##### Table of Contents





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,
    2010ORo

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

NYSE AmexToronto Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Form 10-K Form 10-K. þ
    Large accelerated filer o

Accelerated filer o

Non-accelerated filero
    (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, 2010
    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.


Reserved


25PART 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


42Item 8.


Financial Statements and Supplementary Data


43Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


43Item 9A.


Controls and Procedures


43Item 9B.


Other Information


44PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


45Item 11.


Executive Compensation


45Item 12.


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


45Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


45Item 14.


Principal Accounting Fees and Services


45PART IVItem 15.


Exhibits, Financial Statement Schedules


46EX-2.1EX-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
  and/or
  CURRENCY
   1




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##### Table of Contents



PART I  Item 1.
    Business  Form 10-K,
      Recent
    Acquisitions
        Corporate
    Structure
  Jurisdiction ofSubsidiary

IncorporationMad Catz, Inc.

Delaware1328158 Ontario Inc.

Ontario, CanadaMad Catz Europe, Limited

England and WalesMad Catz Interactive Asia Limited

Hong KongMad Catz Technological Development (Shenzhen) Co., Ltd

Peoples Republic of ChinaWinkler Atlantic Holdings Limited

British Virgin IslandsSaitek Elektronik Vertriebs GmbH

GermanySaitek S.A.

FranceTritton Technologies Inc.

DelawareFX Unlimited Inc.

DelawareXencet USA, Inc.

DelawareSingapore Holdings Inc.

DelawareMad Catz (Asia) Limited

Hong Kong    2




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




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##### Table of Contents



tm ®
        Mad
    Catz Strategy
      
    continuing to increase the flow of premium products across our
    major brands: Mad Catz (casual gaming); Saitek (simulation);
    Cyborg (pro-gaming); Eclipse (home and office); Tritton (audio
    and PC);   4




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
    continuing to pursue videogame publishing and distribution
    opportunities, with a particular emphasis on hardware-videogame
    bundles; and
    continuing to identify 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.  Intellectual
    Property Needed to Produce our Products
    Rock Band
    Rock Band
    Product
    Development and Support
    and/or
 5




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Manufacturing
    Distribution
    Principal
    Markets
    Customers
     6




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Competitive
    Environment
        Employees
    LocationUnited States


73United Kingdom


38Germany


23France


8Hong Kong


33Spain


1China


70Total


246     Executive
    Officers of the Registrant
    Name

Position

AgeDarren Richardson

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


49Stewart Halpern

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


53Whitney Peterson

Vice President Corporate Development and General Counsel of MCI


45Brian Andersen

Chief Operating Officer of Mad Catz Interactive, Inc.


34  7




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Darren Richardson
  Stewart Halpern
  Whitney Peterson
  Brian Andersen
  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.
      Our
    operating results are exposed to changes in exchange
    rates.
    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.
        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 or less desirable
    on some game platforms and/or for some games, which would reduce
    sales of our products and adversely affect our business, results
    of operations, financial condition and liquidity.
  and/or
  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 videogame console developers have
    expired or may expire within the next fiscal year, which could
    limit our product offerings and significantly reduce our
    revenues.
      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 would
    represent a large share of our outstanding common stock and
    would result in substantial dilution of the percentage of
    ownership of the Companys stockholders;
    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.
        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.
   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.
    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 acquired companies;
    assumption of liabilities of the acquired companies; and
    inability to generate sufficient revenue and cost savings to
    offset acquisition costs.    
    incur additional debt;
    make large and immediate one-time write-offs and restructuring
    and other related expenses;
    become subject to intellectual property or other
    disputes; and
    create goodwill or other intangible assets that could result in
    significant impairment charges
    and/or
    amortization expense in the future.   19




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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.
    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.
  day-to-day
 20




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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.
    Possible
    increase in value to Chinese currency vis-à-vis U.S.
    currency could have a material impact on the cost of our
    products.
  CNY/U.S. dollar
    Failure
    to attract, retain and motivate skilled personnel would have a
    material adverse effect on our results of operations, financial
    condition or liquidity.
   21




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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;
    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.
   22




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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.
    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. 23




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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.
    Investors
    may not be able to secure foreign enforcement of civil
    liabilities against management.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  92108-4406.
        1717-21, th
         24




