-1
  FAS 142-3, FAS 142-3 FAS 142-3
  FAS 107-1 28-1, FAS 107-1 28-1 FAS 107-1 28-1
  Liquidity
    and Capital Resources
  Sources
    of Liquidity
    Form 10-K.
   42




---



##### Table of Contents



Form 10-K.
               43




---



##### Table of Contents



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








More ThanTotal


1 Year


1-3 Years


4-5 Years


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

$
13,272


$
13,272


$



$




Convertible notes payable (excludes interest  see
    Note 8 of Notes to Consolidated Financial Statements)(1)


14,500







1,262



3,248



9,990Saitek completion note (excludes interest  see
    Note 9 of Notes to Consolidated Financial Statements)(1)


847



847











Operating leases (see Note 12 of Notes to Consolidated
    Financial Statements)


4,561



1,254



1,804



1,080



423Royalty & license guaranteed commitments (see
    Note 12 of Notes to Consolidated Financial Statements)


505



476



29







Total

$
33,685


$
15,849


$
3,095


$
4,328


$
10,413     (1)
    
    Amounts reflect the amended maturity terms of the Saitek Notes
    and Saitek completion note; See Notes 8 and 9 of Notes to
    Consolidated Financial Statements.    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market
    Risk
    Foreign
    Currency Exchange Rate Risk
   44




---



##### 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) Rule 13a-15(e)
  Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f).
   45




---



##### Table of Contents



Changes
    in Internal Controls over Financial Reporting
    Remediation
    of Material Weakness
      
    We developed and implemented new reporting instructions and
    checklists for the newly-acquired foreign subsidiaries
    accounting functions.
    We increased the use of 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 retained additional senior accounting personnel with specific
    responsibilities to improve the oversight and review of
    financial reporting. 46




---



##### 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
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules    Financial Statements
 47




---



##### Table of Contents



page F-1.
  Financial Statement Schedules
    Exhibits Regulation S-K)
    2
.1(1)

Asset Purchase Agreement dated as of September 6, 2007, by and
    between Mad Catz Interactive, Inc. and Take-Two Interactive
    Software, Inc.2
.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.3
.1(3)

Articles of Incorporation and Amendments thereto.3
.2(4)

By-Laws of the Company, as amended to date.3
.3(5)

Amendment to By-Law No. 2.10
.1(6)

Guarantee dated September 25, 2000, by 1328158 Ontario Inc. in
    favor of Congress Financial Corporation (Canada).10
.2(6)

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

Guarantee dated September 25, 2000, by Mad Catz, Inc. in favor
    of Congress Financial Corporation (Central).10
.4(7)

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

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

Form of Incentive Stock Option Plan.10
.7(8)*

Employment Agreement dated May 18, 2000, by and between Mad
    Catz, Inc. and Darren Richardson.10
.8(9)*

Amendment to Employment Agreement dated April 1, 2004, by and
    between Mad Catz Interactive, Inc. and Darren Richardson.
    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
.9(10)

Xenon Game Peripheral Licensing Certification Agreement dated
    May 12, 2005, by and between Mad Catz, Inc. 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(11)*

Employment Agreement dated January 16, 2007, by and between Mad
    Catz Interactive, Inc. and Stewart Halpern.10
.11(12)*

Mad Catz Interactive, Inc. Stock Option Plan  200710
.12(12)*

Stock Option Agreement under the Mad Catz Interactive, Inc.
    Stock Option Plan  200710
.13(2)

Consideration Loan Note Instrument dated November 20, 2007, by
    Mad Catz Interactive, Inc. in favor of the Noteholders named
    therein.10
.14(2)

First Amending Agreement dated as of November 20, 2007, by and
    between Mad Catz, Inc. and Wachovia Capital Finance Corporation
    (Central).10
.15(2)

Pledge and Security Agreement dated November 20, 2007, by
    Winkler Atlantic Holdings Limited in favor of Wachovia Capital
    Finance Corporation (Central).10
.16(2)

Guarantee dated November 20, 2007, by Saitek Industries Limited
    in favor of Wachovia Capital Finance Corporation (Central).10
.17(2)

