10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For the fiscal year ended March 31, 2015

OR

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

For the transition period from             to            .

Commission file number 001-14944

MAD CATZ INTERACTIVE, INC.

(Exact name of Registrant as specified in its charter)

Canada	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10680 Treena Street, Suite 500 San Diego, California	92131 (Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(858) 790-5008

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, no par value	NYSE MKT
	Toronto Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨        No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes  ¨        No  þ

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  þ        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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ        No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ

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):

Large accelerated filer  ¨	Accelerated filer  ¨	Non-accelerated filer  ¨	Smaller reporting company   þ
		(Do not check if a smaller reporting company)

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

The aggregate market value of the voting and non-voting common stock held by non-affiliates based on the closing sale price of common stock as reported on the American Stock Exchange on September 30, 2014, the last business day of the second fiscal quarter, was $25,150,631.

There were 73,469,571 shares of the registrant’s common stock issued and outstanding as of June 18, 2015.

DOCUMENTS INCORPORATED BY REFERENCE

Part II and Part III incorporates information by reference from the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for the Registrant’s 2014 Annual Meeting of Shareholders.

MAD CATZ INTERACTIVE, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED MARCH 31, 2015

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business		2
Item 1A.	Risk Factors		9
Item 1B.	Unresolved Staff Comments		22
Item 2.	Properties		22
Item 3.	Legal Proceedings		23
Item 4.	Mine Safety Disclosures		24
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		25
Item 6.	Selected Financial Data		27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		41
Item 8.	Financial Statements and Supplementary Data		42
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		42
Item 9A.	Controls and Procedures		42
Item 9B.	Other Information		43
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance		44
Item 11.	Executive Compensation		44
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		44
Item 13.	Certain Relationships and Related Transactions, and Director Independence		44
Item 14.	Principal Accounting Fees and Services		44
	PART IV
Item 15.	Exhibits, Financial Statement Schedules		45

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K and the documents incorporated by reference herein, contain forward-looking statements and forward looking information as defined in applicable securities legislation (collectively “forward looking statements”), which are prospective and reflect management’s expectations regarding our business, operations, financial performance and business prospects and opportunities. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate,” “plan,” “estimate,” “expect” “believe” and “intend” and statements that an event or result “may,” “will,” “should,” “could” or “might” occur or be achieved and other similar expressions together with the negative of such expressions. These forward-looking statements 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 game systems and accessories, the continuance of normal trade relations between China and the United States, the ability to maintain or extend our existing licenses, the ability to continue producing and selling our products in accordance with various intellectual property that might apply to said products, the continued financial viability of our largest customers, the continuance of timely and adequate supply from third party manufacturers and suppliers, no significant fluctuations in the value of the U.S. dollar relative to other currencies and the continued satisfaction of our obligations under our existing credit facility and any future credit facility we may obtain. Specifically, this document contains forward looking statements regarding, among other things, our focus and strategy for fiscal 2016, the expected life cycles of video game console systems and accessories, anticipated price reductions to console systems and the impact on the market for our products, the increased diversification of our product line and the possible expansion of our product offerings, the impact that new and updated video game platforms may have on our research and development expenditures, on price competition and profitability, the expectation of additional competition if new companies enter the market, the ability to meet the covenants under our existing credit facility, the increased difficulty in forecasting demand for specific products as we introduce and support additional products and enter additional markets, the possible use of financial hedging techniques, the belief that sufficient funds will be available to satisfy our operating needs for the next twelve months, the impact of new laws and regulations on costs and revenues, the continuing volatility of our stock price, the reliance on various intellectual property rights to establish and protect proprietary rights, the continuance of significant seasonal fluctuations in our quarterly results of operations, our expectations regarding sales and gross margins and the maintenance or changes in certain expenses, the ability to realize deferred tax assets, the adequacy of our leased facilities, the adequacy of the allowances for doubtful accounts, our operating expenses and capital expenditures, and the release of the valuation allowance against our deferred tax assets. . Forward-looking statements are subject to significant risks, uncertainties, assumptions and other factors, any of which could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. More detailed information about these risks, uncertainties, assumptions and other factors is provided under Item 1A “Risk Factors”. Investors should not place undue reliance on such forward-looking statements. Forward-looking statements are not guarantees of future performance or outcomes and actual results could differ materially from those expressed or implied by the forward-looking statements. We assume no obligation to update or alter such forward-looking statements whether as a result of new information, future events or otherwise except as required by law.

TRADEMARKS

Some, but not all of the trademarks that we use include: Mad Catz, the Mad Catz logo, Saitek, Tritton, the Tritton logo, M.O.J.O and GameSmart.

CURRENCY

Unless otherwise indicated, all dollar references herein are in U.S. dollars.

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PART I

Item 1.    Business

In this Annual Report on Form 10-K, “Mad Catz Interactive, Inc.,” “Mad Catz,” the “Company,” “we,” “us,” and “our” refer to Mad Catz Interactive, Inc. and all of our consolidated subsidiaries.

Mad Catz Interactive, Inc. (“MCII”) was incorporated under the Canada Business Corporations Act on August 25, 1993.

Corporate Structure

Subsidiary	Jurisdiction of Incorporation
Mad Catz, Inc. (“MCI”)	Delaware
1328158 Ontario Inc. (“Mad Catz Canada”)	Ontario, Canada
Mad Catz Europe, Limited	England and Wales
Mad Catz GmbH	Germany
Saitek S.A. (“Mad Catz France”)	France
Mad Catz Co., Ltd (“Mad Catz Japan”)	Japan
Mad Catz Interactive Asia Limited	Hong Kong
Mad Catz Technological Development (Shenzhen) Co., Ltd.	People’s Republic of China
Winkler Atlantic Holdings Limited	British Virgin Islands
FX Unlimited Inc.	Delaware
Xencet USA, Inc.	Delaware
Singapore Holdings Inc.	Delaware

Descriptions of our subsidiary corporations are as follows:

• Mad Catz, Inc., acquired by MCII in August 1999, is engaged in the marketing and sale of our products to the general market in the United States and to Mad Catz Canada for further resale into Canada. MCI’s offices in San Diego, California, serve as our main operational headquarters. MCI also provides corporate services for all of our subsidiaries. MCI and its predecessor company have been involved in the videogame industry since approximately 1991.

• Mad Catz Canada is engaged in the marketing and sale of our products to the general market in Canada.

• Mad Catz Europe, Limited is engaged in the marketing and sale of our products to the general market in Europe and to Mad Catz GmbH for further resale into Germany.

• Mad Catz GmbH is engaged in the marketing and sale of our products to the general market in Germany.

• Mad Catz France is engaged in sales and marketing support services regarding the sale of our products to the general market in France. Mad Catz France does not buy and sell product but rather acts as a sales agent for Mad Catz Europe, Limited in the French market.

• Mad Catz Japan is engaged in the marketing and sale of our products to the general market in Japan.

• Mad Catz Interactive Asia Limited is engaged in the engineering, design and contract manufacture of our products and in the marketing and sales of our products to the general market in Asia.

• Mad Catz Technological Development (Shenzhen) Co., Ltd. is engaged in the engineering, design, quality assurance and quality control of our products and in the marketing and sale of our products to the general market in China.

• Winkler Atlantic Holdings Limited is the holding company for Mad Catz GmbH and Mad Catz France.

• FX Unlimited Inc., Xencet USA, Inc., and Singapore Holdings Inc. are inactive companies that hold intellectual property related to our business or that are in the process of being dissolved.

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Our common stock trades on the Toronto Stock Exchange and the NYSE MKT under the symbol “MCZ.” Our registered office is located at 181 Bay Street, Suite 4400, Toronto, Ontario, M5J 2T3, and our telephone number is (416) 865-7000. MCI, our primary operating subsidiary and our operational headquarters is located at 10680 Treena Street, Suite 500, San Diego, California, 92131, and our telephone number is (858) 790-5008.

Overview

Mad Catz designs, manufactures (primarily through third parties in Asia), markets and distributes innovative interactive entertainment products marketed under our Mad Catz (gaming), Tritton (audio), and Saitek (simulation) brands. Our products, which primarily include headsets, mice, keyboards, controllers, specialty controllers, and other accessories, cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, PC and Mac computers, smart phones, tablets and other mobile devices. We distribute our products through our online store as well as through many leading retailers around the globe. We are operationally headquartered in San Diego, California, and maintain offices in Europe and Asia.

Industry Overview and Products

The typical successful life cycle of accessories designed for video game consoles is similar to the life cycle of the relevant console, which generally ranges from seven to ten years. Unlike products developed for video game consoles, the majority of our products for PC and Mac computers and smart devices are developed to work on the underlying operating system. Upgrades to the operating system have not historically had a negative effect on the compatibility of our accessories; therefore, we expect the product lifecycle of products developed for use with PC and Mac computers and smart devices to be longer and less cyclical than products developed for video game consoles. Factors such as competition for access to retail shelf space, changing technology, consumer preferences and seasonality could result in shortening the life cycle for some of our products and increasing the importance of our ability to release new products on a timely basis. We must frequently introduce new products and revisions to existing products in order to generate new revenues and/or to replace declining revenues from older products. The complexity of new technologies has resulted in longer development cycles and the need to carefully monitor and manage the product development process.