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Item 3.
    Legal
    Proceedings  Case No. 37-2009-00081888
    Item 4.
    (Reserved) 25




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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 2010Fourth Quarter

$
0.57


$
0.33


$
0.59


$
0.36Third Quarter


0.54



0.32



0.55



0.33Second Quarter


0.50



0.24



0.50



0.27First Quarter


0.47



0.22



0.50



0.20Fiscal 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



0.55   Holders
    Dividends
   26




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Issuer
    Purchases of Equity Securities
      COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    AMONG MAD CATZ INTERACTIVE, INC., THE NYSE AMEX COMPOSITE
    INDEX,
    THE S&P/TSX COMPOSITE INDEX AND SIC CODE 3944 
    GAMES & TOYS, EXCEPT BICYCLES
  
  *
    $100 invested on
    3/31/05 in
    stock or index, including reinvestment of dividends. 
    Fiscal year ending March 31.  ©
  ASSUMES $100
    INVESTED ON MAR. 31, 2005
    ASSUMES DIVIDEND REINVESTED
    FISCAL YEAR ENDING MAR. 31, 2010
  Fiscal Year Ended3/31/2005


3/31/2006


3/31/2007


3/31/2008


3/31/2009


3/31/2010Mad Catz Interactive, Inc.

$
100.00


$
34.57


$
51.23


$
38.27


$
19.17


$
29.63SIC Code Index


100.00



141.38



162.85



180.78



103.34



164.18AMEX Market Index


100.00



128.43



143.10



148.83



100.57



142.96S&P/TSX Composite Total Return


100.00



108.92



135.64



122.93



90.62



143.3    27




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Item 6.
    Selected
    Financial Data  Form 10-K.
  Years Ended March 31,2010


2009


2008


2007


2006(In thousands of U.S. dollars, except share and per share
    data)Consolidated Statements of Operations Data:Net sales

$
119,012


$
112,563


$
87,737


$
99,797


$
100,945Cost of sales


82,616



80,558



58,841



74,703



88,147Gross profit


36,396



32,005



28,896



25,094



12,798Operating expenses:Sales and marketing


11,452



13,216



10,304



8,923



12,252General and administrative


12,343



14,968



11,004



8,244



7,915Research and development


2,657



1,076



1,516



1,406



1,605Goodwill impairment






27,887











Amortization


1,758



2,344



987







Total operating expenses


28,210



59,491



23,811



18,573



21,772Operating income (loss)


8,186



(27,486
)


5,085



6,521



(8,974
)Interest expense, net


(2,235
)


(2,094
)


(1,156
)


(1,109
)


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


(270
)


(462
)


1,703



256



(765
)Other income


252



361



280



262



307Income (loss) before income taxes


5,933



(29,681
)


5,912



5,930



(10,827
)Income tax (expense) benefit


(1,470
)


(2,933
)


(2,744
)


(2,225
)


4,174Net income (loss)

$
4,463


$
(32,614
)

$
3,168


$
3,705


$
(6,653
)Net income (loss) per share  basic

$
0.08


$
(0.59
)

$
0.06


$
0.07


$
(0.12
)Net income (loss) per share  diluted

$
0.08


$
(0.59
)

$
0.06


$
0.07


$
(0.12
)Shares used in calculation:Basic


55,098,549



55,088,960



54,843,688



54,244,383



54,244,383Diluted


55,103,237



55,088,960



55,314,438



55,036,591



54,244,383Consolidated Selected Balance Sheet Data:Cash

$
2,245


$
2,890


$
5,230


$
2,350


$
1,607Working capital


10,053



4,697



8,789



14,351



6,089Goodwill and intangible assets, net


11,294



13,585



44,024



19,331



24,997Total assets


51,549



55,601



91,321



55,218



68,735Bank loan


3,829



13,272



11,470



1,345



8,581Convertible notes payable including interest


16,096



16,051



14,901







Total shareholders equity


11,334



6,417



41,315



37,227



36,852  28




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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
      Seasonality
    and Fluctuation of Sales
    Foreign
    Currency
    Critical
    Accounting Policies
   29




