Form 10-Q

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0001193125-12-454639.txt : 20121106 0001193125-12-454639.hdr.sgml : 20121106 20121106163710 ACCESSION NUMBER: 0001193125-12-454639 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121106 DATE AS OF CHANGE: 20121106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAD CATZ INTERACTIVE INC CENTRAL INDEX KEY: 0001088162 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 874627953 STATE OF INCORPORATION: Z4 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14944 FILM NUMBER: 121183683 BUSINESS ADDRESS: STREET 1: 141 ADELAIDE STREET WEST STREET 2: SUITE 400 CITY: TORONTO ONTARIO STATE: A6 ZIP: M5H 3L5 BUSINESS PHONE: 6196839830 MAIL ADDRESS: STREET 1: 141 ADELAIDE STREET WEST STREET 2: SUITE 400 CITY: TORONTO ONTARIO STATE: A6 ZIP: M5H 3L5 FORMER COMPANY: FORMER CONFORMED NAME: GAMES TRADER INC DATE OF NAME CHANGE: 19990608 10-Q 1 d411550d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2012

¨	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				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				92108
(Address of principal executive offices)				(Zip Code)

(619) 683-9830

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

There were 63,477,399 shares of the registrant’s common stock issued and outstanding as of November 2, 2012.

MAD CATZ INTERACTIVE, INC.

FORM 10-Q

FOR THE PERIOD ENDED SEPTEMBER 30, 2012

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2012 and March 31, 2012	3
	Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2012 and 2011	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended September 30, 2012 and 2011	5
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2012 and 2011	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 4.	Controls and Procedures	19
PART II — OTHER INFORMATION		20
Item 1.	Legal Proceedings	20
Item 1a.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosure	20
Item 5.	Other Information	20
Item 6.	Exhibits	21
SIGNATURES		21

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

MAD CATZ INTERACTIVE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)


	September 30,			March 31,
	2012			2012
Assets
Current assets:
Cash	$	2,546		$	2,474
Accounts receivable, net		23,407			15,278
Other receivables		1,280			1,196
Inventories		29,240			32,521
Deferred tax assets		110			110
Income tax receivable		1,747			1,747
Prepaid expenses and other current assets		3,965			3,305

Total current assets		62,295			56,631
Deferred tax assets		450			440
Other assets		835			863
Property and equipment, net		3,487			4,037
Intangible assets, net		4,148			4,626
Goodwill		10,484			10,476

Total assets	$	81,699		$	77,073

Liabilities and Shareholders’ Equity
Current liabilities:
Bank loan	$	21,880		$	16,654
Accounts payable		20,300			17,634
Accrued liabilities		6,491			6,401
Contingent consideration, current		1,682			1,600
Income taxes payable		1,083			1,375

Total current liabilities		51,436			43,664
Contingent consideration		1,969			2,769
Warrant liability		623			693
Deferred tax liabilities		242			245
Other long-term liabilities		167			211

Total liabilities		54,437			47,582
Shareholders’ equity:
Common stock, no par value, unlimited shares authorized; 63,477,399 and 63,462,399 shares issued and outstanding at September 30, 2012 and March 31, 2012		59,823			59,432
Accumulated other comprehensive loss		(2,071	)		(1,618	)
Accumulated deficit		(30,490	)		(28,323	)

Total shareholders’ equity		27,262			29,491

Total liabilities and shareholders’ equity	$	81,699		$	77,073

See accompanying notes to unaudited condensed consolidated financial statements.

MAD CATZ INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands of U.S. dollars, except share and per share data)


	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net sales	$	31,215		$	25,751		$	53,037		$	42,214
Cost of sales		22,228			18,321			37,775			30,838

Gross profit		8,987			7,430			15,262			11,376
Operating expenses:
Sales and marketing		4,000			3,748			7,239			7,012
General and administrative		2,820			3,260			5,776			6,601
Research and development		1,217			1,499			2,238			3,191
Acquisition related items		206			267			724			592
Amortization of intangible assets		232			241			465			486

Total operating expenses		8,475			9,015			16,442			17,882

Operating income (loss)		512			(1,585	)		(1,180	)		(6,506	)
Interest expense, net		(251	)		(285	)		(520	)		(447	)
Foreign exchange loss, net		(250	)		183			6			198
Change in fair value of warrant liability		(120	)		1,540			70			2,534
Other income		12			4			77			32

Loss before income taxes		(97	)		(143	)		(1,547	)		(4,189	)
Income tax expense (benefit)		353			343			620			(219	)

Net loss	$	(450	)	$	(486	)	$	(2,167	)	$	(3,970	)

Basic net loss per share	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.06	)

Diluted net loss per share	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.06	)

Weighted average shares — basic		63,467,779			63,444,069			63,465,104			62,731,643

Weighted average shares — diluted		63,467,779			63,444,069			63,465,104			62,731,643

See accompanying notes to unaudited condensed consolidated financial statements.

MAD CATZ INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands of U.S. dollars)


	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(450	)	$	(486	)	$	(2,167	)	$	(3,970	)
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		707			(1,064	)		(453	)		(979	)

Total other comprehensive income (loss)		707			(1,064	)		(453	)		(979	)

Comprehensive income (loss)	$	257		$	(1,550	)	$	(2,620	)	$	(4,949	)

See accompanying notes to unaudited condensed consolidated financial statements.

MAD CATZ INTERACTIVE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of U.S. dollars)


	Six Months Ended
	September 30,
	2012			2011
Cash flows from operating activities:
Net loss	$	(2,167	)	$	(3,970	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,563			1,633
Amortization of deferred financing fees		92			74
Provision for deferred income taxes		(13	)		23
Loss on disposal or sale of assets		—			22
Stock-based compensation		384			279
Contingent consideration, net of payments		170			592
Change in fair value of warrant liability		(70	)		(2,534	)
Changes in operating assets and liabilities:
Accounts receivable		(8,352	)		3,952
Other receivables		(87	)		(425	)
Inventories		3,191			(5,838	)
Prepaid expenses and other current assets		(677	)		(387	)
Other assets		(9	)		(19	)
Accounts payable		2,593			6,593
Accrued liabilities		87			(5,114	)
Income taxes receivable/payable		(300	)		(1,173	)

Net cash used in operating activities		(3,595	)		(6,292	)

Cash flows from investing activities:
Purchases of property and equipment		(566	)		(1,667	)

Net cash used in investing activities		(566	)		(1,667	)

Cash flows from financing activities:
Payment of contingent consideration		(888	)		(1,546	)
Payment of financing costs		(100	)		—
Repayments of convertible notes		—			(14,500	)
Proceeds from issuance of common stock and warrants, net of issuance costs of $820		—			11,351
Repayments on bank loan		(33,926	)		(50,837	)
Borrowings on bank loan		39,153			62,465
Proceeds from exercise of stock options		7			29

Net cash provided by financing activities		4,246			6,962

Effects of foreign exchange on cash		(13	)		(22	)

Net increase (decrease) in cash		72			(1,019	)
Cash, beginning of period		2,474			3,734

Cash, end of period	$	2,546		$	2,715

Supplemental cash flow information:
Income taxes paid	$	918		$	899

Interest paid	$	407		$	392

Supplemental disclosure of non-cash investing and financing activities:
Fair value of warrants issued	$	—		$	3,250

See accompanying notes to unaudited condensed consolidated financial statements.

MAD CATZ INTERACTIVE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss) and cash flows contained in this Quarterly Report on Form 10-Q, which are unaudited, include the accounts of Mad Catz Interactive, Inc. (the “Company”) and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all entries necessary for a fair presentation of such condensed consolidated financial statements have been included. These entries consisted only of normal recurring items. The results of operations for the interim period are not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year. The Company generates a substantial percentage of net sales in the last three months of every calendar year, its fiscal third quarter. These condensed consolidated financial statement refer to the Company’s fiscal years ending March 31 as its “Fiscal” years.

The condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with United States generally accepted accounting principles. Please refer to the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2012 contained in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (the “SEC”).

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to asset impairments, reserves for accounts receivable and inventories, contingencies and litigation, valuation and recognition of share-based payments, contingent consideration, warrant liability and income taxes. Illiquid credit markets, volatile equity markets, volatility of foreign currency exchange rates, and declines in customer spending have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. Actual results could differ from those estimates.

(2) Correction of Immaterial Errors Related to Prior Periods

During the first quarter of fiscal year 2013, the Company’s management determined that its previously issued financial statements contained immaterial errors related to the omission of an accrual of a customer’s contractually agreed upon defective allowance. The Company corrected the errors by revising the fiscal 2012 balances. The total effect of this revision to prior period financial statements was a decrease to shareholders’ equity and accounts receivable of $253,000 over the amounts previously reported in the consolidated financial statements for the year ended March 31, 2012. The revision applicable to the three and six month period ended September 30, 2011 was a decrease of $6,000 and $7,000, respectively, to net sales.

(3) Recently Issued Accounting Standards

The Company has adopted the following new accounting standards:

Presentation of Comprehensive Income: In June 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, requiring entities to report components of other comprehensive income in either a single continuous statement or in two separate statements. In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05”. The amendments in ASU 2011-12 defer the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. The amendments in ASU 2011-12 are effective at the same time as ASU 2011-05 so that entities will not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 is deferring. The amendments in ASU 2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of these amended standards affected the presentation of the Company’s other comprehensive income but not the Company’s financial position or results of operations.

(4) Fair Value Measurement

For a description of the fair value hierarchy, see Note 2 to the Company’s 2012 consolidated financial statements contained in the Company’s Annual Report on Form 10-K for its fiscal year ended March 31, 2012.

The carrying values of the Company’s financial instruments, including cash, accounts receivable, other receivables, accounts payable, accrued liabilities and income taxes receivable/payable approximate their fair values due to the short maturity of these instruments. The carrying value of the bank loan approximates its fair value as the interest rate and other terms are that which is currently available to the Company.

