##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File No. 001-14944
 
 MAD CATZ INTERACTIVE, INC.
 (Exact name of Registrant as specified in its charter)
 
 Canada
(State or other jurisdiction of 
incorporation or organization)
    
    Not Applicable
(I.R.S. Employer
Identification No.)7480 Mission Valley Road, Suite 101
San Diego, California
(Address of principal executive offices)
    
    92108
(Zip Code)
 (619) 683-9830
(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




---



##### 



MAD CATZ INTERACTIVE, INC.
FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2010
 TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets as of September 30, 2010 and March 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    9Item 4. Controls and Procedures
    
    
    16PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1a. Risk Factors
    
    
    17Item 4. Removed and ReservedItem 6. Exhibits
    
    
    18SIGNATURES
    
    
    18EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 MAD CATZ INTERACTIVE, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    March 31,2010
    
    
    2010AssetsCurrent assets:Cash
    
    $
    3,686
    
    
    $
    2,245Accounts receivable, net
    
    
    28,497
    
    
    
    14,620Other receivables
    
    
    2,005
    
    
    
    123Income tax receivable
    
    
    22
    
    
    
    21Inventories
    
    
    51,609
    
    
    
    16,975Deferred tax assets
    
    
    17
    
    
    
    17Prepaid expenses and other current assets
    
    
    1,619
    
    
    
    1,410Total current assets
    
    
    87,455
    
    
    
    35,411Deferred tax assets
    
    
    717
    
    
    
    766Other assets
    
    
    633
    
    
    
    626Property and equipment, net
    
    
    3,680
    
    
    
    3,452Intangible assets, net
    
    
    6,071
    
    
    
    2,828Goodwill
    
    
    11,404
    
    
    
    8,466Total assets
    
    $
    109,960
    
    
    $
    51,549Liabilities and Shareholders EquityCurrent liabilities:Bank loan
    
    $
    28,262
    
    
    $
    3,829Accounts payable
    
    
    38,434
    
    
    
    11,871Accrued liabilities
    
    
    8,747
    
    
    
    7,988Note payable, current
    
    
    525
    
    
    
    Contingent consideration, current
    
    
    288
    
    
    
    Income taxes payable
    
    
    2,229
    
    
    
    1,670Total current liabilities
    
    
    78,485
    
    
    
    25,358Convertible notes payable
    
    
    14,500
    
    
    
    14,500Contingent consideration
    
    
    3,408
    
    
    
    Other long-term liabilities
    
    
    1,707
    
    
    
    357Total liabilities
    
    
    98,100
    
    
    
    40,215Shareholders equity:Common stock, no par value, unlimited shares authorized; 55,098,549 shares issued and outstanding at September 30, 2010 and March 31, 2010
    
    
    49,195
    
    
    
    48,865Accumulated other comprehensive income (loss)
    
    
    389
    
    
    
    (55
    )Accumulated deficit
    
    
    (37,724
    )
    
    
    (37,476
    )Total shareholders equity
    
    
    11,860
    
    
    
    11,334Total liabilities and shareholders equity
    
    $
    109,960
    
    
    $
    51,549
  3




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##### Table of Contents



MAD CATZ INTERACTIVE, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    37,409
    
    
    $
    21,603
    
    
    $
    57,320
    
    
    $
    43,981Cost of sales
    
    
    26,904
    
    
    
    14,846
    
    
    
    40,873
    
    
    
    30,571Gross profit
    
    
    10,505
    
    
    
    6,757
    
    
    
    16,447
    
    
    
    13,410Operating expenses:Sales and marketing
    
    
    3,562
    
    
    
    2,609
    
    
    
    6,047
    
    
    
    5,051General and administrative
    
    
    3,295
    
    
    
    3,045
    
    
    
    6,518
    
    
    
    6,097Research and development
    
    
    950
    
    
    
    691
    
    
    
    1,691
    
    
    
    1,292Acquisition related items
    
    
    546
    
    
    
    
    
    
    
    606
    
    
    
    Amortization of intangible assets
    
    
    224
    
    
    
    590
    
    
    
    465
    
    
    
    1,172Total operating expenses
    
    
    8,577
    
    
    
    6,935
    
    
    
    15,327
    
    
    
    13,612Operating income (loss)
    
    
    1,928
    
    
    
    (178
    )
    
    
    1,120
    
    
    