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Revenue
    Recognition
  60-day
  Customer
    Marketing Programs
      product-by-product
        Allowance
    for Doubtful Accounts
   30




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Inventory
    Valuation
      Valuation
    of Goodwill
    Share-Based
    Payments
   31




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Valuation
    of Deferred Income Taxes
       32




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Fiscal
    Year Ended March 31, 2010 Compared to Fiscal Year Ended
    March 31, 2009
  Net
    Sales
    Year Ended


Year EndedMarch 31, 2010


March 31, 2009


$


%Net Sales


% of Total


Net Sales


% of Total


Change


ChangeUnited States

$
63,223



53
%

$
65,003



58
%

$
(1,780
)


(2.7
)%Europe


49,005



41
%


41,442



37
%


7,563



18.2
%Canada


3,109



3
%


1,974



2
%


1,135



57.5
%Other countries


3,675



3
%


4,144



3
%


(469
)


(11.3
)%Consolidated net sales

$
119,012



100
%

$
112,563



100
%

$
6,449



5.7
%       Year Ended


Year EndedMarch 31, 2010


March 31, 2009Net Sales


% of Total


Net Sales


% of Total1st

    quarter

$
22,378



19
%

$
23,226



21
%2nd

    quarter


21,603



18
%


25,750



23
%3rd

    quarter


48,763



41
%


40,817



36
%4th

    quarter


26,268



22
%


22,770



20
%Total

$
119,012



100
%

$
112,563



100
%   Call of Duty: Modern Warfare 2 Super Street Fighter IV Rock Band Rock Band
    2 Street Fighter IV
 33




---



##### Table of Contents



Year Ended March 31,2010


2009Xbox 360


31
%


19
%PC


22
%


29
%PlayStation 3


17
%


8
%Wii


13
%


16
%Handheld Consoles


4
%


10
%PlayStation 2


2
%


3
%GameCube


2
%


2
%All others


9
%


13
%Total


100
%


100
%     Year Ended March 31,2010


2009Controllers


28
%


23
%Specialty controllers


24
%


16
%Accessories


24
%


46
%Audio


15
%


7
%PC


8
%


6
%Games(a)


1
%


1
%All others


0
%


1
%Total


100
%


100
%     (a)
    
    Games category includes GameShark videogame enhancement products
    in addition to videogames with related accessories.  Gross
    Profit
      Year Ended March 31,2010


2009% of





% of


$


%Amount


Net Sales


Amount


Net Sales


Change


ChangeNet sales

$
119,012



100.0
%

$
112,563



100.0
%

$
6,449



5.7
%Cost of sales


82,616



69.4
%


80,558



71.6
%


2,058



2.6
%Gross profit

$
36,396



30.6
%

$
32,005



28.4
%

$
4,391



13.7
%    34




---



##### Table of Contents



Operating
    Expenses
    March 31,


% of


March 31,


% of


$


%2010


Net Sales


2009


Net Sales


Change


ChangeSales and marketing

$
11,452



9.6
%

$
13,216



11.7
%

$
(1,764
)


(13.3
)%General and administrative


12,343



10.4
%


14,968



13.3
%


(2,625
)


(17.5
)%Research and development


2,657



2.2
%


1,076



1.0
%


1,581



146.9
%Goodwill impairment







%


27,887



24.8



(27,887
)


(100.0
)%Amortization of intangibles


1,758



1.5
%


2,344



2.1
%


(586
)


(25.0
)%Total operating expenses

$
28,210



23.7
%

$
59,491



52.9
%

$
(31,281
)


(52.6
)%   Sales and Marketing Expenses.
  General and Administrative.
  Research and Development.
  Goodwill Impairment.
  Amortization of Intangibles.
 35




---



##### Table of Contents



Interest
    Expense, net, Foreign Exchange Loss and Other
    Income
    March 31,


% of


March 31,


% of


$


%2010


Net Sales


2009


Net Sales


Change


ChangeInterest expense, net

$
(2,235
)


1.8
%

$
(2,094
)


1.9
%

$
(141
)


6.8
%Foreign exchange loss

$
(270
)


0.2
%

$
(462
)


0.4
%

$
192



(41.6
)%Other income

$
252



0.2
%

$
361



0.3
%

$
(109
)