The following tables provide a summary of the recognized assets and liabilities carried at fair value on a recurring basis as of September 30, 2012 and March 31, 2012 (in thousands):


	Balance as of September 30, 2012			Basis of Fair Value Measurements
	Balance as of September 30, 2012			Level 1		Level 2		Level 3
Liabilities:
Contingent consideration, net of working capital (Note 5)	$	(3,651	)	$	—	$	—	$	(3,651	)
Warrant liability (Note 7)		(623	)		—		—		(623	)

	$	(4,274	)	$	—	$	—	$	(4,274	)


	Balance as of March 31, 2012			Basis of Fair Value Measurements
	Balance as of March 31, 2012			Level 1		Level 2		Level 3
Liabilities:
Contingent consideration, net of working capital (Note 5)	$	(4,369	)	$	—	$	—	$	(4,369	)
Warrant liability (Note 7)		(693	)		—		—		(693	)

	$	(5,062	)	$	—	$	—	$	(5,062	)

The following tables provide a roll forward of the Company’s level three fair value measurements during the six months ended September 30, 2012, which consist of the Company’s contingent consideration liability and warrant liability (in thousands):


Contingent consideration, net of working capital:
Balance at March 31, 2012	$	(4,369	)
Contingent consideration payment		1,442
Increases during the year – acquisition related expense		(724	)

Balance at September 30, 2012	$	(3,651	)


Warrant liability:
Balance at March 31, 2012	$	(693	)
Change in fair value of warrant liability		70

Balance at September 30, 2012	$	(623	)

(5) Contingent Consideration

In connection with the fiscal year 2011 acquisition of Tritton Technologies Inc. (“Tritton”), the Company has a contingent consideration arrangement that requires the Company to pay the former owners of Tritton additional consideration based on a percentage of future sales of Tritton products over a five year period, subject to maximum annual amounts, up to an aggregate of $8.7 million. The fair value of the contingent consideration arrangement has been determined primarily by using the income approach and using a discount rate of approximately 14 percent. The amount paid for contingent consideration is expected to be reduced by the amount of any working capital adjustment. In May 2011, the Company paid $1,546,000 under this arrangement. The maximum earn out for fiscal year ended March 31, 2012 of $1,600,000 was achieved, and $1,442,000 of this amount has been paid as of September 30, 2012. The remaining $150,000, which is net of the $8,000 working capital adjustment, will be paid out prior to December 31, 2012, including interest accruing at an annual rate of 7 percent. The remaining annual payments will be made in May of each year through 2015.

Fluctuations in the fair value of contingent consideration are impacted by unobservable inputs, most significantly estimated future sales of Tritton products and the estimated discount rate. Significant increases (decreases) in either of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Generally, a change in the assumption used for estimated future sales of Tritton products is accompanied by a directionally similar change in the fair value of contingent consideration liability, whereas a change in assumption used for the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability.

(6) Inventories

Inventories consist of the following (in thousands):


	September 30, 2012		March 31, 2012
Raw materials	$	2,113	$	2,456
Semi finished goods		—		8
Finished goods		27,127		30,057

Inventories	$	29,240	$	32,521

(7) Securities Purchase Agreement

In April 2011 the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain accredited investors, pursuant to which the Company sold (a) an aggregate of 6,352,293 shares of its common stock (the “Shares”) and (b) warrants to purchase an aggregate of 2,540,918 shares of common stock of the Company (“Warrants” and, together with the Shares, the “Securities”). On May 3, 2011 the Company filed a Registration Statement registering up to 8,893,211 common shares of the Company comprised of: (i) 6,352,293 common shares and (ii) 2,540,918 common shares issuable upon exercise of 2,540,918 warrants. The Securities were issued at a price equal to $1.92 for aggregate gross proceeds of approximately $12,196,000. The Warrants became exercisable on October 21, 2011 at a per share exercise price equal to $2.56. The Warrants contain provisions that adjust the exercise price in the event the Company pays stock dividends, effects stock splits or issues additional shares of common stock at a price per share less than the exercise price of the Warrants. The Warrants will remain exercisable until October 21, 2016.

The Company accounts for the Warrants with exercise price reset features in accordance with the applicable FASB guidance. Under this guidance, warrants with these reset features are accounted for as liabilities and carried at fair value, with changes in fair value included in net earnings (loss) until such time as the Warrants are exercised or expire.

The fair value of the Warrants decreased from $693,000 as of March 31, 2012 to $623,000 as of September 30, 2012, which resulted in a $70,000 gain from the change in fair value of warrants for the six months ended September 30, 2012.

These Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the Warrants using the Black-Scholes option pricing model using the following assumptions:


	As of September 30, 2012
Expected term		4.0 years
Common stock market price	$	0.61
Risk-free interest rate		0.47	%
Expected volatility		95.84	%


	As of March 31, 2012
Expected term		4.5 years
Common stock market price	$	0.62
Risk-free interest rate		0.91	%
Expected volatility		94.09	%

Expected volatility is based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods that correspond to the expected term of the Warrants. The Company believes this method produces an estimate that is representative of the Company’s expectations of future volatility over the expected term of these Warrants. The Company currently has no reason to believe future volatility over the expected remaining life of these Warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the Warrants. The risk-free interest rate is the interest rate for treasury constant maturity instruments published by the Federal Reserve Board that is closest to the expected term of the Warrants.

(8) Basic and Diluted Net Loss per Share

Basic loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share includes the impact of potentially dilutive securities.


	Three Months Ended September 30,						Six months Ended September 30,
	2012			2011			2012			2011
Numerator:
Net loss	$	(450	)	$	(486	)	$	(2,167	)	$	(3,970	)
Effect of convertible notes payable		—			—			—			—

Numerator for diluted net loss per share		(450	)		(486	)		(2,167	)		(3,970	)

Denominator:
Weighted average shares used to compute basic loss per share		63,467,779			63,444,069			63,465,104			62,731,643
Effect of convertible debt		—			—			—			—
Effect of dilutive share share-based awards		—			—			—			—

Denominator for diluted net loss per share		63,467,779			63,444,069			63,465,104			62,731,643

Basic loss per share	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.06	)
Diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.06	)

Outstanding options to purchase an aggregate of 8,616,766 and 8,285,748 shares of the Company’s common stock for the three and six months ended September 30, 2012, respectively, and 7,238,110 and 6,816,657 shares of the Company’s common stock for the three and six months ended September 30, 2011, respectively, were excluded from diluted net loss per share calculations because inclusion of such options would have an anti-dilutive effect during these periods. Outstanding warrants to purchase an aggregate of 2,540,918 shares of the Company’s common stock for each of the three and six months ended September 30, 2012, and 2,540,918 and 2,082,720 shares of the Company’s common stock for the three and six months ended September 30, 2011, respectively, were excluded from the diluted net loss per share calculations because of their anti-dilutive effect during the period. Weighted average shares of 949,189 related to the convertible notes payable were excluded from the calculation for the six month period ended September 30, 2011 because of their anti-dilutive effect during the period.

(9) Geographic Data and Concentrations

The Company’s sales are attributed to the following geographic regions (in thousands):


	Three months ended September 30,				Six months ended September 30,
	2012		2011		2012		2011
Net sales:
United States	$	12,700	$	11,115	$	22,183	$	20,110
Europe		14,970		12,691		24,766		19,068
Canada		943		875		1,899		1,512
Other countries		2,602		1,070		4,189		1,524

	$	31,215	$	25,751	$	53,037	$	42,214

Revenue is attributed to geographic regions based on the location of the customer. During the three and six months ended September 30, 2012, one customer individually accounted for approximately 27% and 26% of the Company’s gross sales, respectively, one other customer individually accounted for approximately 11% and 10% of the Company’s gross sales, respectively and one other customer accounted for 11% and 9% of the Company’s gross sales, respectively. During the three and six months ended September 30, 2011, one customer individually accounted for approximately 24% and 22% of the Company’s gross sales, respectively, and one other customer individually accounted for approximately 12% and 11% of the Company’s gross sales, respectively. At September 30, 2012, three different customers represented approximately 27%, 14% and 11% of accounts receivable, respectively. At September 30, 2011, one customer represented 32% of accounts receivable and another customer represented 13% of accounts receivable. At September 30, 2012 and 2011, there were no other customers which accounted for greater than 10% of accounts receivable or gross sales.

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 which involve 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, 2012 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, 2012.

Overview

Our Business

We design, manufacture (primarily through third parties in Asia), sell, market and distribute products for all major videogame platforms, the PC and Mac and, to a lesser extent, the iPod and other audio devices. Our accessories are marketed primarily under the Mad Catz, Tritton, Saitek, GameShark and AirDrives brands; we also produce for selected customers a limited range of products which are marketed on a “private label” basis. Our products include videogame, PC and audio accessories, such as control pads, steering wheels, joysticks, memory cards, video cables, flight sticks, dance pads, microphones, car adapters, carry cases, mice, keyboards and headsets. We also develop flight simulation software through our internal ThunderHawk Studios^TM. We also publish and distribute videogames.

Seasonality and Fluctuation of Sales

We generate a substantial percentage of our net sales in the last three months of every calendar year, our fiscal third quarter. Our quarterly results of operations can be expected to fluctuate significantly in the future, as a result of many factors, including: seasonal influences on our sales; unpredictable consumer preferences and spending trends; the introduction of new videogame platforms; the need to increase inventories in advance of our primary selling season; and timing of introductions of new products.

Potential Fluctuations in Foreign Currency

During the three and six month periods ended September 30, 2012, approximately 59% and 58% of total net sales were transacted outside of the United States, respectively. The majority of our international business is presently conducted in currencies other than the U.S. dollar. Foreign currency transaction gains and losses arising from normal business operations are credited to or charged against earnings in the period incurred. As a result, fluctuations in the value of the currencies in which we conduct our business relative to the U.S. dollar will cause currency transaction gains and losses, which we have experienced in the past and continue to experience. Due to the volatility of currency exchange rates, among other factors, we cannot predict the effect of exchange rate fluctuations upon future operating results. There can be no assurances that we will not experience currency losses in the future. To date we have not hedged against foreign currency exposure.

Critical Accounting Policies

Our critical accounting principles and estimates remain consistent with those reported in our Annual Report on Form 10-K for the year ended March 31, 2012, as filed with the SEC.

RESULTS OF OPERATIONS

Net Sales

From a geographical perspective, our net sales for the three and six months ended September 30, 2012 and 2011 were as follows (in thousands):


	Three months ended September 30,										$		%
	2012		% of total			2011		% of total			Change		Change
United States	$	12,700		41	%	$	11,115		43	%	$	1,585		14	%
Europe		14,970		48	%		12,691		49	%		2,279		18	%
Canada		943		3	%		875		4	%		68		8	%
Other countries		2,602		8	%		1,070		4	%		1,532		143	%

Consolidated net sales	$	31,215		100	%	$	25,751		100	%	$	5,464		21	%


	Six months ended September 30,										$		%
	2012		% of total			2011		% of total			Change		Change
United States	$	22,183		42	%	$	20,110		48	%	$	2,073		10	%
Europe		24,766		47	%		19,068		45	%		5,698		30	%
Canada		1,899		3	%		1,512		3	%		387		26	%
Other countries		4,189		8	%		1,524		4	%		2,665		175	%

Consolidated net sales	$	53,037		100	%	$	42,214		100	%	$	10,823		26	%

For the three months ended September 30, 2012, consolidated net sales increased 21% as compared to the three month period ended September 30, 2011. The main drivers of the increase in net sales were strong European and U.S. demand for the Tritton-branded headsets and software sales. Additionally, net sales in other countries in the second quarter of fiscal year 2013 increased due to sales of the R.A.T. line of products.