General Security Agreement dated November 20, 2007, by Saitek
    Industries Limited in favor of Wachovia Capital Finance
    Corporation (Central). 48




---



##### Table of Contents



10
.18*

Amendment to Employment Agreement dated December 31, 2008, by
    and between Mad Catz Interactive, Inc. and Darren Richardson.10
.19*

Amendment to Employment Agreement dated December 31, 2008, by
    and between Mad Catz Interactive, Inc. and Stewart Halpern.10
.20*

Director Compensation Table10
.21

Waiver and Amendment Letter Agreement dated March 18, 2009, by
    and between Mad Catz, Inc. and Wachovia Capital Finance
    Corporation (Central).10
.22

Third Amended and Restated Loan Agreement dated as of June 23,
    2009, by and between Mad Catz, Inc. and Wachovia Capital Finance
    Corporation (Central).10
.23

General Security Agreement dated June 23, 2009, by Winkler
    Atlantic Holdings Limited in favor of and Wachovia Capital
    Finance Corporation (Central).10
.24

Guarantee dated June 23, 2009, by Winkler Atlantic Holdings
    Limited in favor of Wachovia Capital Finance Corporation
    (Central).10
.25

Negative Pledge Agreement dated June 23, 2009, by Saitek
    Elektronik Vertriebs Gmbh in favor of and Wachovia Capital
    Finance Corporation (Central).10
.26

Guarantee dated June 23, 2009, by Saitek Elektronik Vertriebs
    Gmbh in favor of Wachovia Capital Finance Corporation (Central).10
.27

First Amendment to Stock Pledge Agreement dated June 23, 2009,
    by and between Mad Catz, Inc. and Wachovia Capital Finance
    Corporation (Central).10
.28

Amendment to Consideration Loan Note Instrument and Promissory
    Note dated June 24, 2009, by and between Mad Catz Interactive,
    Inc. and Guymont Services SA as trustee of The Winkler Atlantic
    Trust.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. 49




---



##### Table of Contents



(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
    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.(12)
    
    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. 50




---



##### 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 26, 2009/s/  Stewart
    HalpernStewart
    Halpern

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

June 26, 2009/s/  Thomas
    BrownThomas
    Brown

Director

June 26, 2009/s/  Robert
    MolyneuxRobert
    Molyneux

Director

June 26, 2009/s/  William
    WoodwardWilliam
    Woodward

Director

June 26, 2009  51




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS   
 Index to Consolidated Financial Statements


F-1Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets


F-3Consolidated Statements of Operations


F-4Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss)


F-5Consolidated Statements of Cash Flows


F-6Notes to Consolidated Financial Statements


F-7   F-1




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           KPMG
    LLP
    F-2




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.



Consolidated
    Balance Sheets

March 31,
    2009 and 2008  2009


2008(In thousands of U.S. dollars, except share data)ASSETSCurrent assets:Cash

$
2,890


$
5,230Accounts receivable, net of allowances of $5,926 and $4,514 at
    March 31, 2009 and 2008, respectively


15,524



14,567Other receivables


471



583Inventories


17,774



20,554Deferred tax assets


19



1,591Income tax receivable


759



Prepaid expense and other current assets


1,491



1,369Total current assets


38,928



43,894Deferred tax assets


484



978Other assets


778



324Property and equipment, net


1,826



2,101Intangible assets, net


5,118



8,320Goodwill


8,467



35,704Total assets

$
55,601


$
91,321LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Bank loan

$
13,272


$
11,470Accounts payable


13,528



16,280Accrued liabilities


5,929



6,859Note payable


847



Income taxes payable


655



496Total current liabilities


34,231



35,105Other long term liabilities


453



Convertible notes payable


14,500



14,901Total liabilities


49,184



50,006Shareholders equity:Common stock, no par value, unlimited shares authorized;
    55,098,549 and 54,973,549 shares issued and outstanding at
    March 31, 2009 and 2008, respectively


48,255



47,717Accumulated other comprehensive income


101



2,923Accumulated deficit


(41,939
)


(9,325
)Total shareholders equity


6,417



41,315Total liabilities and shareholders equity

$
55,601


$
91,321    F-3




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.



