Mad Catz® Reports Fiscal 2015 Third Quarter Financial Results

Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT/TSX: MCZ), today announced financial results for the fiscal 2015 third quarter ended December 31, 2014.

Key Highlights of Fiscal 2015 Third Quarter and Subsequent:

• Fiscal 2015 third quarter net sales decreased 7% to $30.5 million, driven by a 15% decrease in EMEA and a 3% decrease in the Americas, partially offset by a 50% increase in net sales across APAC;
• Gross margin improved to 26.9% from 24.1% in the prior year quarter;
• Total operating expenses decreased 15% from the prior year period to $6.0 million;
• Operating income increased 145% to $2.2 million;
• Diluted income per share was $0.02 for the fiscal 2015 third quarter, compared to a diluted loss per share of ($0.01) last year;
• Net position of bank loan, less cash, was $10.7 million at December 31, 2014, compared to $11.1 million at December 31, 2013;
• Shipped the C.T.R.L.i™ and Micro C.T.R.L.i™ mobile gamepads, a new range of controllers designed for iPhone, iPad and iPod touch;
• Shipped the F.R.E.Q.9™ wireless surround headset for gaming, audio and smart devices;
• Shipped the F.R.E.Q.TE™ (Tournament Edition) stereo gaming headset for Windows PC and Mac;
• Shipped the G.L.I.D.E.TE™ (Tournament Edition) gaming surface;
• Announced the R.A.T. PROX gaming mouse, a 2015 CES Innovation Award Honoree;
• Announced the L.Y.N.X. 9™ mobile hybrid controller for android smart devices, tablets and Windows PC;
• Shipped the TRITTON™ Swarm™ wireless mobile headset;
• Entered into an agreement with Capcom to produce the Ultra Street Fighter™ IV Arcade FightStick Tournament Edition 2; and
• Teamed up with GIANTS Software® to create dedicated Saitek®-branded simulation hardware for the Farming Simulator™ series of games on Windows PC.

Commenting on the Company’s fiscal 2015 third quarter results, Karen McGinnis, Chief Financial Officer of Mad Catz, said, “Despite the challenging top-line environment, we continue to make operational progress across our organization, creating a more streamlined business model with greater accountability and cost efficiency. These efforts resulted in a 145% improvement in quarterly operating income over the prior year, and will ultimately allow us to better compete in a global marketplace and position Mad Catz for long-term success in growing our business.”

Darren Richardson, President and Chief Executive Officer of Mad Catz, commented, “Looking ahead, we remain confident that our brands are strong, that our product portfolio is poised to gain considerable leverage from the ongoing console transition as well as the shift towards mobile gaming, that our geographic footprint is broad and diverse and gaining clear market share in key markets like Asia, and that we are executing well in an evolving marketplace on the back of the recent console transition.”

The Company will host a conference call and simultaneous webcast on February 5, 2015, at 5:00 p.m. ET, which can be accessed by dialing (212) 231-2910. Following its completion, a replay of the call can be accessed for 30 days at the Company's Web site (www.madcatz.com, select “About Us/Investor Relations”) or for seven days via telephone at (800) 633-8284 (reservation #21760805) or, for International callers, at (402) 977-9140.

About Mad Catz

Mad Catz Interactive, Inc. (“Mad Catz”) (NYSE MKT/TSX: MCZ) is a global provider of innovative interactive entertainment products marketed under its Mad Catz® (gaming), Tritton® (audio), and Saitek® (simulation) brands. Mad Catz products cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows® PC and Mac® computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as distribution via many leading retailers around the globe. Headquartered in San Diego, California, Mad Catz maintains offices in Europe and Asia. For additional information about Mad Catz and its products, please visit the Company’s website at www.madcatz.com.

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Safe Harbor

Information in this press release that involves the Company's expectations business prospects, plans, intentions or strategies regarding its future are forward-looking statements that are not facts and that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "project," "intend," "should," "plan," "goal," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause the Company’s actual future results to differ materially from those expressed in the forward-looking statements set forth in this release are the following: the ability to maintain or renew the Company's licenses; competitive developments affecting the Company's current products; first-party price reductions; availability of capital under our credit facility; commercial acceptance of new in-home gaming consoles; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; unanticipated product delays; or a downturn in the market or industry. A further list and description of these and other factors, risks, uncertainties and other matters can be found in the Company's most recent annual report, and any subsequent quarterly reports, filed with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators. The forward-looking statements in this release are based upon information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements as a result of new information or future events or developments, except as may be require by applicable law. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of the Company and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

Adjusted EBITDA (loss), a non-GAAP financial measure, represents net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, the gain/loss on the change in the fair value of the related warrant liability, goodwill impairment, if any, and acquisition related items. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it being presented as an alternative to operating or net income (loss) as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. As defined, Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. We believe, however, that in addition to the performance measures found in our financial statements, Adjusted EBITDA is a useful financial performance measurement for assessing our Company’s operating performance. We use Adjusted EBITDA as a measurement of operating performance in comparing our performance on a consistent basis over prior periods, as it removes from operating results the impact of our capital structure, including the interest expense resulting from our outstanding debt, and our asset base, including depreciation and amortization of our capital and intangible assets. In addition, Adjusted EBITDA is an important measure for our lender.