For the six months ended September 30, 2012, consolidated net sales increased 26% as compared to the six months ended September 30, 2011. The preponderance of the increase in net sales occurred during the latter part of the six month period for the reasons described above.

Our sales by platform as a percentage of gross sales for the three and six months ended September 30, 2012 and 2011 were as follows:


	Three months ended						Six months ended
	September 30,						September 30,
	2012			2011			2012			2011
Xbox 360		32	%		36	%		30	%		31	%
PC and Mac		31	%		28	%		33	%		29	%
PlayStation 3		10	%		7	%		8	%		7	%
Wii		0	%		2	%		1	%		3	%
Handheld Consoles(a)		1	%		2	%		1	%		2	%
GameCube		0	%		1	%		0	%		1	%
All others(b)		26	%		24	%		27	%		27	%

Total		100	%		100	%		100	%		100	%

(a)	Handheld consoles include Sony PSP and Vita and Nintendo DS, DS Lite, DSi, DS XL and 3DS.

(b)	All others include universal products which can be used on multiple platforms.

Sales of PC products increased primarily due to sales of the R.A.T. line of products. Sales of products designed for use with the PlayStation 3 platform increased due to software sales for this platform. Sales of products designed for use with the Wii platform continued to decline in anticipation of the release of a successor platform later in the year.

Our sales by product category as a percentage of gross sales for the three and six months ended September 30, 2012 and 2011 were as follows:


	Three months ended						Six months ended
	September 30,						September 30,
	2012			2011			2012			2011
Audio		44	%		43	%		44	%		38	%
Specialty controllers		14	%		22	%		14	%		23	%
PC and Mac Devices		20	%		14	%		20	%		14	%
Controllers		5	%		11	%		7	%		13	%
Accessories		7	%		9	%		8	%		11	%
Games		10	%		1	%		7	%		1	%

Total		100	%		100	%		100	%		100	%

The increase in audio products is primarily related to sales of Tritton-branded products. The increase in PC and Mac devices is primarily related to sales of the R.A.T. line of products. The decrease in specialty controllers as a percentage of total gross sales primarily related to the decrease in sales of our accessories compatible with the Rock Band 3 game. The decrease in controllers was primarily related to products compatible with the Xbox 360 and Wii. The increase in games is related to the release of software during the quarter.

Our sales by brand as a percentage of gross sales for the three and six months ended September 30, 2012 and 2011 were as follows:


	Three months ended						Six months ended
	September 30,						September 30,
	2012			2011			2012			2011
Mad Catz		51	%		54	%		49	%		56	%
Tritton		39	%		33	%		40	%		29	%
Saitek		8	%		10	%		9	%		11	%
All others		2	%		3	%		2	%		4	%

Total		100	%		100	%		100	%		100	%

During the quarter ended June 30, 2012, products previously offered under our Cyborg brand began a transition to our Mad Catz brand, which was completed during the second quarter of fiscal 2013. As a result, the sales reported in the prior period under the Cyborg brand have been reclassified as sales of our Mad Catz brand. In addition, sales previously reported as Eclipse have been reclassified as Other.

The decrease in Mad Catz products primarily related to the decrease in sales of our accessories compatible with the Rock Band 3 game, partially offset by an increase related to sales of the R.A.T. branded line of products and software offerings. The increase in Tritton as a percentage of total gross sales primarily related to strong audio headset demand.

Gross Profit

Gross profit is defined as net sales less cost of sales. Cost of sales consists of product costs, cost of licenses and royalties, cost of freight-in and freight-out and distribution center costs, including depreciation and other overhead.

The following table presents net sales, cost of sales and gross profit for the three and six months ended September 30, 2012 and 2011 (in thousands):


	Three months ended September 30,
			% of Net					% of Net			$		%
	2012		Sales			2011		Sales			Change		Change
Net sales	$	31,215		100	%	$	25,751		100	%	$	5,464		21	%
Cost of sales		22,228		71	%		18,321		71	%		3,907		21	%

Gross profit	$	8,987		29	%	$	7,430		29	%	$	1,557		21	%


	Six months ended September 30,
			% of Net					% of Net			$		%
	2012		Sales			2011		Sales			Change		Change
Net sales	$	53,037		100	%	$	42,214		100	%	$	10,823		26	%
Cost of sales		37,775		71	%		30,838		73	%		6,937		22	%

Gross profit	$	15,262		29	%	$	11,376		27	%	$	3,886		34	%

Gross profit for the three months ended September 30, 2012 increased 21%, while gross profit as a percentage of net sales, or gross profit margin, remained 29%. Gross profit for the six months ended September 30, 2012 increased 34%, while gross profit margin, increased from 27% to 29%. We expect the gross profit margins to remain in the current range, although the gross profit margins may fluctuate due to factors such as changes in product mix and exchange rate fluctuations.

Operating Expenses

Operating expenses for the three and six months ended September 30, 2012 and 2011 were as follows (in thousands):


	Three months ended September 30,
			% of Net					% of Net			$			%
	2012		Sales			2011		Sales			Change			Change
Sales and marketing	$	4,000		13	%	$	3,748		14	%	$	252			7	%
General and administrative		2,820		9	%		3,260		13	%		(440	)		(13	)%
Research and development		1,217		4	%		1,499		6	%		(282	)		(19	)%
Acquisition related items		206		0	%		267		1	%		(61	)		(23	)%
Amortization		232		1	%		241		1	%		(9	)		(4	)%

Total operating expenses	$	8,475		27	%	$	9,015		35	%	$	(540	)		(6	)%


	Six months ended September 30,
			% of Net					% of Net			$			%
	2012		Sales			2011		Sales			Change			Change
Sales and marketing	$	7,239		14	%	$	7,012		16	%	$	227			3	%
General and administrative		5,776		11	%		6,601		16	%		(825	)		(12	)%
Research and development		2,238		4	%		3,191		8	%		(953	)		(30	)%
Acquisition related items		724		1	%		592		1	%		132			22	%
Amortization		465		1	%		486		1	%		(21	)		(4	)%

Total operating expenses	$	16,442		31	%	$	17,882		42	%	$	(1,440	)		(8	)%

Sales and Marketing. Sales and marketing expenses consist primarily of payroll, commissions, participation at trade shows and travel costs for our worldwide sales and marketing staff, advertising expense and costs of operating our websites. The increase in sales and marketing expense was primarily due to increased marketing spending and exchange rate fluctuations. We expect sales and marketing expenses as a percentage of net sales in fiscal 2013 to approximate fiscal year 2012 levels.

General and Administrative. General and administrative expenses include salaries and benefits for our executive and administrative personnel, facilities costs and professional services, such as legal and accounting. The decrease in general and administrative expenses for the six month period was primarily related to decreased legal fees related to defending the Company in legal actions arising in the ordinary course of its business. We expect general and administrative expenses in fiscal 2013 to be slightly lower than fiscal year 2012 levels.

Research and Development. Research and development expenses include the costs of developing and enhancing new and existing products. The decrease in research and development expenses primarily relates to the completion of activities related to audio products and software development during fiscal 2012. We expect research and development expenses in fiscal 2013 to be lower than fiscal year 2012 levels.

Acquisition related items. Acquisition related items relate to accounting for the Tritton acquisition, which include transaction costs and adjustments to the liability for contingent consideration, which will continue to be adjusted through fiscal 2015 when the contingent consideration will be fully paid.

Amortization. Amortization expenses consist of the amortization of the acquired intangible assets from Saitek, Joytech and Tritton. The slight decrease in amortization expenses was due to intangibles acquired in the Joytech and Saitek acquisitions that have become fully amortized.

Interest Expense, net, Foreign Exchange (Loss) Gain, Change in Fair Value of Warrant Liability and Other Income

Interest expense, net, foreign exchange (loss) gain, change in fair value of warrant liability and other income for the three and six months ended September 30, 2012 and 2011 were as follows (in thousands):


	Three months ended September 30,
				% of Net						% of Net			$			%
	2012			Sales			2011			Sales			Change			Change
Interest expense, net	$	(251	)		1	%	$	(285	)		1	%	$	34			12	%
Foreign exchange (loss) gain	$	(250	)		1	%	$	183			1	%	$	(433	)		(237	)%
Change in fair value of warrant liability	$	(120	)		0	%	$	1,540			6	%	$	(1,660	)		(108	)%
Other income	$	12			0	%	$	4			0	%	$	8			200	%

	Six months ended September 30,
	2012			% of Net Sales			2011			% of Net Sales			$ Change			% Change
Interest expense, net	$	(520	)		1	%	$	(447	)		1	%	$	(73	)		(16	)%
Foreign exchange gain	$	6			0	%	$	198			1	%	$	(192	)		(97	)%
Change in fair value of warrant liability	$	70			0	%	$	2,534			6	%	$	(2,464	)		(97	)%
Other income	$	77			0	%	$	32			0	%	$	45			141	%

The decrease in interest expense during the three month period ended September 30, 2012 is related to lower interest rates as a result of the loan amendment. The increase in interest expense during the six month period ended September 30, 2012 is related to higher outstanding revolving credit balances during the period.

The foreign exchange loss in the three month period ended September 30, 2012 is due primarily to the decrease in value of the U.S. dollar and Hong Kong dollar versus the Great British Pound and the Euro during the period. The foreign exchange gains in the three and six month periods ended September 30, 2011 and six month period ended September 30, 2012 are due primarily to the rise in value of the U.S. dollar and Hong Kong dollar versus the Great British Pound and the Euro during those periods.

The change in fair value of warrant liability recorded in all periods represents the change in fair value of the Warrants issued in connection with the Securities Purchase Agreement. Specifically, the change in the Company’s stock price changes the value of the warrant liability and resulted in loss or income during the three and six month periods.

Other income during the three and six month periods ended September 30, 2012 primarily consists of a recovery of accrued goods and service taxes in Canada and to a lesser extent, advertising income from our GameShark.com website.