    (202
    )Interest expense, net
    
    
    (713
    )
    
    
    (525
    )
    
    
    (1,238
    )
    
    
    (993
    )Foreign exchange gain (loss), net
    
    
    909
    
    
    
    (106
    )
    
    
    695
    
    
    
    (419
    )Other income
    
    
    117
    
    
    
    65
    
    
    
    177
    
    
    
    96Income (loss) before income taxes
    
    
    2,241
    
    
    
    (744
    )
    
    
    754
    
    
    
    (1,518
    )Income tax expense
    
    
    1,113
    
    
    
    227
    
    
    
    1,002
    
    
    
    449Net income (loss)
    
    $
    1,128
    
    
    $
    (971
    )
    
    $
    (248
    )
    
    $
    (1,967
    )Basic net income (loss) per share
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    (0.00
    )
    
    $
    (0.04
    )Diluted net income (loss) per share
    
    $
    0.02
    
    
    $
    (0.02
    )
    
    $
    (0.00
    )
    
    $
    (0.04
    )Weighted average shares  basic
    
    
    55,098,549
    
    
    
    55,098,549
    
    
    
    55,098,549
    
    
    
    55,098,549Weighted average shares  diluted
    
    
    55,116,359
    
    
    
    55,098,549
    
    
    
    55,098,549
    
    
    
    55,098,549
  4




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##### Table of Contents



MAD CATZ INTERACTIVE, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedSeptember 30,2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (248
    )
    
    $
    (1,967
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    1,346
    
    
    
    2,084Amortization of deferred financing fees
    
    
    74
    
    
    
    90Provision for deferred income taxes
    
    
    49
    
    
    
    117Loss on disposal or sale of assets
    
    
    1
    
    
    
    63Stock-based compensation
    
    
    330
    
    
    
    308Changes in operating assets and liabilities, net of effects from acquisition:Accounts receivable
    
    
    (13,324
    )
    
    
    3,273Other receivables
    
    
    (1,873
    )
    
    
    71Inventories
    
    
    (32,389
    )
    
    
    (15,572
    )Prepaid expenses and other current assets
    
    
    (124
    )
    
    
    (253
    )Other assets
    
    
    (37
    )
    
    
    (206
    )Accounts payable
    
    
    24,097
    
    
    
    9,672Accrued liabilities
    
    
    1,048
    
    
    
    1,181Income taxes receivable/payable
    
    
    561
    
    
    
    (150
    )Net cash used in operating activities
    
    
    (20,489
    )
    
    
    (1,289
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,020
    )
    
    
    (1,422
    )Cash paid for acquisition, net of cash received
    
    
    (1,189
    )
    
    
    Net cash used in investing activities
    
    
    (2,209
    )
    
    
    (1,422
    )Cash flows from financing activities:Payment of financing fees
    
    
    (100
    )
    
    
    (200
    )Repayments on notes payable
    
    
    (279
    )
    
    
    Repayments on bank loan
    
    
    (39,157
    )
    
    
    (41,070
    )Borrowings on bank loan
    
    
    63,592
    
    
    
    47,092Net cash provided by financing activities
    
    
    24,056
    
    
    
    5,822Effects of foreign exchange on cash
    
    
    83
    
    
    
    297Net increase in cash
    
    
    1,441
    
    
    
    3,408Cash, beginning of period
    
    
    2,245
    
    
    
    2,890Cash, end of period
    
    $
    3,686
    
    
    $
    6,298Supplemental cash flow information:Income taxes paid
    
    $
    453
    
    
    $
    642Interest paid
    
    $
    441
    
    
    $
    426Supplemental disclosure of non-cash investing and financing activities:Fair value of assets acquired in acquisition, net of cash received
    
    
    2,772
    
    
    
    Goodwill
    
    
    2,928
    
    
    
    Intangible assets
    
    
    3,700
    
    
    
    Liabilities assumed in acquisition
    
    
    (4,155
    )
    
    
    Notes payable assumed in acquisition
    
    
    (803
    )
    
    
    Contingent consideration liability, net of $947 working capital adjustment
    
    
    (3,253
    )
    
    
    Net cash paid for acquisition
    
    $
    1,189
    
    
    $
    
  5




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##### Table of Contents



MAD CATZ INTERACTIVE, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 (1) Basis of Presentation
    (2) Acquisition
  6