Consolidated
    Statements of Operations

Years
    Ended March 31, 2009, 2008 and 2007  2009


2008


2007(In thousands of U.S. dollars, exceptshare and per share data)Net sales

$
112,563


$
87,737


$
99,797Cost of sales


80,558



58,841



74,703Gross profit


32,005



28,896



25,094Operating expenses:Sales and marketing


13,216



10,304



8,923General and administrative


14,968



11,004



8,244Research and development


1,076



1,516



1,406Goodwill impairment


27,887







Amortization of intangible assets


2,344



987



Total operating expenses


59,491



23,811



18,573Operating income (loss)


(27,486
)


5,085



6,521Interest expense, net


(2,094
)


(1,156
)


(1,109
)Foreign exchange gain (loss), net


(462
)


1,703



256Other income


361



280



262Income (loss) before income taxes


(29,681
)


5,912



5,930Income tax expense


(2,933
)


(2,744
)


(2,225
)Net income (loss)

$
(32,614
)

$
3,168


$
3,705Net income (loss) per share:Basic

$
(0.59
)

$
0.06


$
0.07Diluted

$
(0.59
)

$
0.06


$
0.07Number of shares used in per share computations:Basic


55,088,960



54,843,688



54,244,383Diluted


55,088,960



55,314,438



55,036,591    F-4




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.



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

Years
    Ended March 31, 2009, 2008 and 2007  AccumulatedOther





TotalCommon Stock


Comprehensive


Accumulated


ShareholdersShares


Amount


Income (Loss)


Deficit


Equity(In thousands of U.S. dollars, except share data)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
)

$
41,315Stock option exercises


125,000



57











57Stock-based compensation






481











481Comprehensive loss:Net loss














(32,614
)


(32,614
)Foreign currency translation adjustment










(2,822
)






(2,822
)Total comprehensive loss


















(35,436
)Balance at March 31, 2009


55,098,549


$
48,255


$
101


$
(41,939
)

$
6,417    F-5




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.



Consolidated
    Statements of Cash Flows

Years
    Ended March 31, 2009, 2008 and 2007  2009


2008


2007(In thousands of U.S. dollars)Cash flows from operating activities:Net income (loss)

$
(32,614
)

$
3,168


$
3,705Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


4,193



2,910



1,938Amortization of deferred financing fees


56



34



10Increase in sales reserves


9,533



6,271



7,937Stock-based compensation


481



267



359Goodwill impairment


27,887







Provision (benefit) for deferred income taxes


2,657



1,489



1,592Changes in operating assets and liabilities, net of effects of
    Joytech and Saitek acquisitions in 2008:Accounts receivable


(11,921
)


1,194



(9,398
)Other receivables


98



431



351Inventories


2,401



146



5,912Prepaid expense and other current assets


(15
)


(472
)


963Other assets


(106
)


(147
)


Accounts payable


(3,127
)


(7,690
)


(6,133
)Accrued liabilities


(1,443
)


(1,395
)


(522
)Income taxes receivable/payable


(226
)


12



1,727Net cash provided by (used in) operating activities


(2,146
)


6,218



8,441Cash flows from investing activities:Purchases of property and equipment


(1,403
)


(794
)


(385
)Cash paid for Joytech acquisition






(2,983
)


Cash paid for Saitek acquisition






(10,214
)


Net cash used in investing activities


(1,403
)


(13,991
)


(385
)Cash flows from financing activities:Borrowings on bank loan


97,708



89,077



90,440Repayments on bank loan


(95,906
)


(78,952
)


(97,676
)Payment of financing fees






(125
)


(94
)Proceeds from exercise of stock options


57



345



Net cash provided by (used in) financing activities


1,859



10,345



(7,330
)Effects of foreign exchange on cash


(650
)


308



17Net increase (decrease) in cash


(2,340
)