Income Tax Expense (Benefit)

Income tax expense (benefit) for the three and six months ended September 30, 2012 and 2011 was as follows (in thousands):


	Three months ended September 30,
			Effective						Effective			$		%
	2012		Tax Rate			2011			Tax Rate			Change		Change
Income tax expense	$	353		(364	)%	$	343			(240	)%	$	10		3	%

	Six months ended September 30,
			Effective						Effective			$		%
	2012		Tax Rate			2011			Tax Rate			Change		Change
Income tax expense (benefit)	$	620		(40	)%	$	(219	)		(5	)%	$	839		(383	)%

The Company’s effective tax rate is a blended rate for different jurisdictions in which the Company operates. The effective tax rate fluctuates depending on the taxable income in each jurisdiction and the statutory income tax rates in those jurisdictions in which we do business, including our U.S. operating company, and our Canadian parent company for which we continue to provide a full valuation allowance against its losses. The Company will continue to evaluate the realizability of its net deferred tax asset on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the realizability of deferred tax assets and will release the valuation allowance if there is sufficient positive evidence, including but not limited to cumulative earnings in successive recent periods, to overcome such negative evidence. The change in the effective tax rate in the second quarter of fiscal 2013 versus the second quarter of fiscal 2012 was primarily due to the book income in certain jurisdictions in the second quarter of fiscal 2013 as compared to losses in those jurisdictions in the second quarter of fiscal 2012.

For fiscal 2013, we project a 27% effective tax rate. Our current projected tax rate for fiscal 2013 could change significantly if actual results differ from our current outlook-based projections.

Liquidity and Capital Resources

Sources of Liquidity


	As of and for the six months ended September 30,
(in thousands)	2012			2011			Change
Cash	$	2,546		$	2,715		$	(169	)

Percentage of total assets		3	%		4	%
Cash used in operating activities	$	(3,595	)	$	(6,292	)	$	2,697
Cash used in investing activities		(566	)		(1,667	)		1,101
Cash provided by financing activities		4.246			6,962			(2,716	)
Effects of foreign exchange on cash		(13	)		(22	)		9

Net increase (decrease) in cash	$	72		$	(1,019	)		1,091

At September 30, 2012, available cash was approximately $2.5 million compared to cash of approximately $2.5 million at March 31, 2012 and $2.7 million at September 30, 2011. Our primary sources of liquidity include a revolving line of credit (as discussed below under Cash Flows from Financing Activities), cash on hand at the beginning of the year and cash flows generated from operations during the year.

Cash Flows from Operating Activities

Our cash flows from operating activities have typically included the collection of customer receivables generated by the sale of our products, offset by payments to vendors for materials and manufacture of our products. For the six months ended September 30, 2012, cash used in operating activities was $3.6 million compared to cash used of $6.3 million for the six months ended September 30, 2011. Cash used in operating activities for the six months ended September 30, 2012 and 2011 primarily resulted from an increase of accounts receivable partially offset by a decrease in inventory. The decrease in cash usage during the fiscal year 2013 compared to the 2012 period is primarily due to a later scheduled peak season forecast which required less inventory build-up during the second fiscal quarter. We are focused on effectively managing our overall liquidity position by continuously monitoring expenses, inventory levels and managing our accounts receivable collection efforts.

Due to the seasonality of our business, we typically experience a large build-up in inventories beginning during our second fiscal quarter ending September 30, with corresponding increases in accounts payable and our bank loan balance. These increases are in anticipation of the holiday selling season, which occurs during our third fiscal quarter ending December 31. During the third quarter our inventories decrease and accounts receivable increase as a result of the annual holiday selling. A large percentage of our annual revenue is generated during our third quarter. During our fourth quarter ending March 31, the sales cycle completes with decreases in accounts receivable, inventory, accounts payable and bank loan and net increase in cash. We forecast the expected demand for the holiday selling season months in advance to ensure adequate quantities of inventory. Our sales personnel forecast holiday sales based on information received from our major customers as to expected product purchases for the holiday season, and we also utilize mathematical modeling techniques to forecast demand based on recent point-of-sale activity. If demand does not meet expectations, the result will be excess inventories, and/or reduced sales and the overall effect could result in a reduction to cash flows from operating activities following payment of accounts payable.

Cash Flows from Investing Activities

Cash used in investing activities was $0.6 million during the six months ended September 30, 2012 and $1.7 million during the six months ended September 30, 2011. In the six months ended September 30, 2012, net cash used in investing activities consisted of capital expenditures to support our operations and were primarily for production molds, and to a lesser extent, computers and furniture and fixtures. In the six months ended September 30, 2011, net cash used in investing activities consisted of capital expenditures to support our operations and were primarily for production molds, and to a lesser extent, computers and machinery and equipment.

Cash Flows from Financing Activities

Cash provided by financing activities during the six months ended September 30, 2012 of $4.2 million was a result of net borrowings under our line of credit, partially offset by repayment of the convertible notes. For the six months ended September 30, 2011, cash provided by financing activities of $7.0 million was a result of net borrowings under our line of credit and net proceeds received for the issuance of common stock, partially offset by repayment of the convertible notes.

We maintain a Credit Facility with Wells Fargo Capital Finance, LLC to borrow up to $30 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. On August 1, 2012, we amended the line of credit to extend the maturity date to October 31, 2015. Prior to August 1, 2012, the line of credit accrued interest on the daily outstanding balance at the U.S. prime rate plus 2.0% per annum. Under the amended line of credit, interest accrues on the daily outstanding balance at an interest rate that ranges from U.S. prime rate plus 0.25% to U.S. prime rate plus 1.0% per annum depending upon the fixed charge coverage ratio. At September 30, 2012, the interest rate was 3.75%. We are also required to pay a monthly service fee of $1,500 and an unused line fee equal to 0.25% of the unused portion of the loan. Borrowings under the Credit Facility are secured by a first priority interest in the inventories, equipment, accounts receivable and investment properties of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries and is guaranteed by the Company. We are required to meet a quarterly covenant based on our trailing four quarter’s coverage of fixed charges as well as monthly year-to-date EBITDA covenant. We were in compliance with both of these covenants as of September 30, 2012.

In connection with the Company’s acquisition of Tritton, the Company is obligated to make certain payments to former Tritton shareholders of up to $8.7 million based on the achievement of certain specific performance measures. In May 2011, the Company made the first payment for $1.5 million. The maximum earn out for fiscal year ended March 31, 2012 of $1.6 million was achieved, and $1.4 million of this amount has been paid as of September 30, 2012. The remaining $150,000, which is net of the $8,000 working capital adjustment, will be paid prior to December 31, 2012, including interest accruing at an annual rate of 7%. The aggregate fair value of the remaining payments was $3.7 million as of September 30, 2012, and is reflected in the Company’s consolidated balance sheet.

We believe that our available cash balances, anticipated cash flows from operations and available line of credit will be sufficient to satisfy our operating needs for at least the next twelve months. However, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from additional credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, additional debt financing may contain more restrictive covenants than our existing debt.

Contractual Obligations and Commitments

There have been no other material changes to our contractual obligations from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

As of September 30, 2012 and March 31, 2012, we did not have any relationships with unconsolidated entities or financial parties, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in such relationships.

EBITDA, and Adjusted EBITDA

EBITDA, a non-GAAP financial measure, represents net income before interest, taxes, depreciation and amortization. To address the Warrants issued in the first quarter of fiscal 2012 and the resulting gain/loss on the change in the related warrant liability, we have excluded this non-operating, non-cash charge and defined the result as “Adjusted EBITDA”. We believe this to be a more meaningful measurement of performance than the previously calculated EBITDA. 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 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 generally accepted accounting principles. 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. Our management uses 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. We calculate Adjusted EBITDA as follows (in thousands):


	Three months ended						Six months ended
	September 30,						September 30,
	2012			2011			2012			2011
Net income (loss)	$	(450	)	$	(486	)	$	(2,167	)	$	(3,970	)
Adjustments:
Interest expense		251			285			520			447
Income tax expense (benefit)		353			343			620			(219	)
Depreciation and amortization		784			832			1,563			1,633

EBITDA (loss)	$	938		$	974		$	536		$	(2,109	)
Change in fair value of warrant liability		120			(1,540	)		(70	)		(2,534	)

Adjusted EBITDA (loss)	$	1,058		$	(566	)	$	466		$	(4,643	)

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q are not historical fact and constitute “forward-looking statements” within the meaning of Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended and constitute “forward-looking information” as defined in applicable Canadian securities legislation (collectively “forward-looking statements”). These forward-looking statements may address, among other things, our strategy for growth, business development, market and competitive position, financial results, expected revenue, expense levels in the future and the sufficiency of our existing assets to fund future operations and capital spending needs. These statements relate to our expectations, hopes, beliefs, anticipations, commitments, intentions and strategies regarding the future, and may be identified by the use of words or phrases such as “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” and “potential,” among others. Specifically this document contains forward-looking statements regarding, among other things, the continuance of seasonal fluctuations in the Company’s sales, inventories, receivables, payables and cash; the effect of currency exchange rate fluctuations; the sufficiency of funds available to meet operational needs; and our expectations for fiscal 2013 in respect of our gross profit margin, operating expenses and effective tax rate.

The forward-looking statements contained herein reflect management’s current beliefs and expectations and are based on information currently available to management, as well as its analysis made in light of its experience, perception of trends, current conditions, expected developments and other factors and assumptions believed to be reasonable and relevant in the circumstances. These assumptions include, but are not limited to: continuing demand by consumers for video games and accessories, continued financial viability of our largest customers, continued access to capital to finance our working capital requirements and the continuance of open trade with China, where the preponderance of our products are manufactured.