(30.2
)%     Provision
    for Income Taxes
    March 31,

Effective

March 31,

Effective

$

%2010

Tax Rate

2009

Tax Rate

Change

Change$1,470

24.8%

$2,933

(9.9)%

$(1,463)

(49.9)%     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
%    36




---



##### Table of Contents



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 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. 37




---



##### Table of Contents



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
      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
%  38




---



##### Table of Contents



Sales and Marketing Expenses.
  General and Administrative.
  Research and Development.
  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
%    39




---



##### Table of Contents



Recent
    Accounting Pronouncements
    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 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)

$
3,829


$
3,829


$



$




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


14,500







2,826



3,340



8,334Operating leases (see Note 12 of Notes to Consolidated
    Financial Statements)


4,734



1,493



2,734



507



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


442



302



140







Total

$
23,505


$
5,624


$
5,700


$
3,847


$
8,334    41




---



##### Table of Contents



EBITDA
    RECONCILIATION (Unaudited)
    Years Ended March 31,2010


2009


2008(In thousands of US dollars)Net income (loss)

$
4,463


$
(32,614
)

$
3,168Adjustments:Interest expense, net


2,235



2,094



1,156Income tax expense


1,470



2,933



2,744Depreciation and amortization


3,766



4,193



2,910EBITDA


11,934



(23,394
)


9,978Goodwill impairment






27,887



Adjusted EBITDA

$
11,934


$
4,493


$
9,978   Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Market
    Risk
    Foreign
    Currency Exchange Rate Risk
   42




---



##### 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).
 43




---



##### Table of Contents



Changes
    in Internal Controls over Financial Reporting
    Remediation
    of Significant Deficiencies
    Item 9B.
    Other
    Information   44




---



##### Table of Contents



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   45




---



##### Table of Contents



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules    Financial Statements
  page F-1.
  Financial Statement Schedules
    Exhibits Regulation S-K)
    2
.1

Stock Purchase Agreement dated as of May 28, 2010, by and
    between Mad Catz Interactive, Inc., Mad Catz, Inc., Tritton
    Technologies Inc. and the Stockholders of Tritton Technologies
    Inc. 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 1934.3
.1(1)

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

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

Amendment to By-Law No. 2.10
.1(4)

Guarantee dated September 25, 2000, by 1328158 Ontario Inc. in
    favor of Congress Financial Corporation (Canada).10
.2(4)

General Security Agreement dated September 25, 2000, by Mad
    Catz, Inc. and FX Unlimited, Inc. in favor of Congress Financial
    Corporation (Central).10
.3(4)

Guarantee dated September 25, 2000, by Mad Catz, Inc. in favor
    of Congress Financial Corporation (Central).10
.4(5)

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(5)*

Amended and Restated Incentive Stock Option Plan of Mad Catz
    Interactive, Inc.10
.6(5)*

Form of Incentive Stock Option Plan.10
.7(6)*

Employment Agreement dated May 18, 2000, by and between Mad
    Catz, Inc. and Darren Richardson.10
.8(7)*

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(8)

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(9)*

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

Mad Catz Interactive, Inc. Stock Option Plan  200710
.12(10)*

Stock Option Agreement under the Mad Catz Interactive, Inc.
    Stock Option Plan  200710
.13(11)

Consideration Loan Note Instrument dated November 20, 2007, by
    Mad Catz Interactive, Inc. in favor of the Noteholders named
    therein.10
.14(11)

First Amending Agreement dated as of November 20, 2007, by and
    between Mad Catz, Inc. and Wachovia Capital Finance Corporation
    (Central). 46




---



##### Table of Contents



10
.15(11)

Pledge and Security Agreement dated November 20, 2007, by
    Winkler Atlantic Holdings Limited in favor of Wachovia Capital
    Finance Corporation (Central).10
.16(11)

Guarantee dated November 20, 2007, by Saitek Industries Limited
    in favor of Wachovia Capital Finance Corporation (Central).10
.17(11)

General Security Agreement dated November 20, 2007, by Saitek
    Industries Limited in favor of Wachovia Capital Finance
    Corporation (Central).10
.18(12)*

Amendment to Employment Agreement dated December 31, 2008, by
    and between Mad Catz Interactive, Inc. and Darren Richardson.10
.19(12)*