The past two fiscal years have been challenging years for the video game accessory industry. Our fiscal year 2014 was a pivotal year in the video game industry as the year included the release of new video game consoles by both Microsoft and Sony in November 2013. Microsoft released the Xbox One (successor to the Xbox 360 released in 2005) and Sony released the PlayStation 4 (successor to the PlayStation 3 released in 2006). Although the release of these new consoles were predicted, the decline in sales of the older consoles and the adoption rates of the new consoles has been much greater than we or others in the industry expected because it was so significantly inconsistent with the prior console transition. Approximately 32.0 million combined PlayStation 4 and Xbox One consoles were sold in the first 16 months since launch, a 60% increase compared to a combined 20.0 million PlayStation 3 and Xbox 360 consoles sold during the same time period of the prior console transition. The prior console transition showed a gradual adoption of the new consoles, while the older consoles with reduced pricing continued to sell well, particularly to more casual gamers. We believe that the age of the old consoles (7-8 years) contributed to consumer fatigue with the older technology and mobile gaming has encroached on potential sales of the old consoles to more casual gamers. As a result, sales of accessories designed for the old consoles also declined much more quickly than expected starting several months preceding the console releases. In fiscal 2015, approximately 20% of our gross sales were derived from products designed for use with the next generation of video game consoles (e.g. Xbox One, PlayStation 4, Nintendo Wii U), while only 4% of our gross sales were derived from products designed for use with legacy video game consoles (e.g. Xbox 360, PlayStation 3, Nintendo Wii).

Video game console prices typically are reduced as the products mature in the market-place and as the launch of new consoles is anticipated. Lower console prices usually result in higher sales of the consoles and higher sales of accessories designed to use with such consoles. Microsoft’s Xbox One was launched in November 2013 with a manufacturer suggested retail price (“MSRP”) of $499. In June 2014, Microsoft released a version of the Xbox One without the Kinect motion sensor for a MSRP of $399, and in January 2015 reduced the MSRP to $349. Nintendo’s Wii-U was launched in November 2012 with a MSRP of $299 for the basic model and $349 for the deluxe model, and in September 2013 the MSRP for the deluxe model was reduced to $299. Sony’s Play-

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Station 4 was launched in November 2013 with a MSRP of $399 and has not received a permanent price reduction since the initial launch. Management believes that there may be price reductions in fiscal 2016 on one or more of the current console videogame systems, but no assurances can be given that any such price reductions will take place or that such price reductions will result in higher sales of video game consoles or products designed for use with such video game consoles.

In fiscal 2015, approximately 46% of our gross sales were derived from products designed for use with PC and Mac computers, including input devices, comprised primarily of mice and keyboards; specialty controllers, comprised of flight sticks, yokes, joysticks, and steering wheels; and audio products, comprised primarily of headsets. Gaming on PC and Mac computers remains strong, particularly amongst the core gamers, although this is also driving increased competition in this space.

In fiscal 2015, approximately 7% of our gross sales were derived from products designed for use with smart devices, including smart phones, tablets and other mobile devices. We have been working the past two years to develop our GameSmart branded line of products that are specifically designed to cater to this market and include: gaming controllers; input devices, comprised primarily of mice and keyboards; audio products, comprised primarily of headsets; and our M.O.J.O micro console. Historically, the smart device market has been limited to touch screen gaming due to limitations in the operating systems used in smart devices. Smart devices manufactured by Apple operate on the iOS operating system. Other smart devices operate primarily on Google’s Android operating system. During 2013, Apple released the iOS7 operating system and Google released the android 4.4 operating system known as “KitKat”, both of which provide controller support for gaming on smart devices. As a result, video games developed for smart devices running these operating systems, or subsequent releases, will allow users to use external controllers in addition to the device’s touchscreen when playing video games, thus providing an enhanced gaming experience. We believe controller-enabled games for smart devices will grow substantially in future years.

In fiscal 2015, approximately 22% of our fiscal 2015 gross sales were derived from products that can be used across multiple platforms, such as certain models of our audio headsets and mice.

Mad Catz Strategy

In fiscal 2016, our goal is to return to growth and profitability by focusing on the following strategic and operational objectives, which are consistent with the objectives we set in fiscal 2015:

• designing innovative products for passionate gamers and executing strong global market launches of those products;

• expanding the market for accessories designed for smart devices;

• expanding our global sales reach, with particular focus on the Asia-Pacific (“APAC”) region;

• continuing our discipline in working capital management and product placement profitability; and

• identifying strategic opportunities for the expansion of products in adjacent and compatible categories, original equipment manufacturer (“OEM”) opportunities, and transactions with companies where Mad Catz can leverage its global distribution capabilities.

Intellectual Property Needed to Produce our Products

The technology used in the newer generation of consoles such as the PlayStation 4, Xbox One and Wii U, as well as the Xbox 360 console, require that we obtain a license to ensure that the majority of our products are compatible with the consoles. In contrast, we are generally not required to obtain licenses to produce or market products designed to operate with PC and Mac computers or smart devices.

Because first parties such as Sony, Microsoft and Nintendo have created “closed video game systems”, and therefore companies need a license in order to produce compatible products for said consoles, it is a distinct competitive disadvantage if we cannot obtain such licenses. While the Company currently believes that it has the necessary licenses, or that it can obtain the necessary licenses, in order to produce compatible products with said consoles, there is no guarantee that our licenses will be renewed or granted in the first instance. Moreover, if these first parties enter into license agreements with companies other than us for their “closed systems,” we would be placed at a substantial competitive disadvantage.

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From time to time, we acquire intellectual property licenses to augment the commercial appeal of certain of our products. We must obtain a license before exploiting such intellectual property.

Product Development and Support

We develop products using a team of design, production and technical professionals, in coordination with our marketing and finance departments. This team also has responsibility for the development and production process including the supervision and coordination of internal and external resources. Our hardware products are typically conceived and designed by our internal teams in Magor, Wales, Shenzhen, China and Hong Kong, China. Typically, we own the industrial design and other intellectual property associated with our products, which in most cases includes the tools, dies and molds used for production. From time to time, we also may acquire the rights to produce and distribute products that are, or will be, independently created by third parties in which we share the intellectual property rights or those rights are retained by the third party.

Manufacturing

Our products are manufactured to our specifications by outsourced factories located predominantly in and around Shenzhen, China. The use of outsourced manufacturing facilities is designed to take advantage of specific expertise and allow for flexibility and scalability to respond to seasonality and changing demands for our products. In some instances, packaging and final assembly is performed at our distribution facility in California or by outsourced suppliers in the United States or Europe.

Distribution

Our products are sold to many of the world’s largest retailers of interactive entertainment products primarily on a direct basis without the use of intermediaries or distributors. We also appoint distributors in certain territories to service retail accounts not dealt with on a direct basis. We maintain a direct sales force in the United States, Europe, China and Japan. Direct shipping programs with certain customers, whereby the customer receives and takes title of the products directly in Hong Kong, are managed by our Asian operations. We operate a distribution center in Redlands, California, which services our North American customers, and utilize outsourced distribution centers and related logistics solutions for the European and Asian markets, one in the United Kingdom, one in Germany, one in Japan and one in Hong Kong. All freight is handled by outsourced transportation companies. We operate information systems, including electronic data interchange (EDI) and integrated warehouse management systems, to remain compliant with the requirements of our mass market retailers.

Principal Markets

The Company operates as one business segment, in the design, manufacture (through third parties in Asia), sales, marketing and distribution of interactive entertainment products marketed under our Mad Catz (gaming), Tritton (audio), and Saitek (simulation) brands. In fiscal 2015, approximately 32% of our gross sales were generated by customers with retail stores located in the Americas, 54% in Europe, the Middle East and Africa (“EMEA”), and 14% in APAC. In fiscal 2014, approximately 32% of our gross sales were generated by customers with retail stores located in the Americas, 59% in EMEA, and 9% in APAC. In fiscal 2013, approximately 42% of our gross sales were generated by customers with retail stores located in the Americas, 50% in EMEA, and 8% in APAC.

Customers

Our products are sold by many of the largest video game and consumer accessories retailers in the world including Amazon.com and GameStop in the Americas and Amazon.com, Comtrade, GameStop, Media-Saturn and MicroMania in EMEA.

In each of fiscal 2015, 2014 and 2013, one of our customers, GameStop, individually accounted for approximately 10%, 11% and 17% of our gross sales in fiscal 2015, 2014 and 2013, respectively, taking into account all of its U.S. and non-U.S. entities. In fiscal 2015 and 2014, one other customer, Amazon.com, individually accounted for approximately 14% and 13% of our gross sales in fiscal 2015 and 2014, respectively, taking into account all of its U.S. and non-U.S. entities. No other customer individually accounted for at least 10% of our gross sales in fiscal 2015, 2014 and 2013.

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Competitive Environment

The primary markets in which we sell our products are the Americas, EMEA, and to a lesser extent, APAC. These markets are highly competitive, and we expect that we may face increased competition if additional companies enter these markets. Historically, price has been a significant competitive factor for interactive video game and PC accessories. We believe that the other principal competitive factors that historically have affected retailer and consumer choice include value, product features, ease of use and installation, realism in simulation, name brand recognition, product styling and whether the product is licensed. Additional competitive factors from the perspective of the major retailers include margins, service, support, merchandising and promotional support, reliable and timely delivery, track record and electronic data interchange capability. We seek to differentiate our products through superior product design, packaging, innovation, licensing and branding.

Our principal competitors for video game and PC accessories include first-party manufacturers Microsoft Corporation, Sony Corporation, and Nintendo Co., Ltd. and third-party manufacturers including: Accessories 4 Technology, Astro Gaming, BDA, Big Ben, Corsair, Genius, Hama GmbH & Co KG, Jöllenbeck GmbH, Inc., Logitech, NYKO, PDP, Power A, Razer, Roccat, SteelSeries, Thrustmaster, Trust International, and Turtle Beach.

