Mad Catz reported net sales for the quarter ended June 30, 2009 of $22.4 million, a decrease of 3.7% from record first quarter revenue of $23.2 million in fiscal 2009. While net sales in the company's largest market

-- North America -- grew by 12.5%, the stronger U.S. Dollar, which reduced the value of British Pound ("GBP") and Euro-denominated sales when translated into U.S. dollars, and weaker sales in certain markets caused European sales to decline by 27.6%. Due primarily to this currency translation impact, gross profit decreased 22.4% to $6.4 million from $8.2 million in the same quarter of the prior year, leading to a gross profit margin for the fiscal 2010 first quarter of 28.4%, compared with 35.3% in the year-ago quarter.

Total operating expenses in the fiscal 2010 first quarter decreased 29.7% to $6.4 million, resulting in approximately a break-even operating performance compared to an operating loss of $0.9 million a year ago. Foreign exchange losses for the first quarter of fiscal 2010 totaled $0.3 million compared to a foreign exchange loss of $0.1 million for the prior fiscal first quarter. After income tax expense of $0.2 million, Mad Catz reported a net loss of $1.0 million in the quarter ended June 30, 2009, or a loss of $0.02 per diluted share, compared to a net loss of $0.8 million, or $0.01 per diluted share, after a tax benefit of $0.5 million in the first quarter of the prior fiscal year.

EBITDA, a non-GAAP measure (defined as earnings before interest, taxes, depreciation and amortization), rose 158% to a first fiscal quarter record $0.7 million, compared with EBITDA of $0.3 million in the comparable period of fiscal 2009.

Commenting on the quarter, Darren Richardson, President and Chief Executive Officer of Mad Catz, stated, "Fiscal 2010 first quarter revenue results represent a solid performance in the face of challenging economic and industry environments. We are also pleased that we are delivering on our goal of significantly reducing our operating expenses."

"In addition, we continue to deliver on our goal of leveraging our new product capabilities to increase the flow of new products while adding exciting new product licenses. Noteworthy among these was the recent launch of our first new controller under a wireless license with Microsoft for the Rock Band franchise, a bass guitar controller modeled after the Fender American Precision Bass."

Mr. Richardson added, "The first fiscal quarter of 2010 demonstrates our continued focus on diversifying our product offerings across all platforms and categories. Our growing lineup of Xbox 360 products and added retail placements were contributing factors in shifting the revenue mix, with Xbox 360 sales accounting for 32% of total gross sales in the quarter compared to 11% of total gross sales in the first fiscal quarter of 2009. Our growth on this platform was fueled in part by the increased available supply of our critically-acclaimed Street Fighter IV Fight Sticks and Fight Pads resulting in incremental sales of these products during the quarter. Furthermore, our core console videogame products such as our Xbox 360 control pad and a growing assortment of new products helped grow current generation console product sales to 59% of total gross sales compared to 40% in the year ago quarter."

"As important to our initiatives to bring a growing range of products that heighten the playing experience is our ability to benefit from a more efficient operating model. With strict ongoing cost management efforts we reduced selling, general and administrative expenses by 31.3% from the prior year period to $5.5 million. We are on track to achieve our goal of reducing our SG&A expenses by no less than 10% in fiscal 2010 versus fiscal 2009, which is expected to contribute to significant improvements in overall profitability."

First Quarter Fiscal 2010 Financial Highlights:

Net sales for the first quarter of fiscal 2010 declined 3.7% from the prior year quarter reflecting both the adverse impact of foreign currency translation as well as challenging comparisons with the same period last year when Mad Catz launched its Wii Fit products:

North American net sales were up 12.5% to $14.5 million or 64.7% of quarterly sales;

European net sales fell 27.6% to $7.3 million or 32.4% of quarterly sales; and,

Net sales to other countries rose 86.5% to $0.7 million or 2.9% of quarterly sales.

Gross sales by platform were diversified as follows:

PC products represented 24% of total gross sales vs. 35% in the prior year quarter;

Xbox 360 accounted for 32% of total gross sales vs. 11% a year ago;

Wii represented 8% of total gross sales vs. 18% in the prior year quarter;

PLAYSTATION 3 accounted for 19% of total gross sales vs. 11% a year ago;

All other platforms represented 17% of total gross sales vs. 25% a year ago.