Amendment to Employment Agreement dated December 31, 2008, by
    and between Mad Catz Interactive, Inc. and Stewart Halpern.10
.20(12)*

Director Compensation Table10
.21(12)

Waiver and Amendment Letter Agreement dated March 18, 2009, by
    and between Mad Catz, Inc. and Wachovia Capital Finance
    Corporation (Central).10
.22(12)

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(12)

General Security Agreement dated June 23, 2009, by Winkler
    Atlantic Holdings Limited in favor of and Wachovia Capital
    Finance Corporation (Central).10
.24(12)

Guarantee dated June 23, 2009, by Winkler Atlantic Holdings
    Limited in favor of Wachovia Capital Finance Corporation
    (Central).10
.25(12)

Negative Pledge Agreement dated June 23, 2009, by Saitek
    Elektronik Vertriebs Gmbh in favor of and Wachovia Capital
    Finance Corporation (Central).10
.26(12)

Guarantee dated June 23, 2009, by Saitek Elektronik Vertriebs
    Gmbh in favor of Wachovia Capital Finance Corporation (Central).10
.27(12)

First Amendment to Stock Pledge Agreement dated June 23, 2009,
    by and between Mad Catz, Inc. and Wachovia Capital Finance
    Corporation (Central).10
.28(12)

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.10
.29(13)

Xbox 360 Accessory License Agreement effective March 23, 2009,
    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 1934.21
.1

Subsidiaries of the Company.23
.1

Consent of KPMG 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
    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. 47




---



##### Table of Contents



(2)
    
    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.(3)
    
    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.(4)
    
    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.(5)
    
    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.(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, 2003 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, 2004 and incorporated herein by
    reference.(8)
    
    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.(9)
    
    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.(10)
    
    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.(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 for the fiscal
    year ended November 20, 2007 and incorporated herein by
    reference.(12)
    
    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, 2009 and incorporated herein by
    reference.(13)
    
    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 June 30, 2009 and incorporated
    herein by reference.*
    
    Denotes management contract or compensatory plan or arrangement. 48




---



##### 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 10, 2010/s/  Stewart
    HalpernStewart
    Halpern

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

June 10, 2010/s/  Thomas
    BrownThomas
    Brown

Director

June 10, 2010/s/  Robert
    MolyneuxRobert
    Molyneux

Director

June 10, 2010/s/  William
    WoodwardWilliam
    Woodward

Director

June 10, 2010  49




---



##### 



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, 2010 and 2009
  2010


2009(In thousands of U.S. dollars, except share data)ASSETSCurrent assets:Cash

$
2,245


$
2,890Accounts receivable, net of allowances of $4,848 and $5,926 at
    March 31, 2010 and 2009, respectively


14,620



15,524Other receivables


123



471Inventories


16,975



17,774Deferred tax assets


17



19Income tax receivable


21



759Prepaid expenses and other current assets


1,410



1,491Total current assets


35,411



38,928Deferred tax assets


766



484Other assets


626



362Property and equipment, net


3,452



2,242Intangible assets, net


2,828



5,118Goodwill


8,466



8,467Total assets

$
51,549


$
55,601LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Bank loan

$
3,829


$
13,272Accounts payable


11,871



13,528Accrued liabilities


7,988



5,929Note payable






847Income taxes payable


1,670



655Total current liabilities


25,358



34,231Other long-term liabilities


357



453Convertible notes payable


14,500



14,500Total liabilities


40,215



49,184Subsequent event (Note 16)Shareholders equity:Common stock, no par value, unlimited shares authorized;
    55,098,549 shares issued and outstanding at March 31,
    2010 and 2009


48,865



48,255Accumulated other comprehensive income (loss)


(55
)


101Accumulated deficit


(37,476
)


(41,939
)Total shareholders equity


11,334



6,417Total liabilities and shareholders equity

$
51,549


$
55,601    F-3




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated Statements of Operations
 Years Ended March 31, 2010, 2009 and 2008
  2010