We believe that our products are targeted to a broad demographic group and that the major factors that will provide us with continued viability and competitive edge are innovative products, quality, service, licenses, brands and retail relationships.

Employees

At March 31, 2015, we had 227 full-time employees in the following locations:

Location
United States	66
Canada	1
United Kingdom	35
Germany	21
France	5
Hong Kong	35
Spain	2
Sweden	1
Japan	3
China	58
Total	227

Temporary employees, usually ranging between 10 and 20 hourly employees, are used in our distribution center in California, especially during the peak shipping months of October through December. Our ability to attract and retain qualified personnel is essential to our continued success. None of our employees are covered by a collective bargaining agreement, except in locations where all employees are generally part of a collective bargaining agreement, such as in France. As required in certain foreign countries, national collective agreements may apply to certain of our employees. We have never experienced any work stoppage and we believe that our employee relations are good.

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Executive Officers of the Registrant

Our executive officers and their ages as of June 25, 2015 are as follows:

Name	Position	Age
Darren Richardson	President, Chief Executive Officer and Director		54
Karen McGinnis	Chief Financial Officer		48
Brian Andersen	Chief Operating Officer		39
Whitney Peterson	Senior Vice President - Business Affairs, General Counsel and Secretary		50
Andrew Young	Vice President, Product Development		48

Darren Richardson has been our President and Chief Executive Officer since April 2004 and a director of the Company since 2005. Prior to his appointment as our President and Chief Executive Officer, Mr. Richardson served as our Executive Vice President since October 1997 and President and Chief Operating Officer of MCI since September 1999. Mr. Richardson served in several senior management capacities with Games Trader from 1997 until 1999, including Chief Operating Officer, and Vice President of Business Development, responsible for sales and marketing with a focus on new account development. He holds a Master of Business Administration degree from Trinity College, Dublin and a Bachelor of Commerce degree from the University of Wollongong, Australia.

Karen McGinnis has been our Chief Financial Officer since June 2013. Prior to joining the Company, she served as Vice President, Corporate Controller, and Chief Accounting Officer of Cymer, Inc., a global developer, manufacturer and marketer of light sources for the manufacturers of photolithography tools in the semiconductor equipment industry, from November 2009 through May 2013. Ms. McGinnis was employed by Insight Enterprises, Inc., a Fortune 500 global provider of information technology hardware, software and services, as Chief Accounting Officer from September 2006 until March 2009 and as senior vice president of finance from 2001 through September 2006. Ms. McGinnis is a Certified Public Accountant and received her bachelor’s degree in accounting from the University of Oklahoma.

Brian Andersen has been our Chief Operating Officer since June 2009. Mr. Andersen joined us in October 2002 in connection with our European expansion. Mr. Andersen has held a number of positions within our European operations since that time, including Category Manager until July 2003, Director of Operations from July 2003 until July 2005 and most recently European General Manager since July 2005. Prior to joining us, Mr. Andersen worked as European Stock Controller for Recoton Corp., the parent company of InterAct Accessories, and Financial Controller for Apost in Denmark, which has since been acquired by DHL International GmbH. Mr. Andersen has completed the International Business Studies at Koege Handelsskole, Denmark.

Whitney Peterson has been our General Counsel and Corporate Secretary since April 2008 and Senior Vice President, Business Affairs since March 2013 and has held senior management positions within the Company since July 1998. Prior to joining us, Mr. Peterson worked at the international law firm of Latham & Watkins. Mr. Peterson received his law degree from the J. Rueben Clark School of Law at Brigham Young University, where he graduated Magna Cum Laude. Mr. Peterson also served as an Articles Editor on the BYU Law Review in which he was published. Following law school, Mr. Peterson clerked for the Honorable Bruce S. Jenkins, Chief Judge of the Federal District Court in Utah.

Andrew Young has been our Vice President Product Development since September 2008. Prior to joining us, Mr. Young spent eleven years with Saitek plc in various Engineering Management positions and was Director of Engineering, Quality and Manufacturing Operations for Saitek upon our acquisition. Prior to that, Mr. Young held various design positions with Penny & Giles, a global company that specialized in control systems for the aerospace, military and commercial sectors. Mr. Young is a fully qualified Mechanical Engineer with post graduate qualifications with the OU & Harvard Business School in Manufacturing Management and Strategic Marketing Management.

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Available Information

We provide our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports free of charge under “Investor Relations” on our website at www.madcatz.com as soon as reasonably practicable after we electronically file this material with, or furnish this material to, the United States Securities and Exchange Commission (the “SEC”). The information contained on our website is not part of this Annual Report. You may also read and copy the documents to which we refer at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at www.sec.gov.

We are required to file reports and other information with certain Canadian provincial securities commissions. You are invited to read and copy any reports, statements or other information, other than confidential filings, that we file with the provincial securities commissions. These filings are also electronically available from the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) (http://www.sedar.com), the Canadian equivalent of the SEC’s Electronic Document Gathering And Retrieval System, as well as on our website at www.madcatz.com under “Investor Relations.”

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Item 1A.    Risk Factors

You should consider each of the following factors, as well as the other information in this Annual Report, and in our other filings with the SEC, before deciding whether to invest in or continue to hold our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of the following risks actually occur, our business and financial results could be harmed. In that case, the trading price of our common shares could decline. You should also refer to the other information set forth in this Annual Report, including our financial statements and the related notes.

Risks Concerning Our Customers and Products

A significant portion of our revenue is derived from a few large customers.

The vast majority of our sales are generated from a small number of large customers. In each of fiscal 2015, 2014 and 2013, one of our customers, GameStop, individually accounted for approximately 10%, 11% and 17% of our gross sales respectively, taking into account all of its U.S. and non-U.S. entities. In fiscal 2015 and 2014, one other customer, Amazon.com, individually accounted for approximately 14% and 13% of our gross sales in fiscal 2015 and 2014, respectively, taking into account all of its U.S. and non-U.S. entities. Our top ten customers accounted for approximately 57%, 57%, and 59% of gross sales in fiscal 2015, 2014 and 2013, respectively.

We do not have long-term agreements with these or other significant customers and our agreements with these customers do not require them to purchase any specific number or amount of our products. As a result, agreements with respect to pricing, returns, cooperative advertising or special promotions, among other things, are subject to periodic negotiation with each customer. No assurance can be given that these or other customers will continue to do business with us or that they will maintain their historical levels of business. The loss of or a material reduction in sales to any of our significant customers could have a material adverse effect on our business, results of operations, financial condition and liquidity. In addition, the uncertainty of product orders can make it difficult to forecast our sales and allocate our resources in a manner consistent with actual sales, and our expense levels are based in part on our expectations of future sales. If our expectations regarding future sales are inaccurate, we may be unable to reduce costs in a timely manner to adjust for sales shortfalls.

Our operating results are exposed to changes in exchange rates.

We have net monetary asset and liability balances in currencies other than the U.S. dollar, including the Pound Sterling, the Euro, the Canadian dollar, the Hong Kong dollar, the Japanese yen, and the Chinese Yuan Renminbi (“CNY”). International sales primarily are generated by our subsidiaries in the United Kingdom, Germany and Canada, and are denominated typically in their local currency. The expenses incurred by these subsidiaries are also denominated in the local currency. Our product costs from contract manufacturers are typically denominated in Hong Kong dollar. As a result, our operating results are exposed to changes in exchange rates between any of these currencies, and we do not currently hedge our foreign exchange risk. We will continue to monitor our exposure to currency fluctuations, and, where appropriate, may use financial hedging techniques in the future to minimize the effect of these fluctuations, which may be significant from time to time.

One or more of our largest customers may directly import or manufacture private-label products that are identical or very similar to our products. This could cause a significant decline in our sales and profitability.

Video game and PC accessories are widely available from manufacturers and other suppliers around the world. Each of our largest customers has substantially greater resources than we do, and has the ability to directly import or manufacture private-label video game accessories from manufacturers and other suppliers, including from some of our own subcontract manufacturers and suppliers. Our customers may believe that higher profit margins can be achieved if they implement a direct import or private-label program, reducing sales of our products. As a consequence, our sales and profitability could decline significantly.

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A significant portion of our revenue is derived from a few core product categories.

We are dependent on a small number of core product categories to generate a significant proportion of our revenues. No assurance can be given that these or other products will continue to have consumer acceptance or that they will maintain their historical levels of sales. The loss of one or more of these products could have a material adverse effect on our business, results of operations, financial condition and liquidity.

Our financial results are dependent on timely introduction of new products, and any failure or delay in the introduction of new products to the marketplace may have a material adverse effect on our business, results of operations, financial condition and liquidity. Our product mix constantly changes.

We generate our revenues from a number of frequently updated and enhanced “active products.” We define active products as products that have maintained a minimum level of average gross sales per quarter. Each product may be configured and sold in a number of different stock keeping units. We typically introduce new products and discontinue a similar number of products each year to maintain an optimal number of active products that we believe best supports our customers and the market. If we do not introduce new products in a timely and efficient manner and in accordance with our operating plans, our results of operations, financial condition and liquidity could be negatively and materially affected.