Forward-looking statements are not guarantees of performance and are subject to important factors and events that could cause our actual business, prospects and results of operations to differ materially from the historical information contained in this Form 10-Q, and from those that may be expressed or implied by the forward-looking statements. Readers are cautioned that actual results could differ materially from the anticipated results or other expectations expressed in these forward-looking statements for the reasons detailed in Part I — Item 1A. — Risk Factors of our most recent Annual Report on Form 10-K, and in Part II Other Information — Item 1A. We believe that many of the risks detailed in our other SEC filings are part of doing business in the industry in which we operate, and will likely be present in all periods reported. The fact that certain risks are endemic to the industry does not lessen their significance. The forward-looking statements contained in this report are made as of the date of this report and we assume no obligation to update them or to update the reasons why actual results could differ from those projected in such forward-looking statements, except as may be required by applicable law.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

For the second quarter of fiscal 2013, our management with the participation of our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2012. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Accordingly, our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level in ensuring that information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the SEC.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during the process.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

On July 6, 2012, the Company’s subsidiaries Mad Catz Inc., and Mad Catz Interactive Asia Limited filed a complaint styled Mad Catz, Inc. et. al. v. KnowledgeTech Corp., Case No. 37-2012-00100125-CU-BC-CTL, in the Superior Court of California, County of San Diego. The complaint alleges that KnowledgeTech Corp. breached its contract with the plaintiffs for failing to issue credits for defective and returned product. The plaintiffs are seeking damages in the amount to be determined at trial. Since the filing of the complaint, KnowledgeTech filed a cross-complaint against Mad Catz Interactive Asia Limited and Mad Catz, Inc., and a complaint against Mad Catz Interactive, Inc., Tritton Technologies, Inc., and Mad Catz Europe Limited seeking payment for good produced without any set off for defective goods. The case is in its early stages and discovery is just beginning. No trial date has been set.

On August 21, 2012, a complaint was filed in the United States District Court for the Southern District of New York, styled, Humanscale Corporation v. Mad Catz Interactive, Inc., et. al. Case No. 12 Civ. 7160, alleging that certain of Mad Catz’ R.A.T. branded gaming mice violated the claims of United States patent number 6,157,370 (the ‘370 patent”). The complaint was never served on Mad Catz. Subsequent to the filing of the complaint, Mad Catz and Humanscale executed a Settlement and Exclusive License Agreement, which settled the case and which allows Mad Catz the exclusive right to enforce the ‘370 patent against third parties.

We may at times be involved in litigation in the ordinary course of business. We will also, from time to time, when appropriate in management’s estimation, record reserves in our financial statements for pending litigation. Litigation is expensive and is subject to inherent uncertainties, and an adverse result in any such matters could adversely impact our operating results or financial condition. Additionally, any litigation to which we may become subject could also require significant involvement of our senior management and may divert management’s attention from our business and operations. Although claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of any current pending matters will not have a material adverse effect on our business, financial condition, results of operations or liquidity taken as a whole.

Item 1A. Risk Factors

There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On November 6, 2012, the Company entered into amendments to its employment agreements with Darren Richardson, President and CEO, Allyson Evans, CFO, Brian Andersen, COO, and Whitney Peterson, Secretary of the Company and General Counsel of the Company’s Mad Catz, Inc. subsidiary. The amendments are intended to ensure compliance of the agreements with Section 409A of the Internal Revenue Code.

Item 6. Exhibits


10.1		Amendment to Employment Agreement, effective as of November 6, 2012, by and among Mad Catz Interactive, Inc., Mad Catz, Inc. and Darren Richardson.

10.2		Amendment to Employment Agreement, effective as of November 6, 2012, by and among Mad Catz Interactive, Inc., Mad Catz, Inc. and Allyson Evans.

10.3		Amendment to Employment Agreement, effective as of November 6, 2012, by and among Mad Catz Interactive, Inc., Mad Catz, Inc. and Brian Andersen.

10.4		Amendment to Employment Agreement, effective as of November 6, 2012, by and among Mad Catz Interactive, Inc., Mad Catz, Inc. and Whitney Peterson.

31.1		Certification of Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		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.

101		The following materials from Mad Catz Interactive, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


				MAD CATZ INTERACTIVE, INC.

November 6, 2012				/s/ Darren Richardson
				Darren Richardson
				President and Chief Executive Officer

November 6, 2012				/s/ Allyson Evans
				Allyson Evans
				Chief Financial Officer

EX-10.1 2 d411550dex101.htm AMENDMENT TO EMPLOYMENT AGREEMENT Amendment to Employment Agreement

Exhibit 10.1

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (this “Amendment”) is made effective as of November 6, 2012, by and among Mad Catz, Inc., a Delaware corporation (“Mad Catz”), Mad Catz Interactive, Inc., a corporation organized under the laws of Canada (“Parent”), and Darren Richardson (“Executive”). Mad Catz and Parent are referred to herein collectively as the “Company.”

WHEREAS, Mad Catz and Executive are parties to that certain Employment Agreement dated as of May 18, 2000, as amended by that certain Amendment to Employment Agreement dated as of April 1, 2004 between Parent and Executive and as further amended by that certain Amendment to Employment Agreement dated as of December 31, 2008 between the Company and Executive (collectively, the “Agreement”).

WHEREAS, the Company and Executive desire to amend the Agreement to ensure that the benefits to be provided by the Agreement comply with, or are exempt from, the provisions of Section 409A (“Section 409A”) of the United States Internal Revenue Code, as amended (together with the Department of Treasury regulations and other guidance promulgated thereunder, the “Code”).

The parties further agree as follows:

1. Amendment to Section 1.4 of the Agreement. The period at the end of Section 1.4 of the Agreement is hereby replaced with a semicolon and the following language is hereby added to the end of Section 1.4 of the Agreement following such semicolon:

“provided, however, that if the sixty (60)-day period begins in one taxable year and ends in a second taxable year, such amounts shall be paid in the second taxable year.”

2. Miscellaneous. The Agreement, as amended by this Amendment, shall remain in full force and effect in accordance with the terms and conditions thereof. The formation, construction, and performance of this Amendment shall be construed in accordance with the laws of California, without regard to conflict of laws principles. This Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. In the event of any conflict between the original terms of the Agreement and this Amendment, the terms of this Amendment shall prevail.

[Signature Page Follows]

THE PARTIES TO THIS AMENDMENT HAVE READ THE FOREGOING AMENDMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AMENDMENT ON THE DATES SHOWN BELOW.


	EXECUTIVE

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
		Darren Richardson

	MAD CATZ, INC.

Dated: November 6, 2012	By:	/s/ ALLYSON EVANS
	Name:	Allyson Evans
	Title:	Chief Financisl Officer

	MAD CATZ INTERACTIVE, INC.

Dated: November 6, 2012	By:	/s/ ALLYSON EVANS
	Name:	Allyson Evans
	Title:	Chief Financisl Officer

EX-10.2 3 d411550dex102.htm AMENDMENT TO EMPLOYMENT AGREEMENT Amendment to Employment Agreement

Exhibit 10.2

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (this “Amendment”) is made effective as of November 6, 2012, by and among Mad Catz, Inc., a Delaware corporation (“Mad Catz”), Mad Catz Interactive, Inc., a corporation organized under the laws of Canada (“Parent”), and Allyson Evans (“Executive”). Mad Catz and Parent are referred to herein collectively as the “Company.”

WHEREAS, Mad Catz and Executive are parties to that certain Employment Agreement dated as of June 13, 2011 (the “Agreement”).

The parties further agree as follows:

1. Amendment to Section 1.4 of the Agreement. The following language is hereby added to the end of Section 1.4 of the Agreement:

“The Company shall be under no obligation to provide the payments and benefits described in this Section 1.4 unless you shall have executed the Release Agreement (and applicable revocation period thereunder shall have expired) within fifty-five (55) days following the date of your termination of employment. The payment of the severance amounts payable under this Section 1.4 shall be paid in a lump sum no later than sixty (60) days following the date of your termination of employment; provided, however, that if the sixty (60)-day period begins in one taxable year and ends in a second taxable year, such amounts shall be paid in the second taxable year.”

2. Amendment to Section 2.5 of the Agreement. The following language is hereby added to the end of Section 2.5 of the Agreement:

“To the extent that any payments or reimbursements provided to you under this Agreement are deemed to constitute compensation to which Treasury Regulation Section 1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed to you promptly, but in no event later than December 31 of the year following the year in which the expense is incurred. The amount of any such payments eligible for reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any other taxable year, and your right to such payments or reimbursement shall not be subject to liquidation or exchange for any other benefit.”

3. New Section 10.6 of the Agreement. A new Section 10.6 is hereby added to the Agreement as follows:

“10.6 Section 409A of the Code.

(a) To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Department of Treasury regulations and other interpretive guidance issued thereunder.

(b) Notwithstanding anything herein to the contrary, to the extent any of the amounts payable under Section 1.4 are treated as non-qualified deferred compensation subject to Section 409A of the Code, then (i) no portion of such amounts shall be payable to you unless your termination of employment constitutes a “separation from service,” as defined in Treasury Regulation Section 409A-1(h) (and any successor provision thereto) (a “Separation from Service”), and (ii) if at the time of your Separation from Service you are determined by the Company to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code and the Company determines that delayed commencement of any portion of the amounts payable under Section 1.4 is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such portion of the amounts payable under Section 1.4 shall not be provided to you prior to the earlier of (A) the expiration of the six-month period measured from the date of your Separation from Service, (B) the date of your death or (C) such earlier date as is permitted under Section 409A of the Code. Upon the expiration of the applicable Code Section 409A(a)(2)(B)(i) deferral period, all payments deferred shall be paid in a lump sum to you within thirty (30) days following such expiration, and any remaining payments due under this Agreement shall be paid as otherwise provided herein. The determination of whether you are a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of your Separation from Service shall be made by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including without limitation Treasury Regulation Section 1.409A-1(i) and any successor provision thereto).”

4. Miscellaneous. The Agreement, as amended by this Amendment, shall remain in full force and effect in accordance with the terms and conditions thereof. The formation, construction, and performance of this Amendment shall be construed in accordance with the laws of California, without regard to conflict of laws principles. This Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. In the event of any conflict between the original terms of the Agreement and this Amendment, the terms of this Amendment shall prevail.

[Signature Page Follows]


	EXECUTIVE

Dated: November 6, 2012	By:	/s/ ALLYSON EVANS
		Allyson Evans

	MAD CATZ, INC.

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
	Name:	Darren Richardson
	Title:	President & Chief Executive Officer

	MAD CATZ INTERACTIVE, INC.

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
	Name:	Darren Richardson
	Title:	President & Chief Executive Officer

EX-10.3 4 d411550dex103.htm AMENDMENT TO EMPLOYMENT AGREEMENT Amendment to Employment Agreement

Exhibit 10.3

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (this “Amendment”) is made effective as of November 6, 2012, by and among Mad Catz, Inc., a Delaware corporation (“Mad Catz”), Mad Catz Interactive, Inc., a corporation organized under the laws of Canada (“Parent”), and Brian Andersen (“Executive”). Mad Catz and Parent are referred to herein collectively as the “Company.”

WHEREAS, Mad Catz and Executive are parties to that certain Employment Agreement dated as of January 1, 2008 (the “Agreement”).