2009


2008(In thousands of U.S. dollars, exceptshare and per share data)Net sales

$
119,012


$
112,563


$
87,737Cost of sales


82,616



80,558



58,841Gross profit


36,396



32,005



28,896Operating expenses:Sales and marketing


11,452



13,216



10,304General and administrative


12,343



14,968



11,004Research and development


2,657



1,076



1,516Goodwill impairment






27,887



Amortization of intangible assets


1,758



2,344



987Total operating expenses


28,210



59,491



23,811Operating income (loss)


8,186



(27,486
)


5,085Interest expense, net


(2,235
)


(2,094
)


(1,156
)Foreign exchange gain (loss), net


(270
)


(462
)


1,703Other income


252



361



280Income (loss) before income taxes


5,933



(29,681
)


5,912Income tax expense


(1,470
)


(2,933
)


(2,744
)Net income (loss)

$
4,463


$
(32,614
)

$
3,168Net income (loss) per share:Basic

$
0.08


$
(0.59
)

$
0.06Diluted

$
0.08


$
(0.59
)

$
0.06Number of shares used in per share computations:Basic


55,098,549



55,088,960



54,843,688Diluted


55,103,237



55,088,960



55,314,438    F-4




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss)
 Years Ended March 31, 2010, 2009 and 2008
  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, 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
)

$
6,417Stock-based compensation






610











610Comprehensive loss:Net income














4,463



4,463Foreign currency translation adjustment










(156
)






(156
)Total comprehensive income


















4,307Balance at March 31, 2010


55,098,549


$
48,865


$
(55
)

$
(37,476
)

$
11,334    F-5




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Consolidated Statements of Cash Flows
 Years Ended March 31, 2010, 2009 and 2008
  2010


2009


2008(In thousands of U.S. dollars)Cash flows from operating activities:Net income (loss)

$
4,463


$
(32,614
)

$
3,168Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


3,766



4,193



2,910Amortization of deferred financing fees


176



56



34Stock-based compensation


610



481



267Goodwill impairment






27,887



Loss on disposal of assets


89







Provision (benefit) for deferred income taxes


(550
)


2,657



1,489Changes in operating assets and liabilities, net of effects of
    Joytech and Saitek acquisitions in 2008:Accounts receivable


864



(2,388
)


7,465Other receivables


332



98



431Inventories


763



2,401



146Prepaid expenses and other current assets


77



(15
)


(472
)Other assets


53



(106
)


(147
)Accounts payable


(1,731
)


(3,127
)


(7,690
)Accrued liabilities


1,877



(1,443
)


(1,395
)Income taxes receivable/payable


1,933



(226
)


12Net cash provided by (used in) operating activities


12,722



(2,146
)


6,218Cash flows from investing activities:Purchases of property and equipment


(2,718
)


(1,403
)


(794
)Cash paid for Joytech acquisition










(2,983
)Cash paid for Saitek acquisition










(10,214
)Net cash used in investing activities


(2,718
)


(1,403
)


(13,991
)Cash flows from financing activities:Borrowings on bank loan


99,907



97,708



89,077Repayments on bank loan


(109,350
)


(95,906
)


(78,952
)Payment of financing fees


(496
)






(125
)Payment of Saitek completion note


(847
)






Proceeds from exercise of stock options






57



345Net cash provided by (used in) financing activities


(10,786
)


1,859



10,345Effects of foreign exchange on cash


137



(650
)


308Net increase (decrease) in cash


(645
)


(2,340
)


2,880Cash, beginning of year


2,890



5,230



2,350Cash, end of year

$
2,245


$
2,890


$
5,230Supplemental cash flow information:Income taxes paid

$
1,007


$
673


$
1,340Interest paid

$
2,243


$
822


$
809Supplemental disclosures of noncash investing and financing
    activities:Convertible notes payable issued in conjunction with Saitek
    acquisition

$



$



$
14,500Note payable issued






847



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










13,506Inventories










7,896Property and equipment










899Deferred tax assets






1,031



248Assumed liabilities










(13,553
)In process research and development










Intangible assets










8,132Goodwill






98



18,221Restructuring and transaction costs






282



2,910    F-6




---



##### 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
    Fair
    Value of Financial Instruments
   F-7




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  Revenue
    Recognition
  60-day
    Allowance
    for Doubtful Accounts and Other Allowances
      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    F-8




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  Intangible
    Assets
    Useful Life(Years)Trademarks