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##### Table of Contents



Consideration:Cash paid
    
    
    1,350Preliminary working capital adjustment, net of holdback
    
    
    (947
    )Fair value of contingent consideration
    
    
    4,200Total purchase price
    
    
    4,603
  Recognized amounts of identifiable assets acquired and liabilities assumedNet working capital
    
    
    (731
    )Property, plant and equipment and other assets
    
    
    120Deferred tax liability
    
    
    (1,413
    )Goodwill
    
    
    2,927Other intangible assets
    
    
    3,700Total purchase price
    
    
    4,603
  Customer relationships
    
    
    900Trademark and trade names
    
    
    2,800
      7




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##### Table of Contents



Changes in goodwill
  Goodwill balance as of March 31, 2010
    
    
    8,466Changes due to foreign currency translation
    
    
    11Increase due to Tritton acquisition
    
    
    2,927Goodwill balance as of September 30, 2010
    
    
    11,404
  (3) Notes Payable
  (4) Bank Loan
  (5) Inventories
  September 30,
    
    
    March 31,2010
    
    
    2010Raw materials
    
    $
    3,931
    
    
    $
    1,546Finished goods
    
    
    47,678
    
    
    
    15,429Inventories
    
    $
    51,609
    
    
    $
    16,975
 (6) Comprehensive Income (Loss)
  Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss)
    
    $
    1,128
    
    
    $
    (971
    )
    
    $
    (248
    )
    
    $
    (1,967
    )Foreign currency translation adjustment
    
    
    876
    
    
    
    88
    
    
    
    444
    
    
    
    1,412Comprehensive income (loss)
    
    $
    2,004
    
    
    $
    (883
    )
    
    $
    196
    
    
    $
    (555
    )
  (7) Basic and Diluted Net Earnings per Share
   8




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##### Table of Contents



(8) Geographic Data
  Three months ended
    
    
    Six months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales:United States
    
    $
    23,971
    
    
    $
    11,531
    
    
    $
    34,403
    
    
    $
    25,141Europe
    
    
    12,235
    
    
    
    8,504
    
    
    
    20,579
    
    
    
    15,829Canada
    
    
    434
    
    
    
    500
    
    
    
    803
    
    
    
    1,357Other countries
    
    
    769
    
    
    
    1,068
    
    
    
    1,535
    
    
    
    1,654$
    37,409
    
    
    $
    21,603
    
    
    $
    57,320
    
    
    $
    43,981
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Unless the context otherwise requires, all references in this section to the Company, we,
us or our refer, collectively, to Mad Catz Interactive, Inc. and all of its subsidiaries, and
all references in this section to Mad Catz refer to Mad Catz Interactive, Inc.
 This section contains forward-looking statements and forward looking information (collectively
forward-looking statements) as defined in applicable securities legislation 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 under
Forward-looking Statements herein and in Item 1A. Risk Factors in our Annual Report on Form
10-K for the fiscal year ended March 31, 2010 and in Part II Other Information  Item 1A. Risk
Factors in this Quarterly Report on Form 10-Q . The following discussion should be read in
conjunction with our condensed consolidated financial statements and related notes included in this
Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended March
31, 2010.
 Overview
 Our Business
  Seasonality and Fluctuation of Sales
  Potential Fluctuations in Foreign Currency
  Critical Accounting Policies
  9




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##### Table of Contents



RESULTS OF OPERATIONS
 Net Sales
  Three months ended September 30,
    
    
    $
    
    
    %2010
    
    
    %of total
    
    
    2009
    
    
    %of total
    
    
    Change
    
    
    ChangeUnited States
    
    $
    23,971
    
    
    
    64
    %
    
    $
    11,531
    
    
    
    54
    %
    
    $
    12,440
    
    
    
    108
    %Europe
    
    
    12,235
    
    
    
    33
    %
    
    
    8,504
    
    
    
    39
    %
    
    
    3,731
    
    
    
    44
    %Canada
    
    
    434
    
    
    
    1
    %
    
    
    500
    
    
    
    2
    %
    
    
    (66
    )
    
    
    (13
    )%Other countries
    
    
    769
    
    
    
    2
    %
    
    
    1,068
    
    
    
    5
    %
    
    
    (299
    )
    
    
    (28
    )%Consolidated net sales
    
    $
    37,409
    
    
    