There are numerous steps required to develop a product from conception to commercial introduction and to ensure timely shipment to retail customers, including designing, sourcing and testing the electronic components, receiving approval of hardware and other third-party licensors, factory availability and manufacturing and designing the graphics and packaging. Any difficulties or delays in the product development process will likely result in delays in the contemplated product introduction schedule. It is common in new product introductions or product updates to encounter technical and other difficulties affecting manufacturing efficiency and, at times, the ability to manufacture the product at all. Although these difficulties can be corrected or improved over time with continued manufacturing experience and engineering efforts, if one or more aspects necessary for the introduction of products are not completed as scheduled, or if technical difficulties take longer than anticipated to overcome, the product introductions will be delayed, or in some cases may be terminated. No assurances can be given that products will be introduced in a timely fashion, and if new products are delayed, our sales and revenue growth may be limited or impaired.

Some of our products have been only recently introduced and although they may experience strong initial market acceptance, no assurance can be given that any initial acceptance will result in future sales. As a general matter, we expect that sales of these products will decline over the product’s life cycle. We cannot predict the length of the life cycle for any particular product. In order to control costs, and take advantage of the limited shelf space provided to us, we periodically discontinue some of our product offerings. Our long-term operating results will therefore depend largely upon our continued ability to conceive, develop and introduce new appealing products at competitive prices.

We depend upon third parties to develop products and video games.

Our business is dependent upon the continued development of new and enhanced video game platforms by first-party manufacturers and video games by publishers. Our business could suffer if any of these parties fail to develop new or enhanced video game platforms or popular game and entertainment titles for current or future generation platforms. If a platform is withdrawn from the market or fails to sell, we may be forced to liquidate our inventories or accept returns resulting in significant losses.

Historically, the video game industry has been cyclical with many consumers delaying the purchase of new video game systems for one to two years following the launch of a new system. This transition period creates a challenging sales environment for the video game industry and for our products designed for use with video game platforms. The general decline in the video game industry that typically occurs during these transition periods may adversely impact our business, results of operations, financial condition and liquidity, and if the decline is longer or deeper than expected, the impact on our business will be more severe.

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New game platforms and development for multiple consoles and mobile devices create additional technical and business model uncertainties that could impact our business.

A significant portion of our revenues are derived from the sale of video game accessories for use with proprietary video game platforms, such as the Microsoft Xbox One; the Sony PlayStation 4 and the Nintendo Wii U and proprietary mobile devices, designed to work on the Apple and Android operating systems. The success of our products is significantly affected by commercial acceptance of such video game and mobile platforms and the life cycle of older platforms. In addition, we anticipate that the research and development expenses incurred to develop compatible accessories for new and updated video game and mobile platforms may impact our profitability.

If first-party manufacturers choose to design PC, console or mobile-based systems that do not operate with third-party accessories and are successful in implementing technological barriers that prevent us from developing, manufacturing, marketing and distributing products for these new game platforms, our ability to continue our current business would be severely limited and our business, financial condition, results of operations and liquidity would be harmed.

Changes to current game platforms or introductions of new game platforms may result in our products becoming inoperable or less desirable on some game platforms and/or for some games, which would reduce sales of our products and adversely affect our business, results of operations, financial condition and liquidity.

A significant proportion of our revenues are derived from products that are reverse engineered. First-party manufacturers continually update their game platforms to enhance features and to correct problems in the operating systems and reduce costs. These manufacturers also expend significant resources to create new game platforms. During the development of such product updates and new game platforms, manufacturers may implement changes to the design of the game platforms that render our products inoperable and/or less desirable for playing certain games. If our products become inoperable on one or more game platform, or if platform system enhancements make our products less desirable, our sales may be significantly reduced. Moreover, we may have excess inventories of products that do not operate properly with new game platforms, which would limit our growth and harm our business, results of operations, financial condition and liquidity.

We are subject to various environmental laws and regulations that could impose substantial costs upon us and may adversely affect our business, operating results and financial condition.

Our operations and some of our products are regulated under various federal, state, local and international environmental laws. In addition, regulatory bodies in many of the jurisdictions in which we operate propose, enact and amend environmental laws and regulations on a regular basis. The laws and regulations applying to our business include those governing the discharge of pollutants into the air and water, the management, disposal and labeling of, and exposure to, hazardous substances and wastes and the cleanup of contaminated sites. We incur additional costs to comply with such regulations and may incur fines and civil or criminal sanctions, third-party property damage or personal injury claims, or could be required to incur substantial investigation or remediation costs, if we were to violate or become liable under environmental laws. Liability under environmental laws can be joint and several and without regard to comparative fault. The ultimate costs under environmental laws and the timing of these costs are difficult to predict. Although we cannot predict the ultimate impact of any new laws and regulations, they will likely result in additional costs or decreased revenue, and could require that we redesign or change how we manufacture our products, any of which could have a material adverse effect on our business. To the extent that our competitors choose not to abide by these environmental laws and regulations, we will be at a cost disadvantage, thereby hindering our ability to effectively compete in the marketplace.

Errors or defects contained in our products, failure to comply with applicable safety standards or a product recall could result in delayed shipments or rejection of our products, damage to our reputation and expose us to regulatory or other legal action.

Any defects or errors in the operation of our products may result in delays in their introduction. In addition, errors or defects may be uncovered after commercial shipments have begun, which could result in the rejection of our products by our customers, damage to our reputation, lost sales, diverted development resources and

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increased customer service and support costs and warranty claims, any of which could harm our business. Adults and children could sustain injuries from our products, and we may be subject to claims or lawsuits resulting from such injuries. There is a risk that these claims or liabilities may exceed, or fall outside the scope of, our insurance coverage. We may also be unable to obtain adequate liability insurance in the future. Because we are a small company, a product recall would be particularly harmful to us because we have limited financial and administrative resources to effectively manage a product recall and it would detract management’s attention from implementing our core business strategies. A significant product defect or product recall could materially and adversely affect our brand image, causing a decline in our sales, and could reduce or deplete our financial resources.

If we do not accurately forecast demand for particular products, we could incur additional costs or experience manufacturing delays, which would reduce our gross margins or cause us to lose sales.

Demand for our products depends on many factors such as consumer preferences and the introduction or adoption of game platforms and related content, and can be difficult to forecast. We expect that it will become more difficult to forecast demand for specific products as we introduce and support additional products, enter additional markets and as competition in our markets intensifies. If we misjudge the demand for our products, we could face the following problems in our operations, each of which could harm our operating results:

• If our forecasts of demand are too high, we may accumulate excess inventories of products, which could lead to markdown allowances or write-offs affecting some or all of such excess inventories. We may also have to adjust the prices of our existing products to reduce such excess inventories.

• If demand for specific products increases beyond what we forecast, our suppliers and third-party manufacturers may not be able to increase production rapidly enough to meet the demand. Our failure to meet market demand would lead to missed opportunities to increase our base of users, damage our relationships with retailers and harm our business.

• Rapid increases in production levels to meet unanticipated demand could result in increased manufacturing errors, as well as higher component, manufacturing and shipping costs, including increased air freight, all of which could reduce our profit margins and harm our relationships with retailers and consumers.

Our pricing and product return policies and other promotional activities may negatively impact our sales and profitability and harm our business, results of operations, financial condition and liquidity.

In the event a first-party manufacturer or other competitor reduces its prices, we could be forced to respond by lowering our prices to remain competitive. If we are forced to lower prices, we may be required to “price protect” the products that remain unsold in our customers’ inventories at the time of the price reduction. Price protection results in us issuing a credit to our customers in the amount of the price reduction for each unsold unit in the customer’s inventory. Our price protection policies, which are customary in the video game industry, can have a major impact on our sales and profitability if we are forced to reduce the price of products for which a large inventory exists. It is also likely that we will experience additional price competition, which may lead to price protection, as we continue to introduce new and enhanced products.

To the extent we introduce new versions of products or change our product sales mix, the rate of product returns may also increase above historical levels. Although we establish allowances for anticipated product returns and believe our existing policies have resulted in allowances that are adequate, there can be no assurance that such product return obligations will not exceed our allowances in the future, which would have a material adverse effect on our future operating results and financial condition.

We may not be able to comply with the terms of our license agreements, which may result in the loss of one or more of the licenses.

We have license and royalty agreements with various parties in which we pay fees in exchange for rights to use product inventions or trademarked names, shapes and likenesses in our products. The agreements often include minimum fee guarantees based on a reasonable expectation of the product sales to be generated throughout the life of the agreement. We cannot assure that we will be able to meet these expectations and may be obligated to pay unearned fees as a result. Some of our license agreements also contain stringent requirements

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regarding the use of the licensor’s trademarks. Our license and royalty agreements are for fixed terms. We cannot assure that we will be able to comply with all of the requirements contained in our licenses or that we will be able to maintain or extend the rights to our existing licenses.

Some of our license agreements with video game console developers have expired or may expire within the next fiscal year, which could limit our product offerings and significantly reduce our revenues.

Historically, a majority of our revenues have come from the sale of video game accessories for use with video game consoles sold by first-party manufacturers. Some of these products have been produced under license agreements with these first-party manufacturers. Some of these licenses are necessary in order for us to actually produce and sell the products (“license dependent products”), while other licenses have some perceived or actual marketing or sales benefit, but do not dictate whether we can produce the product (“marketing licenses”). Some of these license agreements have expired and others may expire, which could limit our product offerings and significantly reduce our revenues.