4 - 15Customer relationships


3 - 6Product lines


2 - 3Copyrights


5Website


4Other


1 - 3   Goodwill
        Impairment
    of Long-Lived Assets
   F-9




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    Royalties
    and Intellectual Property Licenses
      Advertising
    and Research and Development
    Income
    Taxes
      Foreign
    Currency Translation
   F-10




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
      Net
    Income (Loss) per Share
      Years Ended March 31,2010


2009


2008Basic weighted average common shares outstanding


55,098,549



55,088,960



54,843,688Effect of dilutive securities  options


4,688







470,750Diluted weighted average common and potential common shares
    outstanding


55,103,237



55,088,960



55,314,438     Stock-Based
    Compensation
       F-11




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  Comprehensive
    Income (Loss)
    Recently
    Adopted Accounting Pronouncements
           F-12




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
      2010-09, Amendments to Certain Recognition and Disclosure Requirements
      (3)
    Acquisitions  Saitek
   F-13




---



##### 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

$



$



$
   (4)
    Inventories    March 31,2010


2009Raw materials

$
1,546


$
949Finished goods


15,429



16,825Inventories

$
16,975


$
17,774   (5)
    Property
    and Equipment    March 31,2010


2009Molds

$
6,400


$
5,352Computer equipment and software


2,734



2,382Manufacturing and office equipment


1,013



854Furniture and fixtures


383



338Leasehold improvements


623



46511,153



9,391Less: Accumulated depreciation and amortization


(7,701
)


(7,149
)Property and equipment, net

$
3,452


$
2,242    F-14




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  (6)
    Intangible
    Assets and Goodwill    2010


2009Accumulated


Net Book


Net Book


Useful lifeCost


Amortization


Value


Value


(Years)Trademarks

$
5,472


$
4,445


$
1,027


$
1,751


4 - 15Customer relationships


3,199



1,415



1,784



2,338


3 - 6Product lines


3,194



3,187



7



1,003


2 - 3Other


110



100



10



26


1 - 3Intangible assets

$
11,975


$
9,147


$
2,828


$
5,118       FutureAmortizationYear ending March 31, 2011


667Year ending March 31, 2012


602Year ending March 31, 2013


595Year ending March 31, 2014


395Year ending March 31, 2015


83Thereafter


4862,828     Balance 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

$
8,467Translation adjustment


(1
)Balance at March 31, 2010

$
8,466Accumulated goodwill impairment losses at March 31, 2010

$
(27,887
)   (7)
    Bank
    Loan   F-15




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    (8)
    Convertible
    Notes Payable      Year ending March 31:2011

$
2012


1,2622013


1,5642014


1,6842015


1,656Thereafter


8,334$
14,500   (9)
    Saitek
    Completion Note    (10)
    Stock-Based
    Compensation   F-16




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
        2010


2009


2008Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseOptions


Price


Options


Price


Options


PriceOutstanding, beginning of year


7,396,275


$
0.58



3,835,334


$
0.80



3,605,500


$
0.54Granted


725,000



0.33



3,925,000



0.46



1,425,000



1.18Exercised










(125,000
)


0.46



(729,166
)


0.49Expired/canceled


(545,375
)


0.87



(239,059
)


0.75



(466,000
)


0.97Outstanding, end of year


7,575,900


$
0.58



7,396,275


$
0.58



3,835,334


$
0.80Exercisable, end of year


4,052,873


$
0.63



2,535,002


$
0.64



1,978,386


$
0.66Vested and expected to vest, end of year


7,329,288


$
0.58



7,055,986


$
0.63



2,851,838


$
0.78        F-17




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    2010

2009

2008Assumptions:Expected volatility

85%

74% - 75%

74% - 75%Risk-free interest rate

2.47%

2.18% - 3.11%

4.37% - 4.78%Forfeitures

7%

5%

7%Dividend yield





Expected term

5 years

1 - 5 years

1 - 4 years     (11)
    Income
    Taxes    Years Ended March 31,2010


2009


2008Income (loss) before income taxes:Domestic (U.S.)

$
777


$
(16,563
)

$
3,987Foreign


5,156



(13,118
)


1,925$
5,933


$
(29,681
)

$
5,912Income tax expense (benefit):Current:Federal (U.S.)