The parties further agree as follows:

1. Amendment to Section 1.4 of the Agreement. The following language is hereby added to the end of Section 1.4 of the Agreement:

2. Amendment to Section 2.5 of the Agreement. The following language is hereby added to the end of Section 2.5 of the Agreement:

3. New Section 10.6 of the Agreement. A new Section 10.6 is hereby added to the Agreement as follows:

“10.6 Section 409A of the Code.

[Signature Page Follows]


	EXECUTIVE

Dated: November 6, 2012	By:	/s/ BRIAN ANDERSEN
		Brian Andersen

	MAD CATZ, INC.

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
	Name:	Darren Richardson
	Title:	President & Chief Executive Officer

	MAD CATZ INTERACTIVE, INC.

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
	Name:	Darren Richardson
	Title:	President & Chief Executive Officer

EX-10.4 5 d411550dex104.htm AMENDMENT TO EMPLOYMENT AGREEMENT Amendment to Employment Agreement

Exhibit 10.4

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (this “Amendment”) is made effective as of November 6, 2012, by and among Mad Catz, Inc., a Delaware corporation (“Mad Catz”), Mad Catz Interactive, Inc., a corporation organized under the laws of Canada (“Parent”), and Whitney Peterson (“Executive”). Mad Catz and Parent are referred to herein collectively as the “Company.”

The parties further agree as follows:

“provided, however, that if the sixty (60)-day period begins in one taxable year and ends in a second taxable year , such amounts shall be paid in the second taxable year.”

[Signature Page Follows]


	EXECUTIVE

Dated: November 6, 2012	By:	/s/ WHITNEY PETERSON
		Whitney Peterson

	MAD CATZ, INC.

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
	Name:	Darren Richardson
	Title:	President & Chief Executive Officer

	MAD CATZ INTERACTIVE, INC.

Dated: November 6, 2012	By:	/s/ DARREN RICHARDSON
	Name:	Darren Richardson
	Title:	President & Chief Executive Officer

EX-31.1 6 d411550dex311.htm CERTIFICATION OF REGISTRANT'S CHIEF EXECUTIVE OFFICER Certification of Registrant's Chief Executive Officer

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Darren Richardson, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Mad Catz Interactive, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

EX-31.2 7 d411550dex312.htm CERTIFICATION OF REGISTRANT'S CHIEF FINANCIAL OFFICER Certification of Registrant's Chief Financial Officer

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Allyson Evans, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Mad Catz Interactive, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

EX-32.1 8 d411550dex321.htm CERTIFICATION OF REGISTRANT'S CHIEF EXECUTIVE OFFICER Certification of Registrant's Chief Executive Officer

EXHIBIT 32.1

Certification of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Mad Catz Interactive, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. §1350, 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, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2 9 d411550dex322.htm CERTIFICATION OF REGISTRANT'S CHIEF FINANCIAL OFFICER Certification of Registrant's Chief Financial Officer

EXHIBIT 32.2

Certification of Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: November 6, 2012						/s/ Allyson Evans
						Allyson Evans, Chief Financial Officer

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<div> (8) Basic and Diluted Net Loss per Share Basic loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share includes the impact of potentially dilutive securities.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="54%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Three Months Ended September 30,</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Six months Ended September 30,</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Numerator: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Net loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(450</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(486</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(2,167</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,970</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Effect of convertible notes payable </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Numerator for diluted net loss per share </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(450</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(486</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,167</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(3,970</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Denominator: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Weighted average shares used to compute basic loss per share </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,467,779</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,444,069</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,465,104</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">62,731,643</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Effect of convertible debt </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Effect of dilutive share share-based awards </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Denominator for diluted net loss per share </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,467,779</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,444,069</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,465,104</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">62,731,643</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Basic loss per share </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.03</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.06</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Diluted loss per share </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.03</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.06</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> </table> Outstanding options to purchase an aggregate of 8,616,766 and 8,285,748 shares of the Company’s common stock for the three and six months ended September 30, 2012, respectively, and 7,238,110 and 6,816,657 shares of the Company’s common stock for the three and six months ended September 30, 2011, respectively, were excluded from diluted net loss per share calculations because inclusion of such options would have an anti-dilutive effect during these periods. Outstanding warrants to purchase an aggregate of 2,540,918 shares of the Company’s common stock for each of the three and six months ended September 30, 2012, and 2,540,918 and 2,082,720 shares of the Company’s common stock for the three and six months ended September 30, 2011, respectively, were excluded from the diluted net loss per share calculations because of their anti-dilutive effect during the period. Weighted average shares of 949,189 related to the convertible notes payable were excluded from the calculation for the six month period ended September 30, 2011 because of their anti-dilutive effect during the period. </div>

-300000

1563000

7000

9000

-566000

918000

2238000

77000

63465104

<div> (4) Fair Value Measurement For a description of the fair value hierarchy, see Note 2 to the Company’s 2012 consolidated financial statements contained in the Company’s Annual Report on Form 10-K for its fiscal year ended March 31, 2012. The carrying values of the Company’s financial instruments, including cash, accounts receivable, other receivables, accounts payable, accrued liabilities and income taxes receivable/payable approximate their fair values due to the short maturity of these instruments. The carrying value of the bank loan approximates its fair value as the interest rate and other terms are that which is currently available to the Company.   The following tables provide a summary of the recognized assets and liabilities carried at fair value on a recurring basis as of September 30, 2012 and March 31, 2012 (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="2" colspan="2" align="center">Balance as of September 30, 2012</td> <td valign="bottom" rowspan="2"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="10" align="center">Basis of Fair Value Measurements</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liabilities: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Contingent consideration, net of working capital (Note 5) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,651</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,651</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Warrant liability (Note 7) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(623</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(623</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,274</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,274</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="2" colspan="2" align="center">Balance as  of March 31, 2012</td> <td valign="bottom" rowspan="2"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="10" align="center">Basis of Fair Value Measurements</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liabilities: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top" nowrap="nowrap"> Contingent consideration, net of working capital (Note 5) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,369</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,369</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Warrant liability (Note 7) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(693</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(693</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(5,062</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(5,062</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> The following tables provide a roll forward of the Company’s level three fair value measurements during the six months ended September 30, 2012, which consist of the Company’s contingent consideration liability and warrant liability (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="88%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration, net of working capital: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Balance at March 31, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,369</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration payment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,442</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Increases during the year – acquisition related expense </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(724</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,651</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="90%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Warrant liability: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Balance at March 31, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(693</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in fair value of warrant liability </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">70</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Balance at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(623</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

<div> The Company’s sales are attributed to the following geographic regions (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="68%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Three months ended September 30,</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Six months ended September 30,</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net sales: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> United States </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">12,700</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">11,115</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">22,183</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">20,110</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Europe </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">14,970</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">12,691</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">24,766</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19,068</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Canada </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">943</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">875</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,899</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,512</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other countries </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,602</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,070</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,189</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,524</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">31,215</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">25,751</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">53,037</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">42,214</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

8352000

-453000

-1547000

<div> (2) Correction of Immaterial Errors Related to Prior Periods During the first quarter of fiscal year 2013, the Company’s management determined that its previously issued financial statements contained immaterial errors related to the omission of an accrual of a customer’s contractually agreed upon defective allowance. The Company corrected the errors by revising the fiscal 2012 balances. The total effect of this revision to prior period financial statements was a decrease to shareholders’ equity and accounts receivable of $253,000 over the amounts previously reported in the consolidated financial statements for the year ended March 31, 2012. The revision applicable to the three and six month period ended September 30, 2011 was a decrease of $6,000 and $7,000, respectively, to net sales. </div>

<div> (6) Inventories Inventories consist of the following (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="74%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">March 31, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Raw materials </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,113</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,456</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Semi finished goods </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Finished goods </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">27,127</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">30,057</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Inventories </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">29,240</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">32,521</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

407000

384000

<div> Inventories consist of the following (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="76%" align="center"> <tr> <td width="74%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">September 30, 2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">March 31, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Raw materials </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,113</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,456</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Semi finished goods </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Finished goods </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">27,127</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">30,057</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Inventories </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">29,240</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">32,521</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

72000

7239000

-1180000

<div> (1) Basis of Presentation The condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss) and cash flows contained in this Quarterly Report on Form 10-Q, which are unaudited, include the accounts of Mad Catz Interactive, Inc. (the “Company”) and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all entries necessary for a fair presentation of such condensed consolidated financial statements have been included. These entries consisted only of normal recurring items. The results of operations for the interim period are not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year. The Company generates a substantial percentage of net sales in the last three months of every calendar year, its fiscal third quarter. These condensed consolidated financial statement refer to the Company’s fiscal years ending March 31 as its “Fiscal” years. The condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with United States generally accepted accounting principles. Please refer to the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2012 contained in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (the “SEC”). The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to asset impairments, reserves for accounts receivable and inventories, contingencies and litigation, valuation and recognition of share-based payments, contingent consideration, warrant liability and income taxes. Illiquid credit markets, volatile equity markets, volatility of foreign currency exchange rates, and declines in customer spending have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. Actual results could differ from those estimates. </div>

-0.03

<div> Diluted loss per share includes the impact of potentially dilutive securities.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="54%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Three Months Ended September 30,</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Six months Ended September 30,</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Numerator: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Net loss </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(450</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(486</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(2,167</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,970</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Effect of convertible notes payable </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Numerator for diluted net loss per share </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(450</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(486</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(2,167</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(3,970</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Denominator: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Weighted average shares used to compute basic loss per share </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,467,779</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,444,069</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,465,104</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">62,731,643</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Effect of convertible debt </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Effect of dilutive share share-based awards </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Denominator for diluted net loss per share </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,467,779</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,444,069</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">63,465,104</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">62,731,643</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Basic loss per share </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.03</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.06</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Diluted loss per share </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.01</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.03</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(0.06</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> </table> </div>

-3191000

37775000

-13000

-2167000

-0.03

5776000

0.9584

63465104

4246000

<div> The following tables provide a summary of the recognized assets and liabilities carried at fair value on a recurring basis as of September 30, 2012 and March 31, 2012 (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="2" colspan="2" align="center">Balance as of September 30, 2012</td> <td valign="bottom" rowspan="2"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="10" align="center">Basis of Fair Value Measurements</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liabilities: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Contingent consideration, net of working capital (Note 5) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,651</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,651</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Warrant liability (Note 7) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(623</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(623</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,274</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,274</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="64%"></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="5%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="2" colspan="2" align="center">Balance as  of March 31, 2012</td> <td valign="bottom" rowspan="2"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="10" align="center">Basis of Fair Value Measurements</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 1</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 2</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Level 3</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liabilities: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"> </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top" nowrap="nowrap"> Contingent consideration, net of working capital (Note 5) </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,369</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,369</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Warrant liability (Note 7) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(693</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(693</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(5,062</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(5,062</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom"> </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div>