Gross sales by category were as follows:

specialty controllers represented 36% of total gross sales vs. 17% a year ago;

Accessories represented 23% of total gross sales vs. 42% a year ago;

Control pads represented 21% of total gross sales vs. 15% a year ago;

Audio products accounted for 10% of total gross sales vs. 9% in the prior year quarter;

PC input devices represented 8% of total gross sales vs. 14% a year ago; and,

Games accounted for 2% of total gross sales vs. 3% in the prior year quarter.

Reported net position of bank loan less cash at June 30, 2009 of $9.4 million compared to $10.4 million as of March 31, 2009 and $10.9 million at June 30, 2008.

Extended the working capital credit facility with Wachovia Capital Finance Corporation with $30.0 million now available under the facility. The Company was in compliance with all facility covenants at June 30, 2009.

Extended the maturity to March 31, 2019 of the $14.5 million convertible note issued as partial consideration for the 2007 acquisition of Saitek.

New Licenses and Distribution Agreements

A global licensing agreement with Activision Blizzard to produce and distribute controllers and accessories based on the upcoming Call of Duty: Modern Warfare 2 videogame for all current videogame platforms and the PC;

A multi-year licensing agreement with JRM Licensing to produce and distribute accessories for all videogame platforms and the PC featuring NASCAR and the likeness and trademarks of Dale Earnhardt, Jr. in North America;

A distribution agreement with MSY Co., Ltd. to distribute the full Mad Catz products in Japan;

A multi-year licensing agreement with Microsoft Corporation for global rights to produce Xbox 360-branded wireless specialty videogame controllers;

A multi-year licensing agreement for exclusive worldwide rights to the Skellramics intellectual property;

A multi-year licensing agreement for exclusive North American rights to selected designs and trademarks of the Kukuxumusu intellectual property; and,

A multi-year licensing agreement with Fender to manufacture a wooden Stratocaster guitar videogame controller.

New Products Shipped Highlights

Rock Band 2 Electro-Harmonix Overdrive Pedal for Xbox 360, PS 3 and Wii;

New range of controllers and accessories for Nintendo Wii, including a Remote, Z-Chuk and Wireless Z-Chuk;

Expansion of the Saitek Pro Flight range of accessories, including the PC Pro Flight Instrument Panel, PC Pro Flight Multi-Panel and PC Pro Flight Radio Panel;

Controller faceplates for the Xbox 360 and PS3 and an Official Licensed Dual Charger for the Wii featuring all 32 NFL teams;

New Products Shipped Highlights (continued)

A range of Wii accessories based on Rayman Raving Rabbids, including a charging dock, plunger gun and remote gripz;

AirDrives FIT Interactive Earphones and AirDrives FIT Interactive Earphones for iPhone; and,

ComicCon Exclusive versions of the Street Fighter IV FightPad and Tournament Edition FightStick for Xbox 360 and PS3.

Upcoming Mad Catz Product Launches

Rock Band 2 Wireless Fender American Precision Bass for PS3;

PowerUp Charging Stand for Wii Fit;

Wireless Wooden Fender Stratocaster Replica Guitar for Xbox 360;

Wireless Fender Telecaster Player's Edition Replica for Xbox 360;

Z-Chuk Blaster for Wii;

A range of new Cyborg PC gaming accessories, including the Cyborg V.3 Mouse and Cyborg V.5 Keyboard;

A range of Saitek-branded colored PC accessories;

A range of accessories for the upcoming Call of Duty: Modern Warfare 2 videogame; and,

A range of Dale Earnhardt, Jr NASCAR accessories, including racing wheels for Xbox 360 and PS3.

Mr. Richardson concluded, "We remain bullish on our long-term prospects and remain committed to expanding our business. We believe our upcoming release schedule based on a high quality, diversified product portfolio and ongoing cost reductions position us to achieve growth in fiscal 2010 despite the ongoing challenges that the economic and industry environments present. We expect these factors to result in significant gains in year-over-year EBITDA and earnings."

The Company will host a conference call and simultaneous webcast on August 12, 2009, at 5:00 p.m. ET, which can be accessed by dialing (212) 231-2929. Following its completion, a replay of the call can be accessed for 30 days at the Company's Web site (www.madcatz.com, select "Investors") or for 7 days via telephone at (800) 633-8284 (reservation # 21433958) or, for International callers, at (402) 977-9140.

About Mad Catz Interactive, Inc.