2,880



743Cash, beginning of year


5,230



2,350



1,607Cash, end of year

$
2,890


$
5,230


$
2,350Supplemental cash flow information:Income taxes paid

$
673


$
1,340


$
186Interest paid

$
822


$
809


$
1,148Supplemental disclosures of noncash investing and financing
    activities:Convertible notes payable issued in conjunction with Saitek
    acquisition

$



$
14,500


$
Note payable issued


847







126Fair value of assets acquired in acquisitions:Accounts receivable and other assets






13,506



Inventories






7,896



Property and equipment






899



5Deferred tax assets


1,031



248



Assumed liabilities






(13,553
)


In process research and development










121Intangible assets






8,132



Goodwill


98



18,221



Restructuring and transaction costs


282



2,910



    F-6




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##### 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
   F-7




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##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Concentration
    of Credit Risk
    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
     F-8




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##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Inventories
  first-in, first-in,
  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 life of lease     Intangible
    Assets
    Useful Life(Years)Trademarks


4 - 15Customer relationships


3 - 6Product lines


2 - 3Copyrights


5Website


4Other


1 - 3   Goodwill
  Goodwill and Other Intangible Assets
    (SFAS No. 142),
   F-9




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Impairment
    of Long-Lived Assets
  Accounting for the
    Impairment or Disposal of Long-Lived Assets,
  Royalties
    and Intellectual Property Licenses
     F-10




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Advertising
    and Research and Development
    Income
    Taxes
      Accounting for Uncertainty in Income Taxes Accounting for Income
    Taxes
  Foreign
    Currency Translation
     F-11




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Net
    Income (Loss) per Share
      Years Ended March 31,2009


2008


2007Basic weighted average common shares outstanding


55,088,960



54,843,688



54,244,383Effect of dilutive securities  options






470,750



792,208Diluted weighted average common and potential common shares
    outstanding


55,088,960



55,314,438



55,036,591     Stock-Based
    Compensation
  Share-Based Payment
      Comprehensive
    Income (Loss)
   F-12




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  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 available-for-sale
  FAS No. 142-3 FAS No. 142-3), Determination of the Useful Life of Intangible Assets FAS No. 142-3 Goodwill and Other Intangible Assets FAS No. 142-3 states FAS 142-3,
  (3)
    Acquisitions  Saitek
   F-13




---



##### Table of Contents



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

$
14,956Issuance of convertible notes


14,500Transaction costs


2,326Issuance of completion note


847Restructuring costs


866Total purchase price

$
33,495       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


1,279Accounts payable and other liabilities


(13,553
)7,726Fair value of identifiable intangible assets acquired:Product lines


3,200Customer relationships


3,100Trademarks and tradenames


1,100Other intangibles


507,450Goodwill


18,319Total purchase price


33,495  F-14




---



##### Table of Contents



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


Lease Exit


TotalBalance at March 31, 2008

$
830


$
80


$
910Payments


(786
)


(80
)


(866
)Reversals


(44
)






(44
)Balance at March 31, 2009

$



$



$
     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     Joytech
        Cash paid for Joytech business

$
2,932Transaction costs


51Total purchase price

$
2,983    F-15




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    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 31,2009


2008Raw materials

$
949


$
816Finished goods


16,825



19,738Inventories

$
17,774


$
20,554   (5)
    Property
    and Equipment    March 31,2009


2008Molds

$
4,936


$
4,121Computer equipment and software


2,382



2,264Manufacturing and office equipment


854



1,181Furniture and fixtures


338



406Leasehold improvements


465



4298,975



8,401Less: Accumulated depreciation and amortization


(7,149
)


(6,300
)Property and equipment, net

$
1,826


$
2,101    F-16




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (6)
    Intangible
    Assets and Goodwill    2009