    100
    %
    
    $
    21,603
    
    
    
    100
    %
    
    $
    15,806
    
    
    
    73
    %
 Six months ended September 30,
    
    
    $
    
    
    %2010
    
    
    %of total
    
    
    2009
    
    
    %of total
    
    
    Change
    
    
    ChangeUnited States
    
    $
    34,403
    
    
    
    60
    %
    
    $
    25,141
    
    
    
    57
    %
    
    $
    9,262
    
    
    
    37
    %Europe
    
    
    20,579
    
    
    
    36
    %
    
    
    15,829
    
    
    
    36
    %
    
    
    4,750
    
    
    
    30
    %Canada
    
    
    803
    
    
    
    1
    %
    
    
    1,357
    
    
    
    3
    %
    
    
    (554
    )
    
    
    (41
    )%Other countries
    
    
    1,535
    
    
    
    3
    %
    
    
    1,654
    
    
    
    4
    %
    
    
    (119
    )
    
    
    (7
    )%Consolidated net sales
    
    $
    57,320
    
    
    
    100
    %
    
    $
    43,981
    
    
    
    100
    %
    
    $
    13,339
    
    
    
    30
    %
 Rock Band 3
 Street Fighter IV
  Three months ended
    
    
    Six months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Xbox 360
    
    
    37
    %
    
    
    26
    %
    
    
    34
    %
    
    
    29
    %PC
    
    
    17
    %
    
    
    32
    %
    
    
    17
    %
    
    
    28
    %PlayStation 3
    
    
    12
    %
    
    
    11
    %
    
    
    16
    %
    
    
    15
    %Wii
    
    
    11
    %
    
    
    11
    %
    
    
    11
    %
    
    
    10
    %Handheld Consoles(a)
    
    
    4
    %
    
    
    5
    %
    
    
    3
    %
    
    
    6
    %PlayStation 2
    
    
    1
    %
    
    
    2
    %
    
    
    1
    %
    
    
    2
    %GameCube
    
    
    1
    %
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %All others
    
    
    17
    %
    
    
    11
    %
    
    
    16
    %
    
    
    8
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 
 (a)
    
    Handheld consoles include Sony PSP and Nintendo Game
Boy Advance, Game Boy Advance SP, DS, DS Lite, DSi and
Micro. 10




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##### Table of Contents



Three months ended
    
    
    Six months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Audio
    
    
    27
    %
    
    
    9
    %
    
    
    29
    %
    
    
    9
    %Specialty controllers
    
    
    23
    %
    
    
    35
    %
    
    
    16
    %
    
    
    38
    %Games
    
    
    15
    %
    
    
    2
    %
    
    
    17
    %
    
    
    2
    %Accessories
    
    
    14
    %
    
    
    23
    %
    
    
    15
    %
    
    
    23
    %Controllers
    
    
    12
    %
    
    
    22
    %
    
    
    15
    %
    
    
    19
    %Personal computer products
    
    
    8
    %
    
    
    9
    %
    
    
    7
    %
    
    
    9
    %All others
    
    
    1
    %
    
    
    
    %
    
    
    1
    %
    
    
    
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Gross Profit
   Three months ended September 30,% of Net
    
    
    
    
    
    
    % of Net
    
    
    $
    
    
    %2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    Change
    
    
    ChangeNet sales
    
    $
    37,409
    
    
    
    100.0
    %
    
    $
    21,603
    
    
    
    100.0
    %
    
    $
    15,806
    
    
    
    73.2
    %Cost of sales
    
    
    26,904
    
    
    
    71.9
    %
    
    
    14,846
    
    
    
    68.7
    %
    
    
    12,058
    
    
    
    81.2
    %Gross profit
    
    $
    10,505
    
    
    
    28.1
    %
    
    $
    6,757
    
    
    
    31.3
    %
    
    $
    3,748
    
    
    
    55.5
    %
 Six months ended September 30,% of Net
    
    
    
    
    
    
    % of Net
    
    
    $
    
    
    %2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    Change
    
    
    ChangeNet sales
    
    $
    57,320
    
    
    
    100.0
    %
    
    $
    43,981
    
    
    
    100.0
    %
    
    $
    13,339
    
    
    
    30.3
    %Cost of sales
    
    
    40,873
    
    
    
    71.3
    %
    
    
    30,571
    
    
    