We are parties to various license agreements with Microsoft Corporation (“Xbox Agreement”) under which we have the right to manufacture (through third party manufacturers), market and sell certain peripheral products for the Xbox 360 and Xbox One video game consoles. The products produced pursuant to the Xbox Agreement are license-dependent products. The Xbox Agreements are evergreen agreements that will automatically be extended unless either party provides written notice of its intention to terminate the license at least 90 days prior to the end of the then-current term. Should the Xbox Agreement expire, be terminated for cause, or fail to be renewed, our product offerings may be limited thereby significantly reducing our revenues.

The collectability of our receivables depends on the continued viability and financial stability of our retailers and distributors.

Due to the concentration of our sales to large high-volume customers, we maintain significant accounts receivable balances with these customers. As of March 31, 2015 and March 31, 2014, our 10 largest accounts receivable balances accounted for approximately 68% and 61%, respectively, of total accounts receivable in each period. We generally do not require any collateral from our customers to secure payment of these accounts receivable. However, we do seek to control credit risk through ongoing credit evaluations of our customers’ financial condition and by purchasing credit insurance on certain accounts receivable balances. If any of our major customers were to default in the payment of their obligations to us, our business, financial condition, operating results and cash flows could be adversely affected.

Risks Concerning Our Suppliers

The manufacture and supply of our products are dependent upon a limited number of third parties, and our success is dependent upon the ability of these parties to manufacture and supply us with sufficient quantities of our products and on the continued viability and financial stability of these third-party suppliers.

We rely on a limited number of manufacturers and suppliers for our products. There can be no assurance that these manufacturers and suppliers will be able to manufacture or supply us with sufficient quantities of products to ensure consumer availability. In addition, these parties may not be able to obtain the raw materials, energy or oil supply required to manufacture sufficient quantities of our products. Moreover, there can be no assurance that such manufacturers and suppliers will not refuse to supply us with products, and independently market their own competing products in the future, or will not otherwise discontinue their relationships with or support of our Company. Our failure to maintain our existing manufacturing and supplier relationships, or to establish new relationships in the future, could have a material adverse effect on our business, results of operations, financial condition and liquidity. If our suppliers are unable or unwilling for any reason to supply us with a sufficient quantity of our products, our business, revenues, results of operations, financial condition and liquidity would be materially adversely affected. If any of our key suppliers became financially unstable, our access to these products might be jeopardized, thereby adversely affecting our business, cash flow, financial condition and operational results.

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Any disruption of shipping and product delivery operations globally could harm our business.

We rely on contract ocean carriers to ship virtually all of our products from China to our primary distribution centers in the United States, Germany and the United Kingdom. Customers that take delivery of our products in China rely on a variety of carriers to ship those products to their distribution centers and retail outlets. We also rely on a number of sources of ground transportation to deliver our products from our primary distribution centers in the United States, the United Kingdom and Germany to our retail customers’ and distributors’ distribution centers and retail outlets. Any disruption or delay in the importation of our products, in the operation of our distribution centers or in the delivery of our products from our primary distribution centers to our retail customers’ and distributors’ distribution centers and retail outlets for any reason, including labor strikes or other labor disputes, terrorism, international incidents or lack of available shipping containers or vehicles, could significantly harm our business and reputation.

Risks of Doing Business Internationally

Any loss of China’s Normal Trade Relations (“NTR”) with the United States, or any changes in tariffs or trade policies, could increase our manufacturing expenses and make it more difficult for us to manufacture our products in China, if at all.

The majority of our products are manufactured in China and exported from Hong Kong and China to the United States and worldwide. As a result of opposition to policies of the Chinese government and China’s growing trade surpluses with the United States, there has been, and in the future may be, opposition to the extension of NTR status for China. The loss of NTR status for China, changes in current tariff structures, or adoption in the United States of other trade policies adverse to China could increase our manufacturing expenses and make it more difficult for us to manufacture our products in China, if at all. This could also apply to our business in Europe as well.

Our manufacturing relationships in China may be adversely affected by changes in the political, economic and legal environment in China.

We maintain offices in Hong Kong and in China. The success of our operations in Hong Kong and China is highly dependent on the Chinese government’s continued support of economic policies that encourage private investment, and particularly foreign private investment. A change in these policies by the Chinese government could adversely affect us by, among other things, imposing confiscatory taxation, restricting currency conversion, imports and sources of supplies, prohibiting us from manufacturing our products in China, or restricting our ability to ship products from China into Hong Kong, or to ship finished products out of Hong Kong, or otherwise shutting down our offices in Hong Kong and China. Although the Chinese government has chosen economic reform policies to date, no assurance can be given that it will continue to pursue such policies or that such policies will not be significantly altered, especially in the event of a change in leadership or other social or political disruption.

Our sources of manufacturing and distribution capabilities could be adversely affected by ongoing tensions between the Chinese and Taiwanese governments. The Chinese government has threatened military action against Taiwan unless Taiwan adopts a plan for unifying with China. As of yet, Taiwan has not indicated that it intends to propose or adopt a reunification plan. Any military action on the part of China could lead to sanctions or military action by the United States and/or European countries, which could materially affect our sales to those countries and our operations in China.

There are also uncertainties regarding the interpretation and enforcement of laws, rules and policies in China. The Chinese legal system is based on written statutes, and prior court decisions have limited precedential value. In addition, many laws and regulations are relatively new, and the Chinese legal system is still evolving, resulting in sporadic and inconsistent enforcement and interpretation. The Chinese judiciary is relatively inexperienced in enforcing the laws that exist, leading to additional uncertainty as to the outcome of any litigation. Even where adequate laws exist in China, it may be impossible to obtain swift and equitable enforcement of such laws, or to obtain enforcement of a judgment by a court in a different jurisdiction.

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The Chinese tax system is subject to substantial uncertainties and has been subject to recently enacted changes, the interpretation and enforcement of which are also uncertain. There can be no assurance that changes in Chinese tax laws or their interpretation or their application will not subject us to substantial Chinese taxes in the future.

There are numerous risks associated with our international operations, any number of which could harm our business.

We have offices and sales throughout the world. Our registered office is in Canada. Our operational headquarters is in San Diego, California. We also have offices in the United Kingdom, France, Germany, Spain, Japan, China and Hong Kong. Approximately 68% of our gross sales in fiscal year 2015 were generated by customers whose retail locations are outside of North America, and a substantial majority of our products are manufactured by third parties in Hong Kong and China. The geographical distances between our operations create a number of logistical and communications challenges. These challenges include managing operations across multiple time zones, directing the manufacture and delivery of products across long distances, coordinating procurement of components and raw materials and their delivery to multiple locations, and coordinating the activities and decisions of the management team, which is based in a number of different countries.

In addition, there are other risks inherent in international operations, which could result in disruption or termination of supply of our products available for sale. These risks include:

• unexpected changes in regulatory requirements, taxes, trade laws and tariffs;

• political instability and the potential reversal of current favorable policies encouraging foreign investment or foreign trade by host countries;

• differences in labor laws, labor unrest and difficulties in staffing and managing international operations;

• longer payment cycles;

• fluctuations in currency exchange rates;

• potential adverse tax consequences;

• limitations on imports or exports of components or assembled products, or other travel restrictions;

• differing intellectual property rights and protections;

• delays from doing business with customs brokers and governmental agencies; and

• higher costs of operations.

These factors could materially and adversely affect our business, operating results, and financial condition.

Intellectual Property Risks

We may be faced with legal challenges related to our products, including that our products infringe third parties’ intellectual property rights. These challenges could cause us to incur significant litigation or licensing expenses or could prohibit us from producing or marketing some or all of our products entirely.

Although we do not believe that our products infringe the proprietary rights of any third parties, there can be no assurance that infringement or other legal claims will not be asserted against us or that any such claims will not materially adversely affect our business, financial condition, or results of operations. Regardless of their validity or success, such claims may result in costly litigation, divert management’s time and attention, cause product shipment delays or require us to enter into royalty or licensing agreements, which may not be available on terms acceptable to us, or at all. If licensing arrangements are required but unavailable, we may be prohibited from marketing and distributing these products. In addition, we could also incur substantial costs to redesign our products to comply with legal orders or contractual arrangements. Any of these costs or outcomes could adversely affect our business, results of operations, financial condition and liquidity.

In recent years, it has been more common for companies inside and outside (so called non-practicing entities) our industry to use patents to aggressively challenge the rights of other companies to prevent the marketing of new products. Companies that obtain patents for products or processes that are necessary for or useful to the

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development of our products may bring legal actions against us claiming infringement and at any given time, we may be involved as both a plaintiff and/or a defendant in a number of patent infringement and other intellectual property-related actions. Defending intellectual property litigation is expensive and complex and outcomes are difficult to predict. Any pending or future patent litigation may result in significant royalty or other payments or injunctions that can prevent the sale of products and may cause a significant diversion of the efforts of our technical and management personnel. While we intend to defend any such lawsuits vigorously, we cannot be certain that we will be successful. In the event that our right to market any of our products is successfully challenged or if we fail to obtain a required license or are unable to design around a patent, our financial condition and results of operations could be materially adversely affected.

Our intellectual property rights may not prevent our competitors from using our technologies or similar technologies to develop competing products, which could weaken our competitive position and harm our financial results.

Our success depends in part on the use of proprietary technologies. We rely, and plan to continue to rely, on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions and licensing arrangements to establish and protect our proprietary rights. We have entered into confidentiality and invention assignment agreements with our employees and contractors, and nondisclosure agreements with selected parties with whom we conduct business to limit access to and disclosure of our proprietary information. These contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent misappropriation of that intellectual property or deter independent third-party development of similar technologies. Monitoring the unauthorized use of proprietary technology and trademarks is costly, and any dispute or other litigation, regardless of outcome, may be costly and time consuming and may divert our management and key personnel from our business operations. The steps taken by us may not prevent unauthorized use of our proprietary technology or trademarks. Many features of our products are not protected by patents; and as a consequence, we may not have the legal right to prevent others from reverse engineering or otherwise copying and using these features in competitive products. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could adversely affect our financial results.