2008Accumulated


Net Book


Net Book


Useful lifeCost


Amortization


Value


Value


(Years)Trademarks

$
5,474


$
3,723


$
1,751


$
2,467


4 - 15Customer relationships


3,161



823



2,338



3,141


3 - 6Product lines


3,185



2,182



1,003



2,647


2 - 3Copyrights


514



514










5Website


457



457










4Other


110



84



26



65


1 - 3Intangible assets

$
12,901


$
7,783


$
5,118


$
8,320       FutureAmortizationYear ending March 31, 2010


2,311Year ending March 31, 2011


661Year ending March 31, 2012


596Year ending March 31, 2013


588Year ending March 31, 2014


391Thereafter


5715,118     Balance at March 31, 2007

$
17,483Aquisition of Saitek


18,221Balance at March 31, 2008


35,704Saitek purchase price adjustments:Working capital adjustment


847Adjustment to estimated transaction costs


282Release of deferred tax asset valuation allowances upon merger
    of Saitek entities into Mad Catz entities


(1,031
)Translation adjustment


552Impairment charge


(27,887
)Balance at March 31, 2009

$
8,467  F-17




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (7)
    Bank
    Loan    (8)
    Convertible
    Notes Payable    (9)
    Saitek
    Completion Note    (10)
    Stock-Based
    Compensation   F-18




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        2009


2008


2007Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseOptions


Price


Options


Price


Options


PriceOutstanding, beginning of year


3,835,334


$
0.80



3,605,500


$
0.54



2,099,333


$
0.99Granted


3,925,000



0.46



1,425,000



1.18



2,880,000



0.45Exercised


(125,000
)


0.46



(729,166
)


0.49



Expired/canceled


(239,059
)


0.75



(466,000
)


0.97



(1,373,833
)


1.08Outstanding, end of year


7,396,275


$
0.58



3,835,334


$
0.80



3,605,500


$
0.54Exercisable, end of year


2,535,002


$
0.64



1,978,386


$
0.66



2,248,000


$
0.55Vested and expected to vest, end of year


7,055,986


$
0.63



2,851,838


$
0.78



3,510,475


$
0.54     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$0.33 - 0.50


5,542,500



8.9


$
0.45



1,391,510



7.6


$
0.41$0.62 - 0.92


833,775



3.2



0.73



664,429



2.0



0.73$1.06 - 1.23


1,020,000



8.3



1.21



479,063



8.3



1.207,396,275



8.2


$
0.58



2,535,002



6.3


$
0.64      F-19




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2009

2008

2007Assumptions:Expected volatility

74% - 75%

74% - 75%

72% - 76%Risk-free interest rate

2.18% - 3.11%

4.37% - 4.78%

4.73% - 4.85%Forfeitures

5%

7%

4%Dividend yield





Expected term

1 - 5 years

1 - 4 years

2 - 4 years     (11)
    Income
    Taxes    Years Ended March 31,2009


2008


2007Income (loss) before income taxes:Domestic (U.S.)

$
(16,563
)

$
3,987


$
3,865Foreign


(13,118
)


1,925



2,065$
(29,681
)

$
5,912


$
5,930Income tax expense (benefit):Current:Federal (U.S.)

$
(630
)

$
511


$
19State (U.S.)


56



27



20Foreign


850



717



594Total current


276



1,255



633Deferred:Federal (U.S.)


2,467



884



1,200State (U.S.)


459



538



354Foreign


(269
)


67



38Total deferred


2,657



1,489



1,592Income tax expense

$
2,933


$
2,744


$
2,225  F-20




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Years Ended March 31,2009


2008


2007Income tax expense (benefit) using the Companys Canadian
    statutory tax rates

$
(9,906
)

$
2,096


$
2,142Income taxed in jurisdictions other than Canada


1,468



(174
)


(263
)Goodwill impairment


7,511







Change in valuation allowance


3,665



1,054



346Other


195



(232
)


$
2,933


$
2,744


$
2,225     March 31,2009


2008Deferred tax assets:Tax loss carryforwards

$
8,542


$
15,370Difference between book and tax basis of inventories


789



809Difference between book and tax basis of accounts receivables


424



487Deferred fees not currently deductible


86



96Accruals and reserves not currently deductible


552



687Difference between book and tax basis if intangible assets,
    property & equipment


800



615Unclaimed depreciation on property and equipment


278



339Unclaimed scientific research expenditures


184



225Other


205



39011,860



19,018Less valuation allowance


(10,895
)