    69.5
    %
    
    
    10,302
    
    
    
    33.7
    %Gross profit
    
    $
    16,447
    
    
    
    28.7
    %
    
    $
    13,410
    
    
    
    30.5
    %
    
    $
    3,037
    
    
    
    22.6
    %
  Operating Expenses
  Three months ended September 30,% of Net
    
    
    
    
    
    
    % of Net
    
    
    $
    
    
    %2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    Change
    
    
    ChangeSales and marketing
    
    $
    3,562
    
    
    
    9.5
    %
    
    $
    2,609
    
    
    
    12.1
    %
    
    $
    953
    
    
    
    36.5
    %General and administrative
    
    
    3,295
    
    
    
    8.8
    %
    
    
    3,045
    
    
    
    14.1
    %
    
    
    250
    
    
    
    8.2
    %Research and development
    
    
    950
    
    
    
    2.5
    %
    
    
    691
    
    
    
    3.2
    %
    
    
    259
    
    
    
    37.5
    %Acquisition related items
    
    
    546
    
    
    
    1.5
    %
    
    
    
    
    
    
    
    %
    
    
    546
    
    
    
    100
    %Amortization
    
    
    224
    
    
    
    0.6
    %
    
    
    590
    
    
    
    2.7
    %
    
    
    (366
    )
    
    
    (62.0
    )%Total operating expenses
    
    $
    8,577
    
    
    
    22.9
    %
    
    $
    6,935
    
    
    
    32.1
    %
    
    $
    1,642
    
    
    
    23.7
    %
 11




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##### Table of Contents



Six months ended September 30,% of Net
    
    
    
    
    
    
    % of Net
    
    
    $
    
    
    %2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    Change
    
    
    ChangeSales and marketing
    
    $
    6,047
    
    
    
    10.5
    %
    
    $
    5,051
    
    
    
    11.5
    %
    
    $
    996
    
    
    
    19.7
    %General and administrative
    
    
    6,518
    
    
    
    11.4
    %
    
    
    6,097
    
    
    
    13.9
    %
    
    
    421
    
    
    
    6.9
    %Research and development
    
    
    1,691
    
    
    
    2.9
    %
    
    
    1,292
    
    
    
    2.9
    %
    
    
    399
    
    
    
    30.9
    %Acquisition related items
    
    
    606
    
    
    
    1.1
    %
    
    
    
    
    
    
    
    %
    
    
    606
    
    
    
    100Amortization
    
    
    465
    
    
    
    0.8
    %
    
    
    1,172
    
    
    
    2.7
    %
    
    
    (707
    )
    
    
    (60.3
    )%Total operating expenses
    
    $
    15,327
    
    
    
    26.7
    %
    
    $
    13,612
    
    
    
    30.9
    %
    
    $
    1,715
    
    
    
    12.6
    %
 Sales and Marketing.
 General and Administrative.
 Research and Development.
 Amortization.
 Interest Expense, Foreign Exchange Gain(Loss) and Other Income
  Three months ended September 30,% of Net
    
    
    
    
    
    
    % of Net
    
    
    $
    
    
    %2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    Change
    
    
    ChangeInterest expense
    
    $
    (713
    )
    
    
    1.9
    %
    
    $
    (525
    )
    
    
    2.4
    %
    
    $
    (188
    )
    
    
    35.8
    %Foreign exchange gain (loss)
    
    $
    909
    
    
    
    2.4
    %
    
    $
    (106
    )
    
    
    0.5
    %
    
    $
    1,015
    
    
    
    957.5
    %Other income
    
    $
    117
    
    
    
    0.3
    %
    
    $
    65
    
    
    
    0.3
    %
    
    $
    52
    
    
    
    80.0
    %
 Six months ended September 30,% of Net
    
    
    
    
    
    
    % of Net
    
    
    $
    
    
    %2010
    
    
    Sales
    
    
    2009
    
    
    Sales
    
    
    Change
    
    
    ChangeInterest expense
    
    $
    (1,238
    )
    
    
    2.2
    %
    
    $
    (993
    )
    
    
    2.3
    %
    
    $
    (245
    )
    
    
    24.7
    %Foreign exchange gain (loss)
    
    $
    695
    
    
    
    1.2
    %
    
    $
    (419
    )
    
    
    1.0
    %
    
    $
    1,114
    
    
    