If our products are copied or “knocked-off,” our sales of these products may be materially reduced and our profitability may be negatively affected.

Occasionally in the video game and PC accessories industry, successful products are “knocked-off” or copied by competitors. While we strive to protect our intellectual property, we cannot guarantee that knock-offs will not occur or that they will not have a significant effect on our business. The costs incurred in protecting our intellectual property rights could be significant, and there is no assurance that we will be able to successfully protect our rights.

Financing Risks

We depend upon the availability of capital under our credit facility to finance our operations. Any additional financing that we may need may not be available on favorable terms, or at all.

In addition to cash flow generated from sales of our products, we finance our operations with a Credit Facility (the “Credit Facility”) provided by Wells Fargo Capital Finance, LLC (“Wells Fargo”), an unrelated party. The Credit Facility expires on July 31, 2016. If we are unable to comply with the restrictive and financial covenants contained in the Credit Facility, Wells Fargo may declare the outstanding borrowings under the facility immediately due and payable. In such an event, our liquidity will be materially adversely affected, which could in turn have a material adverse impact on our future financial position and results of operations. We would be required to obtain additional financing from other sources. We cannot predict whether or on what terms additional financing might be available. If we are required to seek additional financing and are unable to obtain it, we may have to change our business and capital expenditure plans, which would have a materially adverse effect on our future results of operations. In addition, the debt under our Credit Facility could make it more difficult to obtain other debt financing in the future, which could put us at a competitive disadvantage to competitors with less debt.

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The Credit Facility contains financial and other covenants that we are obligated to maintain. If we violate any of these covenants, we will be in default under the Credit Facility. If a default occurs and is not timely cured or waived by Wells Fargo, Wells Fargo could seek remedies against us, including: (1) penalty rates of interest, (2) immediate repayment of the debt or (3) foreclosure on assets securing the Credit Facility. No assurance can be given that we will maintain compliance with these covenants in the future. The Credit Facility is asset based and can only be drawn down in an amount to which eligible collateral exists in North America and the United Kingdom, and can be negatively impacted by extended collection of accounts receivable, unexpectedly high product returns and slow moving inventory, among other factors. We are required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. Our trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, we were not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, we received a waiver of the covenant default from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and modifies the trailing twelve months’ Adjusted EBITDA covenant, as defined, from April 2015 through June 2016.

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, and in the longer term, including any payments due on the note payable. We depend upon the availability of capital under our Credit Facility to finance our operations. Compliance with the Adjusted EBITDA covenants in fiscal 2016, which are tied closely to our internal forecasts and include significant contributions from anticipated sales of products related to the Rock Band 4 video game, depends on our ability to increase net sales and gross profit considerably. Also, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future sales and expenses. If we are unable to comply with the Adjusted EBITDA covenants contained in the Credit Facility, Wells Fargo may declare the outstanding borrowings under the facility immediately due and payable. If we need to obtain additional funds as a result of the termination of the Credit Facility or the acceleration of amounts due thereunder, there can be no assurance that alternative financing can be obtained on substantially similar or acceptable terms, or at all. Our failure to promptly obtain alternate financing could limit our ability to implement our business plan and have an immediate, severe and adverse impact on our business, results of operations, financial condition and liquidity. In the event that no alternative financing is available, we would be forced to drastically curtail operations, or dispose of assets, or cease operations altogether.

Funding for our future growth may depend upon obtaining new financing, which may be difficult to obtain on terms that are acceptable to the Company.

To accommodate our expected future growth, we may need funding in addition to cash provided from current operations and continued availability under our Credit Facility provided by Wells Fargo. Our ability to obtain additional financing on terms that are acceptable to the Company may be constrained by economic conditions that affect global financial markets. If we are unable to obtain additional financing, we may be unable to take advantage of opportunities with potential business partners or new products, to finance our existing operations or to otherwise expand our business as planned.

Accounts receivable represent a large portion of our assets, a large portion of which are owed by a few customers. If these accounts receivable are not paid, we could suffer a significant decline in cash flow and liquidity which, in turn, could limit our ability to pay liabilities and purchase an adequate amount of inventory.

Our accounts receivable represented 16%, 21%, and 26% of our total assets as of March 31, 2015, 2014 and 2013, respectively. As a result of the substantial amount and concentration of our accounts receivable, if any of our major customers fails to timely pay us amounts owed, we could suffer a significant decline in cash flow and liquidity which could negatively affect our ability to make payments under our Credit Facility and which, in turn, could adversely affect our ability to borrow funds, to purchase inventory, to sustain or expand our current sales volume. Accordingly, if any of our major customers fails to timely pay us amounts owed, our sales and profitability may decline.

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Increases in interest rates may increase our interest expense and adversely affect our profitability and cash flow and our ability to service indebtedness.

We depend, in a significant part, on borrowings under the Credit Facility to finance our operations. Under the Credit Facility, interest accrues on the daily outstanding balance at an interest rate that ranges from U.S. prime rate plus 0.50% to U.S. prime rate 2.0%, depending upon our fixed charge coverage ratio. The variable rate debt outstanding under the Credit Facility had a weighted average annual interest rate of approximately 5.25% for the year ended March 31, 2015. Increases in the interest rate under the Credit Facility will increase our interest expense, which could harm our profitability and cash flow.

General Risk Factors

Acquired companies can be difficult to integrate, disrupt our business and adversely affect our operating results. The benefits we anticipate may not be realized in the manner anticipated.

We have made past acquisitions, and may make future acquisitions with the expectation that these acquisitions would result in various benefits including, among other things, enhanced revenue and profits, greater market presence and development, particularly in Europe, and enhancements to our product portfolio and customer base. We may not realize these benefits, as rapidly as, or to the extent, anticipated by our management. There can be no assurance that we will be able to identify, acquire or profitably manage additional businesses or successfully integrate any acquired businesses, products or technologies into our Company without substantial expenses, delays or other operational or financial problems. Acquisitions involve a number of risks, some or all which could have a material adverse effect on our acquired businesses, products or technologies. Furthermore, there can be no assurance that any acquired business, product, or technology will be profitable or achieve anticipated revenues and income. Our failure to manage our acquisition strategy successfully could have a material adverse effect on our business, results of operations and financial condition. In addition, operations and costs incurred in connection with the integration of acquired companies with our other operating subsidiaries also could have an adverse effect on our business, financial condition and operating results. If these risks materialize, our stock price could be materially adversely affected.

Acquisitions involve numerous risks, including:

• difficulties in integrating operations, technologies, services and personnel of the acquired companies;

• potential loss of customers of the acquired companies;

• diversion of financial and management resources from existing operations;

• potential loss of key employees of the acquired companies;

• integrating personnel with diverse business and cultural backgrounds;

• preserving the development, distribution, marketing and other important relationships of the acquired companies;

• assumption of liabilities of the acquired companies; and

• inability to generate sufficient revenue and cost savings to offset acquisition costs.

Our acquisitions may also cause us to:

• incur additional debt;

• make large and immediate one-time write-offs and restructuring and other related expenses;

• become subject to intellectual property or other disputes; and

• create goodwill or other intangible assets that could result in significant impairment charges and/or amortization expense in the future.

As a result, if we fail to properly evaluate, execute and integrate acquisitions, our business and prospects may be seriously harmed.

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Difficult economic, political and market conditions may adversely affect our revenue growth and operating results.

Our revenue and profitability are affected by global business and economic conditions, particularly in the United States and Europe. Downturns in the global economy could have a significant impact on demand for our products. In an uncertain economic environment, there is a greater likelihood that more of our customers could become delinquent on their obligations to us or go bankrupt, which, in turn, could result in a higher level of charge-offs and provision for credit losses, all of which would adversely affect our earnings. Uncertainty created by the long-term effects of volatile oil prices, terrorist activities, potential pandemics, natural disasters and related uncertainties and risks and other geopolitical issues may impact the purchasing decisions of current or potential customers. Because of these factors, we believe the level of demand for our products and services, and projections of future revenue and operating results, will continue to be difficult to predict.

Natural disasters or other events outside of our control may damage our facilities or the facilities of third parties on which we depend for the manufacture and distribution of our products.

Our North American distribution center and operational headquarters are located in California near major earthquake faults that have experienced earthquakes in the past. All of our facilities may be subject to a variety of natural or man-made disasters. An earthquake or other event outside our control, such as power shortages, floods, fires, monsoons, other severe weather conditions, terrorism or other similar events, could disrupt our operations or damage or destroy our facilities. Any of these disruptions could impair the manufacture or distribution of products, damage inventory, interrupt critical functions or otherwise affect our business negatively, harming our business operations and future financial condition, results of operations or liquidity. In addition, if the facilities of our third-party product manufacturers are affected by similar activities beyond our control, our ability to obtain sufficient manufactured products could suffer or be impaired.

Our operations are vulnerable because we have limited redundancy and backup systems. Any failure of our data information systems could negatively impact our financial results.