39153000

15262000

100000

-2620000

677000

16442000

6000

620000

-13000

566000

P4Y

<div> (5) Contingent Consideration In connection with the fiscal year 2011 acquisition of Tritton Technologies Inc. (“Tritton”), the Company has a contingent consideration arrangement that requires the Company to pay the former owners of Tritton additional consideration based on a percentage of future sales of Tritton products over a five year period, subject to maximum annual amounts, up to an aggregate of $8.7 million. The fair value of the contingent consideration arrangement has been determined primarily by using the income approach and using a discount rate of approximately 14 percent. The amount paid for contingent consideration is expected to be reduced by the amount of any working capital adjustment. In May 2011, the Company paid $1,546,000 under this arrangement. The maximum earn out for fiscal year ended March 31, 2012 of $1,600,000 was achieved, and $1,442,000 of this amount has been paid as of September 30, 2012. The remaining $150,000, which is net of the $8,000 working capital adjustment, will be paid out prior to December 31, 2012, including interest accruing at an annual rate of 7 percent. The remaining annual payments will be made in May of each year through 2015. Fluctuations in the fair value of contingent consideration are impacted by unobservable inputs, most significantly estimated future sales of Tritton products and the estimated discount rate. Significant increases (decreases) in either of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Generally, a change in the assumption used for estimated future sales of Tritton products is accompanied by a directionally similar change in the fair value of contingent consideration liability, whereas a change in assumption used for the estimated discount rate is accompanied by a directionally opposite change in the fair value of contingent consideration liability. </div>

<div> (9) Geographic Data and Concentrations The Company’s sales are attributed to the following geographic regions (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="68%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Three months ended September 30,</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="6" align="center">Six months ended September 30,</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2012</td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">2011</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Net sales: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> United States </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">12,700</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">11,115</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">22,183</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">20,110</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Europe </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">14,970</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">12,691</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">24,766</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19,068</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Canada </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">943</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">875</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,899</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,512</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other countries </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,602</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,070</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,189</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,524</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"></td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">31,215</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">25,751</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">53,037</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">42,214</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> Revenue is attributed to geographic regions based on the location of the customer. During the three and six months ended September 30, 2012, one customer individually accounted for approximately 27% and 26% of the Company’s gross sales, respectively, one other customer individually accounted for approximately 11% and 10% of the Company’s gross sales, respectively and one other customer accounted for 11% and 9% of the Company’s gross sales, respectively. During the three and six months ended September 30, 2011, one customer individually accounted for approximately 24% and 22% of the Company’s gross sales, respectively, and one other customer individually accounted for approximately 12% and 11% of the Company’s gross sales, respectively. At September 30, 2012, three different customers represented approximately 27%, 14% and 11% of accounts receivable, respectively. At September 30, 2011, one customer represented 32% of accounts receivable and another customer represented 13% of accounts receivable. At September 30, 2012 and 2011, there were no other customers which accounted for greater than 10% of accounts receivable or gross sales. </div>

465000

53037000

-170000

87000

520000

-2167000

-453000

2593000

0.0047

724000

-3595000

33926000

92000

0.07 8700000 888000 <div> The following tables provide a roll forward of the Company’s level three fair value measurements during the six months ended September 30, 2012, which consist of the Company’s contingent consideration liability and warrant liability (in thousands):   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="88%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration, net of working capital: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Balance at March 31, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(4,369</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Contingent consideration payment </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,442</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Increases during the year – acquisition related expense </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(724</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Balance at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(3,651</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="90%"></td> <td valign="bottom" width="7%"></td> <td></td> <td></td> <td></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Warrant liability: </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top"> Balance at March 31, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(693</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Change in fair value of warrant liability </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">70</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> <tr> <td valign="top"> Balance at September 30, 2012 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">(623</td> <td valign="bottom" nowrap="nowrap">) </td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom">   </td> <td valign="bottom">   </td> <td> </td> </tr> </table> </div> 0.14 P5Y 1442000 <div> These Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the Warrants using the Black-Scholes option pricing model using the following assumptions:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">As of September 30, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Expected term </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.0 years</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Common stock market price </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.61</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.47</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Expected volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">95.84</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">As of March 31, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Expected term </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.5 years</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Common stock market price </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.62</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.91</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Expected volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">94.09</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> </table> </div> 70000 <div> (7) Securities Purchase Agreement In April 2011 the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain accredited investors, pursuant to which the Company sold (a) an aggregate of 6,352,293 shares of its common stock (the “Shares”) and (b) warrants to purchase an aggregate of 2,540,918 shares of common stock of the Company (“Warrants” and, together with the Shares, the “Securities”). On May 3, 2011 the Company filed a Registration Statement registering up to 8,893,211 common shares of the Company comprised of: (i) 6,352,293 common shares and (ii) 2,540,918 common shares issuable upon exercise of 2,540,918 warrants. The Securities were issued at a price equal to $1.92 for aggregate gross proceeds of approximately $12,196,000. The Warrants became exercisable on October 21, 2011 at a per share exercise price equal to $2.56. The Warrants contain provisions that adjust the exercise price in the event the Company pays stock dividends, effects stock splits or issues additional shares of common stock at a price per share less than the exercise price of the Warrants. The Warrants will remain exercisable until October 21, 2016. The Company accounts for the Warrants with exercise price reset features in accordance with the applicable FASB guidance. Under this guidance, warrants with these reset features are accounted for as liabilities and carried at fair value, with changes in fair value included in net earnings (loss) until such time as the Warrants are exercised or expire. The fair value of the Warrants decreased from $693,000 as of March 31, 2012 to $623,000 as of September 30, 2012, which resulted in a $70,000 gain from the change in fair value of warrants for the six months ended September 30, 2012. These Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the Warrants using the Black-Scholes option pricing model using the following assumptions:   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="84%"></td> <td valign="bottom" width="14%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">As of September 30, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Expected term </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.0 years</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Common stock market price </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.61</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.47</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Expected volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">95.84</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="68%" align="center"> <tr> <td width="86%"></td> <td valign="bottom" width="12%"></td> <td></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">As of March 31, 2012</td> <td valign="bottom"> </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Expected term </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4.5 years</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr> <td valign="top"> Common stock market price </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.62</td> <td valign="bottom" nowrap="nowrap">  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Risk-free interest rate </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0.91</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> <tr> <td valign="top"> Expected volatility </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">94.09</td> <td valign="bottom" nowrap="nowrap">% </td> </tr> </table> Expected volatility is based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods that correspond to the expected term of the Warrants. The Company believes this method produces an estimate that is representative of the Company’s expectations of future volatility over the expected term of these Warrants. The Company currently has no reason to believe future volatility over the expected remaining life of these Warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the Warrants. The risk-free interest rate is the interest rate for treasury constant maturity instruments published by the Federal Reserve Board that is closest to the expected term of the Warrants. </div> <div> (3) Recently Issued Accounting Standards The Company has adopted the following new accounting standards: Presentation of Comprehensive Income: In June 2011, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, requiring entities to report components of other comprehensive income in either a single continuous statement or in two separate statements. In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05”. The amendments in ASU 2011-12 defer the requirement to present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. The amendments in ASU 2011-12 are effective at the same time as ASU 2011-05 so that entities will not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 is deferring. The amendments in ASU 2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of these amended standards affected the presentation of the Company’s other comprehensive income but not the Company’s financial position or results of operations. </div>