    265.9
    %Other income
    
    $
    177
    
    
    
    0.3
    %
    
    $
    96
    
    
    
    0.2
    %
    
    $
    81
    
    
    
    84.4
    %
   12




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##### Table of Contents



Income Tax Expense (Benefit)
  Three months ended September 30,Effective
    
    
    
    
    
    
    Effective
    
    
    $
    
    
    %2010
    
    
    Tax Rate
    
    
    2009
    
    
    Tax Rate
    
    
    Change
    
    
    ChangeIncome tax expense
    
    $
    1,113
    
    
    
    49.7
    %
    
    $
    227
    
    
    
    (30.5
    )%
    
    $
    886
    
    
    
    390.3
    %
 Six months ended September 30,Effective
    
    
    
    
    
    
    Effective
    
    
    $
    
    
    %2010
    
    
    Tax Rate
    
    
    2009
    
    
    Tax Rate
    
    
    Change
    
    
    ChangeIncome tax expense
    
    $
    1,002
    
    
    
    132.9
    %
    
    $
    449
    
    
    
    (29.6
    )%
    
    $
    553
    
    
    
    123.2
    %
   Liquidity and Capital Resources
 Sources of Liquidity
 As of and for thesix months endedSeptember 30,(in thousands)
    
    2010
    
    
    2009
    
    
    ChangeCash
    
    $
    3,686
    
    
    $
    6,298
    
    
    $
    (2,612
    )Percentage of total assets
    
    
    3.4
    %
    
    
    8.8
    %Cash used in operating activities
    
    $
    (20,489
    )
    
    $
    (1,289
    )
    
    $
    (19,200
    )Cash used in investing activities
    
    
    (2,209
    )
    
    
    (1,422
    )
    
    
    (787
    )Cash provided by financing activities
    
    
    24,056
    
    
    
    5,822
    
    
    
    18,234Effects of foreign exchange on cash
    
    
    83
    
    
    
    297
    
    
    
    (214
    )Net increase (decrease) in cash
    
    $
    1,441
    
    
    $
    3,408
    
    
    
    (1,967
    )
  Cash Flows from Operating Activities
   13




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##### Table of Contents



Cash Flows from Investing Activities
  Cash Flows from Financing Activities
     Contractual Obligations and Commitments
   14




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##### Table of Contents



EBITDA
  Three months ended
    
    
    Six months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income (loss)
    
    $
    1,128
    
    
    $
    (971
    )
    
    $
    (248
    )
    
    $
    (1,967
    )Adjustments:Interest expense
    
    
    713
    
    
    
    525
    
    
    
    1,238
    
    
    
    993Income tax expense
    
    
    1,113
    
    
    
    227
    
    
    
    1,002
    
    
    
    449Depreciation and amortization
    
    
    680
    
    
    
    1,048
    
    
    
    1,346
    
    
    
    2,084EBITDA
    
    $
    3,634
    
    
    $
    829
    
    
    $
    3,338
    
    
    $
    1,559
 Forward-Looking Statements
    15




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  16




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  17




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##### Table of Contents



Item 6. Exhibits
 10.1
    
    First Amending Agreement, dated as of September 30, 2010, between Mad Catz, Inc. and Wells Fargo Capital
Finance, LLC, successor by merger to Wachovia Capital Finance
Corporation (Central). (Filed as an exhibit to the Registrants
Current Report on Form 8-K filed with the Securities and Exchange
Commission on October 6, 2010 and incorporated herein by reference.)10.2
    
    Mad Catz Interactive, Inc. Stock
Option Plan  2007, as amended and restated. (Filed as an exhibit to the Registrants
Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 16, 2010 and incorporated herein by reference.)31.1
    
    Certification of Registrants Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Registrants Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification 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. This certification is being furnished solely to accompany this
Quarterly Report on Form 10-Q and is not being filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, and is not to be incorporated by reference into any filing of the Company.32.2
    
    Certification 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. This certification is being furnished solely to accompany this
Quarterly Report on Form 10-Q and is not being filed for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, and is not to be incorporated by reference into any filing of the Company.
 
   MAD CATZ INTERACTIVE, INC.November 4, 2010
    /s/  Darren RichardsonDarren RichardsonPresident and Chief Executive OfficerNovember 4, 2010
    /s/  Allyson VanderfordAllyson VanderfordInterim Chief Financial Officer 18