Our internal order, inventory and product data management system is an electronic system through which we manage customer orders and product pricing, shipment, and returns, among other matters. The continued and uninterrupted performance of our information systems is critical to our day-to-day business operations. Despite our precautions, unanticipated interruptions in our computer and telecommunications systems have, in the past, caused problems or stoppages in this electronic system. These interruptions, and resulting problems, could occur in the future. We have extremely limited ability and personnel to process purchase orders and manage product pricing and other matters in any manner other than through this electronic system. Any interruption or delay in the operation of this electronic system could cause a significant decline in our sales and profitability.

Our business is seasonal and our financial results vary from period to period.

The video game and PC accessories industry is highly seasonal and our operating results vary substantially from period to period. We generate a substantial portion of our sales during the holiday season. The high level of seasonality causes us to take significant risks in the purchase of inventory for the holiday season. There can be no guarantee that our customers or we will sell all of our inventories. Excess inventory at year-end may result in financial losses from obsolescence, reserves, returns and markdowns.

Moreover, if expenses remain relatively fixed, but our revenues are less than anticipated in any quarter, our operating results would be adversely affected for that quarter. In addition, incurring unexpected expenses could adversely affect operating results for the period in which such expenses are incurred. Failure to achieve periodic revenue, earnings and other operating and financial results as anticipated by brokerage firms or industry analysts could result in an immediate and adverse effect on the market price of our common shares. We may not discover, or be able to confirm, revenue or earnings shortfalls until the end of a quarter, which could result in a greater immediate and adverse effect on the share price.

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We are constantly looking for opportunities to grow our business and diversify our product line. If we fail to successfully manage the expansion of our business, our sales may not increase commensurately with our capital investments, which would cause our profitability to decline.

The industry in which we compete is highly competitive. As a result, we look for opportunities to grow our business, including through the expansion of our product offerings. We plan to continue the diversification of our product line. Our new product offerings, including our complete lines of products for each of the new video game systems, have required and will continue to require significant resources and management’s close attention. In offering new products, our resources are likely to be strained because we have less experience in the new product categories. Our failure to successfully manage our planned product expansion could result in our sales not increasing commensurately with our capital investments, causing a decline in our profitability.

Failure to attract, retain and motivate skilled personnel would have a material adverse effect on our results of operations, financial condition or liquidity.

Our ability to achieve our revenue and operating performance objectives will depend in large part on our ability to attract and retain qualified and highly skilled sales, marketing, operations, logistics, management, engineering and finance personnel. We compete for our personnel with other companies, and competition for such personnel is intense and is expected to remain so for the foreseeable future, particularly for those with relevant technical expertise. Failure to retain and expand our key employee population could adversely affect our business and operating results.

We are heavily dependent upon our senior management team. The continued availability of this team will be a major contributing factor to our future growth. In the event that any member of senior management becomes unavailable for any reason, we could be materially and adversely affected. We do not maintain key-man life insurance on our senior management.

Competition for market acceptance and retail shelf space and pricing competition affects our revenue and profitability.

The video game and PC accessory market is highly competitive and the barriers to entry are low. Only a small percentage of products introduced in the market achieve any degree of sustained market acceptance. If our products are not successful, our operations and profitability will be negatively impacted. Competition in the video game accessory industry is based primarily upon:

• the availability of significant financial resources;

• the quality of products;

• reviews received for products from independent reviewers;

• access to retail shelf space;

• the success of the game console for which the products were developed;

• the price at which the products are sold; and

• the number of other competing products for the system for which the products were developed.

Some of our competitors, particularly the first-party manufacturers, enjoy competitive advantages over us, such as longer operating histories, larger technical staffs, more established and larger sales and marketing organizations, significantly greater financial and other resources, the ability to respond more quickly to new or emerging technologies and changes in customer requirements or ability to establish or strengthen cooperative relationships with retailers, distributors and other marketers.

Increased competition from these and other sources could require us to respond to competitive pressures by establishing pricing, marketing and other programs or seeking out additional acquisitions that may be less favorable than what we could otherwise establish or obtain, and thus could have a material adverse effect on our business, financial condition and results of operations. No assurance can be given that we will be able to compete effectively in our markets.

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Any future terrorist attacks and other acts of violence or war may affect the demand for video game and PC accessories, which may negatively affect our operations and financial results.

The continued threat of terrorism within the United States, Europe and the Middle East and the military action and heightened security measures in response to such threat may cause significant disruption to commerce throughout the world. To the extent that such disruptions result in delays or cancellations of customer orders, a general decrease in the demand for video game accessories, or our inability to effectively market our products, our business and results of operations could be materially and adversely affected. We are unable to predict whether the threat of terrorism or the responses thereto will result in any long-term commercial disruptions or if such activities or responses will have a long-term material adverse effect on our business, results of operations, financial condition and liquidity.

Volatility in the mass-market and consumer electronic retail sectors could have a material adverse effect on our sales.

We sell our products through a network of domestic and international mass-market and consumer electronics retailers, as well as some distributors, and our success depends on the continued viability and financial stability of these customers. The retail industry has historically been characterized by significant volatility, including periods of widespread financial difficulties and consolidations, and the emergence of alternative distribution channels. While we attempt to minimize the risks associated with this industry volatility, there is always a risk that one or more of our customers will experience economic difficulties or be acquired by competitors. If any of our customers cease doing business, it could have a material adverse effect on our sales and could significantly harm our business, financial condition and operating results.

Risk Factors Related to Our Internal Controls

If we fail to maintain an adequate system of internal controls, we may not be able to accurately report our financial results, which could cause current and potential shareholders to lose confidence in our financial reporting and in turn affect the trading price of our common stock.

Section 404 of the Sarbanes-Oxley Act and the related regulations require the management of public companies in the United States to evaluate and report on the companies’ systems of internal control over financial reporting. We have and will continue to incur significant expenses and management resources to comply with the requirements of Section 404 on an ongoing basis. We cannot be certain that the measures we have taken to assess, document, improve and validate through testing the adequacy of our internal control process over financial reporting will ensure that we maintain such adequate controls over our financial reporting process in the future. Failure to implement required new controls could cause us to fail to meet reporting obligations, which in turn could cause current and potential shareholders to lose confidence in our financial reporting. Inferior internal controls or the determination that our internal control over financial reporting is not effective might cause investors to lose confidence in our reported financial information, which could cause volatility in the market price of our shares.

Risk Factors Related to Our Shares

Penny stock rules may negatively impact the liquidity of our common stock.

Our common stock is subject to rules promulgated by the SEC relating to “penny stocks,” which apply to certain companies whose shares trade at less than $5.00 per share and which do not meet certain other financial requirements specified by the SEC. These rules require brokers who sell “penny stocks” to persons other than established customers and “accredited investors” to complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning the risks of trading in such penny stocks. These rules may discourage or restrict the ability of brokers to sell our common stock and may affect the secondary market for our common stock. These rules could also have a detrimental effect upon our ability to raise funds through an offering of our common stock.

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Volatility of share price and absence of dividends.

The market price of our common stock has been and is likely to be highly volatile. Many factors could have a significant adverse impact on the market price of our common stock, including:

• our or our competitors’ announcements of technological innovations or new products by us or our competitors;

• governmental regulatory actions;

• developments with our strategic alliances and collaborators;

• developments concerning our proprietary rights or the proprietary rights of our competitors (including litigation);

• period-to-period fluctuations in our operating results;

• changes in estimates of our performance by securities analysts;

• market conditions for consumer technology stocks in general; and

• other factors not within our control.

We have never paid cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future.

There can be no assurance that the holders or purchasers of our common stock will be able to resell their shares at prices equal to or greater than their cost.

The market price of our common stock could be subject to significant fluctuations in response to quarterly variations in our operating results, announcements of technological innovations through new products by us or our competitors, changes in financial estimates by securities analysts or other events or factors, many of which are beyond our control. In addition, the stock markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of many companies whose businesses are dependent on technology and that often have been unrelated to the operating performance of such companies. These broad market fluctuations may adversely affect the market price of our common stock. There can be no assurance that the holders or purchasers of our common stock will be able to resell their shares at prices equal to or greater than their cost.

Investors may not be able to secure foreign enforcement of civil liabilities against management.

The enforcement by investors of civil liabilities under the federal securities laws of the United States may be adversely affected by the fact that we are organized under the laws of Canada, that some of our officers and directors are residents of a foreign country and that all, or a substantial portion, of such persons’ assets are located outside of the United States. As a result, it may be difficult for holders of our common stock to affect service of process on such persons within the United States or to realize in the United States upon judgments rendered against them.

Item 1B.    Unresolved Staff Comments

Not applicable.

Item 2.    Properties

Our operational headquarters are located in San Diego, California. We believe that our facilities, all of which are leased facilities, will be suitable and adequate for our present purposes. We also believe we will be able to extend our existing leases on terms satisfactory to us or, if necessary, to locate substitute facilities on acceptable terms.

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Information about our sales, distribution and administrative facilities in use as of March 31, 2015 is summarized in the following table:

Geography	Location	Primary Activities	Lease Expiration
Americas	San Diego, California, USA	Executive Offices, Sales and Administration	November 30, 2020
	Redlands, California, USA	Distribution and Customer Support	June 30, 2019
EMEA	Milton Keynes, Buckinghamshire, United Kingdom	Sales and Administration	Month-to-Month
	Magor, United Kingdom	Product Development	July 1, 2016
	Munchen, Germany	Sales and Administration	March 31, 2017
	Issy Les Moulineaux, France	Sales	February 28, 2017
APAC	Hong Kong S.A.R.	Sales and Administration	November 30, 2016
	Shenzhen, China	Sales, Product Development and Administration	September 22, 2017
	Beijing, China	Sales	March 31, 2016
	Tokyo, Japan	Sales	Month-to-Month

In addition to the above facilities, we outsource distribution and related logistics solutions in the United Kingdom, Germany, Japan and Hong Kong.