0.26

0.10

0.09

22183000

1899000

24766000

4189000

2540918

8285748

2.56 1442000 2540918 1546000

12196000

0.9409

P4Y6M

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1499000

4000

63444069

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-143000

3748000

-1585000

-0.01

18321000

-486000

-0.01

3260000

63444069

7430000

-1550000

9015000

183000

343000

241000

25751000

285000

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-1064000

267000

1540000 6000

0.24

0.12

11115000

875000

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1070000

2540918

7238110

1217000

12000

63467779

707000

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512000

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22228000

-450000

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2820000

63467779

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257000

8475000

-250000

353000

232000

31215000

251000

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206000

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0.11

12700000

943000

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2540918

8616766

0001088162 us-gaap:StockOptionsMember 2012-07-01 2012-09-30 0001088162 us-gaap:WarrantMember 2012-07-01 2012-09-30 0001088162 mcz:OtherCountriesMember 2012-07-01 2012-09-30 0001088162 mcz:EuropeMember 2012-07-01 2012-09-30 0001088162 mcz:CanadaMember 2012-07-01 2012-09-30 0001088162 mcz:UnitedStatesMember 2012-07-01 2012-09-30 0001088162 mcz:CustomerThreeMember 2012-07-01 2012-09-30 0001088162 mcz:CustomerTwoMember 2012-07-01 2012-09-30 0001088162 mcz:CustomerOneMember 2012-07-01 2012-09-30 0001088162 2012-07-01 2012-09-30 0001088162 us-gaap:StockOptionsMember 2011-07-01 2011-09-30 0001088162 us-gaap:WarrantMember 2011-07-01 2011-09-30 0001088162 mcz:OtherCountriesMember 2011-07-01 2011-09-30 0001088162 mcz:EuropeMember 2011-07-01 2011-09-30 0001088162 mcz:CanadaMember 2011-07-01 2011-09-30 0001088162 mcz:UnitedStatesMember 2011-07-01 2011-09-30 0001088162 mcz:CustomerTwoMember 2011-07-01 2011-09-30 0001088162 mcz:CustomerOneMember 2011-07-01 2011-09-30 0001088162 2011-07-01 2011-09-30 0001088162 2011-04-01 2012-03-31 0001088162 2011-04-01 2011-05-03 0001088162 2011-04-01 2011-05-01 0001088162 2011-04-01 2011-04-30 0001088162 2012-09-01 2012-09-30 0001088162 2011-10-01 2011-10-21 0001088162 us-gaap:StockOptionsMember 2012-04-01 2012-09-30 0001088162 us-gaap:WarrantMember 2012-04-01 2012-09-30 0001088162 mcz:OtherCountriesMember 2012-04-01 2012-09-30 0001088162 mcz:EuropeMember 2012-04-01 2012-09-30 0001088162 mcz:CanadaMember 2012-04-01 2012-09-30 0001088162 mcz:UnitedStatesMember 2012-04-01 2012-09-30 0001088162 mcz:CustomerThreeMember 2012-04-01 2012-09-30 0001088162 mcz:CustomerTwoMember 2012-04-01 2012-09-30 0001088162 mcz:CustomerOneMember 2012-04-01 2012-09-30 0001088162 2012-04-01 2012-09-30 0001088162 us-gaap:StockOptionsMember 2011-04-01 2011-09-30 0001088162 us-gaap:ConvertibleDebtSecuritiesMember 2011-04-01 2011-09-30 0001088162 us-gaap:WarrantMember 2011-04-01 2011-09-30 0001088162 mcz:OtherCountriesMember 2011-04-01 2011-09-30 0001088162 mcz:EuropeMember 2011-04-01 2011-09-30 0001088162 mcz:CanadaMember 2011-04-01 2011-09-30 0001088162 mcz:UnitedStatesMember 2011-04-01 2011-09-30 0001088162 mcz:CustomerTwoMember 2011-04-01 2011-09-30 0001088162 mcz:CustomerOneMember 2011-04-01 2011-09-30 0001088162 2011-04-01 2011-09-30 0001088162 us-gaap:FairValueInputsLevel2Member 2012-03-31 0001088162 us-gaap:FairValueInputsLevel1Member 2012-03-31 0001088162 us-gaap:FairValueInputsLevel3Member 2012-03-31 0001088162 2012-03-31 0001088162 2011-04-30 0001088162 2011-03-31 0001088162 mcz:CustomerThreeMember 2012-09-30 0001088162 mcz:CustomerTwoMember 2012-09-30 0001088162 mcz:CustomerOneMember 2012-09-30 0001088162 us-gaap:FairValueInputsLevel2Member 2012-09-30 0001088162 us-gaap:FairValueInputsLevel1Member 2012-09-30 0001088162 us-gaap:FairValueInputsLevel3Member 2012-09-30 0001088162 2012-09-30 0001088162 mcz:OtherCustomersMember 2011-09-30 0001088162 mcz:CustomerOneMember 2011-09-30 0001088162 2011-09-30 0001088162 2012-11-02 0001088162 2011-05-03 shares iso4217:USD shares iso4217:USD pure

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

Contingent Consideration - Additional Information (Detail) (USD $)	1 Months Ended		6 Months Ended	12 Months Ended
	Sep. 30, 2012	May 01, 2011	Sep. 30, 2012	Mar. 31, 2012
Contingencies And Commitments [Line Items]
Contingent consideration arrangement period			5 years
Contingent consideration based on the percentage of future sales			$ 8,700,000
Discount rate			14.00%
Contingent consideration paid		1,546,000	1,442,000
Business acquisition Earn out				1,600,000
Earnout paid	1,442,000
Remaining earnout payment	150,000		150,000
Remaining earnout payment net	$ 8,000		$ 8,000
Interest rate of earnout payment			7.00%

Basic and Diluted Net Earnings (Loss) per Share - Calculation of Basic and Diluted Net Earnings (Loss) Per Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Numerator:
Net loss	$ (450)	$ (486)	$ (2,167)	$ (3,970)
Effect of convertible notes payable
Numerator for diluted net loss per share	$ (450)	$ (486)	$ (2,167)	$ (3,970)
Denominator:
Weighted average shares used to compute basic loss per share	63,467,779	63,444,069	63,465,104	62,731,643
Effect of convertible debt
Effect of dilutive share share-based awards
Denominator for diluted net loss per share	63,467,779	63,444,069	63,465,104	62,731,643
Basic loss per share	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.06)
Diluted loss per share	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.06)

Securities Purchase Agreement - Estimated Fair Value of Warrants (Detail) (USD $)	6 Months Ended	12 Months Ended
	Sep. 30, 2012	Mar. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Expected term	4 years	4 years 6 months
Common stock market price	$ 0.61	$ 0.62
Risk-free interest rate	0.47%	0.91%
Expected volatility	95.84%	94.09%

Geographic Data - Additional Information (Detail)	3 Months Ended		6 Months Ended
Geographic Data - Additional Information (Detail)	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue, Major Customer [Line Items]
Customers accounted for revenue and accounts receivable , Percentage	10.00%	10.00%	10.00%	10.00%
Customer one [Member]
Revenue, Major Customer [Line Items]
Customers accounted for revenue, Percentage	27.00%	24.00%	26.00%	22.00%
Customers accounted for accounts receivable, Percentage	27.00%	32.00%	27.00%	32.00%
Customer two [Member]
Revenue, Major Customer [Line Items]
Customers accounted for revenue, Percentage	11.00%	12.00%	10.00%	11.00%
Customers accounted for accounts receivable, Percentage	14.00%		14.00%
Customer three [Member]
Revenue, Major Customer [Line Items]
Customers accounted for revenue, Percentage	11.00%		9.00%
Customers accounted for accounts receivable, Percentage	11.00%		11.00%
Another customer [Member]
Revenue, Major Customer [Line Items]
Customers accounted for accounts receivable, Percentage		13.00%		13.00%

Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Current assets:
Cash	$ 2,546	$ 2,474
Accounts receivable, net	23,407	15,278
Other receivables	1,280	1,196
Inventories	29,240	32,521
Deferred tax assets	110	110
Income tax receivable	1,747	1,747
Prepaid expenses and other current assets	3,965	3,305
Total current assets	62,295	56,631
Deferred tax assets	450	440
Other assets	835	863
Property and equipment, net	3,487	4,037
Intangible assets, net	4,148	4,626
Goodwill	10,484	10,476
Total assets	81,699	77,073
Current liabilities:
Bank loan	21,880	16,654
Accounts payable	20,300	17,634
Accrued liabilities	6,491	6,401
Contingent consideration, current	1,682	1,600
Income taxes payable	1,083	1,375
Total current liabilities	51,436	43,664
Contingent consideration	1,969	2,769
Warrant liability	623	693
Deferred tax liabilities	242	245
Other long-term liabilities	167	211
Total liabilities	54,437	47,582
Shareholders' equity:
Common stock, no par value, unlimited shares authorized; 63,477,399 and 63,462,399 shares issued and outstanding at September 30, 2012 and March 31, 2012	59,823	59,432
Accumulated other comprehensive loss	(2,071)	(1,618)
Accumulated deficit	(30,490)	(28,323)
Total shareholders' equity	27,262	29,491
Total liabilities and shareholders' equity	$ 81,699	$ 77,073

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss	$ (2,167)	$ (3,970)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,563	1,633
Amortization of deferred financing fees	92	74
Provision for deferred income taxes	(13)	23
Loss on disposal or sale of assets		22
Stock-based compensation	384	279
Contingent consideration, net of payments	170	592
Change in fair value of warrant liability	(70)	(2,534)
Changes in operating assets and liabilities:
Accounts receivable	(8,352)	3,952
Other receivables	(87)	(425)
Inventories	3,191	(5,838)
Prepaid expenses and other current assets	(677)	(387)
Other assets	(9)	(19)
Accounts payable	2,593	6,593
Accrued liabilities	87	(5,114)
Income taxes receivable/payable	(300)	(1,173)
Net cash used in operating activities	(3,595)	(6,292)
Cash flows from investing activities:
Purchases of property and equipment	(566)	(1,667)
Net cash used in investing activities	(566)	(1,667)
Cash flows from financing activities:
Payment of contingent consideration	(888)	(1,546)
Payment of financing costs	(100)
Repayments of convertible notes		(14,500)
Proceeds from issuance of common stock and warrants, net of issuance costs of $820		11,351
Repayments on bank loan	(33,926)	(50,837)
Borrowings on bank loan	39,153	62,465
Proceeds from exercise of stock options	7	29
Net cash provided by financing activities	4,246	6,962
Effects of foreign exchange on cash	(13)	(22)
Net increase (decrease) in cash	72	(1,019)
Cash, beginning of period	2,474	3,734
Cash, end of period	2,546	2,715
Supplemental cash flow information:
Income taxes paid	918	899
Interest paid	407	392
Supplemental disclosure of non-cash investing and financing activities:
Fair value of warrants issued		$ 3,250

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Sep. 30, 2011
Net of issuance costs for common stock and warrants	$ 820

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2012	Mar. 31, 2012
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	Unlimited	Unlimited
Common stock, shares issued	63,477,399	63,462,399
Common stock, shares outstanding	63,477,399	63,462,399

Document and Entity Information	6 Months Ended
Document and Entity Information	Sep. 30, 2012	Nov. 02, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	MCZ
Entity Registrant Name	MAD CATZ INTERACTIVE INC
Entity Central Index Key	0001088162
Current Fiscal Year End Date	--03-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		63,477,399

Fair Value Measurement - Recognized Assets and Liabilities Carried at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Liabilities:
Contingent consideration, net of working capital (Note 5)	$ (3,651)	$ (4,369)
Warrant liability (Note 7)	(623)	(693)
Liabilities, fair value	(4,274)	(5,062)
Level 1 [Member]
Liabilities:
Contingent consideration, net of working capital (Note 5)
Warrant liability (Note 7)
Liabilities, fair value
Level 2 [Member]
Liabilities:
Contingent consideration, net of working capital (Note 5)
Warrant liability (Note 7)
Liabilities, fair value
Level 3 [Member]
Liabilities:
Contingent consideration, net of working capital (Note 5)	(3,651)	(4,369)
Warrant liability (Note 7)	(623)	(693)
Liabilities, fair value	$ (4,274)	$ (5,062)

Inventories - Schedule of Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Mar. 31, 2012
Inventories [Line Items]
Raw materials	$ 2,113	$ 2,456
Semi finished goods		8
Finished goods	27,127	30,057
Inventories	$ 29,240	$ 32,521

Securities Purchase Agreement - Additional Information (Detail) (USD $)	1 Months Ended			3 Months Ended		6 Months Ended
	Oct. 21, 2011	Apr. 30, 2011	May 03, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Sale of common stock		6,352,293		63,477,399		63,477,399		63,462,399
Warrants to purchase shares of common stock		2,540,918
Number of shares, registering			8,893,211
Warrant outstanding			2,540,918
Securities issued price per share			$ 1.92
Proceeds from issuance of securities			$ 12,196,000
Warrants exercise price	$ 2.56
Warrants expiration date						Oct. 21, 2016
Fair value of warrants				623,000		623,000		693,000
Change in fair value of warrant liability				$ (120,000)	$ 1,540,000	$ 70,000	$ 2,534,000