(15,217
)Net deferred tax assets

$
965


$
3,801Deferred tax liabilities:Federal liability on state tax loss

$
231


$
82Prepaid liabilities


24



258Goodwill and intangibles


207



745Other






147Net deferred tax liabilities

$
462


$
1,232Net deferred tax assets

$
503


$
2,569  F-21




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              Accounting for Uncertainty in Income Taxes
 F-22




---



##### Table of Contents



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


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


Gross increase  current-period tax positions

$
2,389Settlements


Lapse of statute of limitations


Unrecognized Tax Benefits  Ending Balance

$
2,389             (12)
    Commitments
    and Contingencies  Leases
   F-23




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year ending March 31:2010

$
1,2542011


1,0182012


7862013


7222014


358Thereafter


423$
4,561   Royalty
    and License Agreements
    Year ending March 31:2010

$
476Thereafter


29$
505   Legal
    Proceedings
  No. 37-2009-00081888
    (13)
    Employee
    Savings Plan   F-24




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (14)
    Geographic
    and Product Line Data    2009


2008


2007Net sales:United States

$
65,003


$
52,129


$
71,168Europe


41,442



31,257



22,163Canada


1,974



2,806



6,355Other countries


4,144



1,545



111$
112,563


$
87,737


$
99,797       2009


2008Property and equipment:United States

$
394


$
608Europe


115



187Canada






Other countries


1,317



1,306$
1,826


$
2,101     Year Ended March 31,2009


2008Accessories

$
26,408


$
13,048Personal computer products


40,173



14,277Control pads


28,828



29,292Batteries


10,582



3,504Cables


9,100



11,619Bundles


8,993



13,608Games


1,695



4,202Steering wheels


1,068



2,940Memory


1,163



2,474All others


209



3,807Total

$
127,801


$
98,771  F-25




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  (15)
    Quarterly
    Financial and Market Information (Unaudited)  Quarter EndedJune 30


Sept. 30


Dec. 31(A)


Mar 31(B)(Amounts in thousands, except per share data)Fiscal 2009 Consolidated:Net sales

$
23,226


$
25,750


$
40,817


$
22,770Gross profit


8,194



7,823



10,548



5,440Operating income (loss)


(884
)


(819
)


(26,413
)


629Net loss


(777
)


(1,239
)


(26,907
)


(3,624
)Net loss per share  basic


(0.02
)


(0.02
)


(0.49
)


(0.06
)Net loss per share  diluted


(0.02
)


(0.02
)


(0.49
)


(0.06
)Common stock price per share:High


0.81



0.80



0.61



0.45Low


0.55



0.45



0.25



0.15Fiscal 2008 Consolidated:Net sales

$
14,631


$
16,876


$
34,316


$
21,914Gross profit


4,732



4,973



12,703



6,488Operating income (loss)


(115
)


1,251



5,565



(1,615
)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



0.56     (A)
    
    In the third quarter of fiscal year 2009, it was determined that
    goodwill had been impaired. Accordingly, the Company performed a
    valuation analysis and recorded a preliminary estimated
    impairment charge of $28.5 million.(B)
    
    In the fourth quarter of fiscal year 2009, the goodwill
    valuation analysis was finalized and a reduction to the
    previously estimated impairment charge in the amount of
    $0.6 million was recorded. F-26




---



##### Table of Contents



SCHEDULE II
    Mad Catz Interactive, Inc.
    Valuation and Qualifying Accounts
    Years Ended March 31, 2009, 2008 and 2007
  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, 2009Allowance for Doubtful Accounts, Cooperative Advertising, Price
    Protection and Sales Returns

$
(4,514
)

$
(6,084
)

$
(3,449
)

$
8,121


$
(5,926
)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
)     (A)
    
    Includes increases in allowances for sales returns, price
    protection and other sales allowances including volume
    discounts. Included in the additions in 2008 is $1,923,000,
    which represents the beginning balance of Saitek upon
    acquisition.(B)
    
    Includes increases in allowances for doubtful accounts and
    cooperative advertising that is awarded based on allowance.
    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 in 2008 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.   F-27