$
7


$
(630
)

$
511State (U.S.)


204



56



27Foreign


1,809



850



717Total current


2,020



276



1,255Deferred:Federal (U.S.)






2,467



884State (U.S.)






459



538Foreign


(550
)


(269
)


67Total deferred


(550
)


2,657



1,489Income tax expense

$
1,470


$
2,933


$
2,744  F-18




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
    Years Ended March 31,2010


2009


2008Income tax expense (benefit) using the Companys Canadian
    statutory tax rates

$
1,940


$
(9,906
)

$
2,096Income taxed in jurisdictions other than Canada


(823
)


1,468



(174
)Goodwill impairment






7,511



Change in valuation allowance


76



3,665



1,054Other


277



195



(232
)$
1,470


$
2,933


$
2,744     March 31,2010


2009Deferred tax assets:Tax loss carryforwards

$
10,300


$
10,509Difference between book and tax basis of inventories


691



789Difference between book and tax basis of accounts receivables


394



424Deferred fees not currently deductible


100



86Accruals and reserves not currently deductible


845



552Difference between book and tax basis of intangible assets,
    property & equipment


1,090



814Unclaimed depreciation on property and equipment


242



278Goodwill and intangibles


500



Unclaimed scientific research expenditures


226



184Other


152



20514,540



13,841Less valuation allowance


(13,236
)


(12,829
)Net deferred tax assets

$
1,304


$
1,012Deferred tax liabilities:Federal liability on state tax loss

$
235


$
231Prepaid liabilities


139



24Goodwill and intangibles


147



254Net deferred tax liabilities

$
521


$
509Net deferred tax assets

$
783


$
503    F-19




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
                 F-20




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
      (12)
    Commitments
    and Contingencies  Leases
    Year ending March 31:2011

$
1,4932012


1,2572013


8842014


5932015


406Thereafter


101$
4,734   Royalty
    and License Agreements
    Year ending March 31:2011

$
3022012


140$
442   (13)
    Employee
    Savings Plan   F-21




---



##### Table of Contents



MAD CATZ
    INTERACTIVE, INC.
  Notes to Consolidated Financial
    Statements  (Continued)
  (14)
    Geographic
    and Product Line Data    2010


2009


2008Net sales:United States

$
63,223


$
65,003


$
52,129Europe


49,005



41,442



31,257Canada


3,109



1,974



2,806Other countries


3,675



4,144



1,545$
119,012


$
112,563


$
87,737       2010


2009Property and equipment:United States

$
787


$
394Europe


160



115Other countries


2,505



1,317$
3,452


$
1,826     Year Ended March 31,2010


2009Controllers

$
36,476


$
29,124Specialty Controllers


31,557



20,723Accessories


30,865



58,982Audio


19,321



8,492PC


10,167



7,399Games


1,792



1,225All others


746



2,124Total

$
130,924


$
128,069  F-22




---



##### 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


Mar 31(Amounts in thousands, except per share data)Fiscal 2010 Consolidated:Net sales

$
22,378


$
21,603


$
48,763


$
26,268Gross profit


6,623



6,757



15,941



7,075Operating income (loss)


(24
)


(178
)


7,644



744Net income (loss)


(996
)


(971
)


5,592



838Net income (loss) per share  basic


(0.02
)


(0.02
)


0.10



0.02Net income (loss) per share  diluted


(0.02
)


(0.02
)


0.09



0.02Common stock price per share:High


0.47



0.50



0.54



0.57Low


0.22



0.24



0.32



0.33Fiscal 2009 Consolidated:Net sales

$
23,226


$
25,750


$
40,817


$
22,770Gross profit


8,194



7,723



10,548



5,540Operating income (loss)


(884
)


(819
)


(26,419
)


636Net loss


(777
)


(1,239
)


(26,909
)


(3,689
)Net loss per share  basic


(0.01
)


(0.02
)


(0.49
)


(0.07
)Net loss per share  diluted


(0.01
)


(0.02
)


(0.49
)


(0.07
)Common stock price per share:High


0.81



0.80



0.61



0.45Low


0.55



0.45



0.25



0.15   (16)
    Subsequent
    Event       F-23