Item 3.    Legal Proceedings

On October 3, 2013, the Company filed a complaint for patent infringement styled Mad Catz Interactive, Inc. v. Razer USA, Ltd., Case No. 13-cv-02371-GPC-JLB, in the United States District Court for the Southern District of California against Razer USA, Ltd. (“Razer”). The complaint alleges that the Company holds an exclusive license, within the United States, to make, use, sell, offer for sale, import, gift or otherwise dispose of the any product falling within the scope of one or more claims of U.S. Patent No. 6,157,370 (the “‘370 Patent”), including all right, power and interest to enforce the ‘370 Patent against any and all third parties, as well as exclusive standing to bring suit against any third party infringing the ‘370 Patent. The complaint further alleges that Razer has infringed and continues to infringe the ‘370 Patent by making, using, offering for sale, selling, and/or importing in the United States certain products covered by one of more claims of the ‘370 Patent, including Razer’s “Ouroboros” computer mouse. On January 10, 2014, Razer filed a counterclaim against the Company for alleged infringement of U.S. Patent No. 8,605,063 (the “‘063 Patent”). Razer further contends that the ‘370 Patent is invalid and unenforceable, and denies infringement. Mad Catz also contends that the ‘063 Patent is invalid and unenforceable, and denies infringement. No trial date has been set in the matter. On August 22, 2014, the Court heard oral argument regarding the parties’ patent claims construction positions and took the matter of patent claims construction under submission at that time. The Court has not yet issued an order regarding claims construction. The parties are currently conducting discovery. The Company believes that Razer’s allegations lack merit and intends to vigorously defend all claims asserted. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability is not probable and any range of potential future charge cannot be reasonably estimated at this time.

On March 11, 2014, the Better Mouse Company, LLC (“BMC”) filed a complaint against the Company and its subsidiary, Mad Catz, Inc., for patent infringement in the United States District Court for the Eastern District of Texas. The action is styled Better Mouse Company, LLC v. Steelseries Aps et al, Lead Civil Action No. 2:14-CV-198. By its complaint, the plaintiff alleges that the Company and its subsidiary have infringed and continue to infringe U.S. Patent No. 7,532,200. The Company answered the complaint on July 17, 2014 and has denied all substantive allegations of infringement and damage. The parties are currently conducting discovery and the Court has set oral argument regarding the parties’ patent claims construction positions for June 2, 2015. Trial in the

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matter is set for December 12, 2015. The Company believes that BMC’s allegations lack merit and intends to vigorously defend all claims asserted. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability is not probable and any range of potential future charge cannot be reasonably estimated at this time.

On November 21, 2014, Samsung Electronics Co., Ltd. and Samsung Austin Semiconductor, LLC (collectively, “Samsung”) filed a complaint against the Company (and numerous third parties, including Nvidia Corporation) for patent infringement in the United States International Trade Commission. The complaint is styled In the Matter of Certain Graphics Processing Chips, Systems on a Chip, and Products Containing the Same, Investigation No. 377-TA-941 and alleges that the defendants have infringed and continue to infringe U.S. Patent Nos. 6,147,385, 6,173,349, 7,056,776, and 7,804,734 by offering for sale, selling, and/or importing into the United States certain graphics processing units, systems on a chip, and products containing the same that, allegedly, are covered by one of more claims of the above-cited patents. Specifically, as to the Company, Samsung alleges that the Company’s M.O.J.O. micro-console for Android product, which utilizes the Nvidia Tegra 4 T40S systems on a chip, directly infringes one of more claims of at least one of the patents at issue. On December 30, 2014, the United States International Trade Commission (the “Commission”) instituted an investigation into the matter to determine whether there is a violation of the Tariff Act of 1930, as amended, by reason of the alleged infringement of the above-cited patents. The Commission’s initial determination is due on or before December 22, 2015 and the target date for completion of the Commission’s investigation is April 22, 2016. The Company believes that the allegations lack merit and intends to vigorously defend all claims asserted. It is impossible at this time to assess whether the outcome of this proceeding will have a material adverse effect on the Company. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability, while possible, is not probable and any range of potential future charge cannot be reasonably estimated at this time.

In addition to the foregoing matters, from time to time, the Company may become involved in various lawsuits and legal proceedings that arise 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.

Item 4.    Mine Safety Disclosures

Not applicable.

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PART II

Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock commenced trading on the Toronto Stock Exchange (“TSX”) in December 1995 and on NYSE MKT (“NYSE MKT”) in September 1999. Since September 2001, our common stock has traded on the NYSE MKT and the TSX under the symbol “MCZ”. The following table sets forth, for the fiscal quarters indicated, the high and low market prices for the Company’s common stock on the NYSE MKT and TSX:

	NYSE MKT (U.S. $)				Toronto Stock Exchange (Canadian $)
	High		Low		High		Low
Fiscal 2015
Fourth Quarter	$	0.54	$	0.35	$	0.68	$	0.45
Third Quarter		0.57		0.38		0.64		0.43
Second Quarter		0.72		0.38		0.75		0.44
First Quarter		0.78		0.47		0.84		0.51
Fiscal 2014
Fourth Quarter	$	0.54	$	0.42	$	0.61	$	0.45
Third Quarter		0.81		0.44		0.86		0.44
Second Quarter		0.90		0.46		0.90		0.50
First Quarter		0.50		0.38		0.52		0.37

Holders

The closing sales price of our common stock on the NYSE MKT was $0.47 on June 18, 2015, and there were approximately 205 shareholders of record of our common stock as of that date.

Dividends

We have never declared or paid any dividends and do not expect to pay any dividends in the foreseeable future.

Issuer Purchases of Equity Securities

Neither our Company nor any affiliated purchaser repurchased any of our equity securities during fiscal 2015.

The graph below compares the cumulative total shareholder return on the Common Stock of the Company from March 31, 2010 through and including March 31, 2015 with the cumulative total return on the S&P/TSX Composite Total Return Index, the NYSE MKT Composite Index and the stocks included in the Morningstar database under the Standard Industrial Code 3944 (Games & Toys, except Bicycles). The graph assumes the investment of $100 in the Company’s Common Stock and in each of the indexes on March 31, 2010 and reinvestment of all dividends. Unless otherwise specified, all dates refer to the last day of each year presented. The stock price information shown on the graph below is not necessarily indicative of future price performance.

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ASSUMES $100 INVESTED ON MARCH 31, 2010

ASSUMES DIVIDEND REINVESTED

FISCAL YEAR ENDED MARCH 31, 2015

	Fiscal Year Ended
	3/31/2010		3/31/2011		3/31/2012		3/31/2013		3/31/2014		3/31/2015
Mad Catz Interactive, Inc.	$	100.00	$	456.25	$	129.17	$	78.75	$	100.52	$	76.85
NYSE MKT Market Index		100.00		130.73		134.28		136.81		153.40		143.27
S&P/TSX Composite Total Return		100.00		120.41		108.66		115.30		133.71		142.97
SIC Code 3944		100.00		123.99		105.21		123.73		154.35		171.80

Companies included in the Standard Industrial Code 3944 peer group include: Corewafer Industries Inc.; Gaming Partners International Corp; Hasbro, Inc.; Jakks Pacific, Inc.; LeapFrog Enterprises, Inc.; Mad Catz Interactive, Inc.; Millennium Prime Inc.; Nocopi Technologies, Inc.; Small World Kids, Inc.; and Smart Technologies Holding Corp.

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Item 6.    Selected Financial Data

The summary of financial information set forth below is derived from and should be read in conjunction with the financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of our results of operations to be expected in the future.

	Years Ended March 31,
	2015			2014			2013			2012			2011
	(In thousands of U.S. dollars, except share and per share data)
Consolidated Statements of Operations Data:
Net sales	$	86,223		$	89,629		$	122,664		$	117,552		$	183,899
Cost of sales		62,379			66,731			88,148			86,052			130,605
Gross profit		23,844			22,898			34,516			31,500			53,294
Operating expenses:
Sales and marketing		11,253			12,656			15,397			15,313			14,316
General and administrative		10,802			11,649			11,941			12,411			13,794
Research and development		2,995			4,238			4,205			5,634			4,678
Acquisition related items		—			134			1,088			1,067			873
Amortization		437			743			933			955			951
Goodwill impairment		—			—			10,468			—			—
Total operating expenses		25,487			29,420			44,032			35,380			34,612
Operating (loss) income		(1,643	)		(6,522	)		(9,516	)		(3,880	)		18,682
Other (expense) income:
Interest expense, net		(775	)		(659	)		(894	)		(1,123	)		(2,897	)
Foreign exchange (loss) gain, net		(784	)		(870	)		615			(560	)		1,195
Change in fair value of warrant liabilities		598			74			544			2,557			—
Other income		172			142			87			115			247
Total other (expense) income		(789	)		(1,313	)		352			989			(1,455	)
(Loss) income before income taxes		(2,432	)		(7,835	)		(9,164	)		(2,891	)		17,227
Income tax benefit (expense)		7,179			394			(2,036	)		1,264			(6,346	)
Net income (loss)	$	4,747		$	(7,441	)	$	(11,200	)	$	(1,627	)	$	10,881
Net income (loss) per share:
Basic	$	0.07		$	(0.12	)	$	(0.18	)	$	(0.03	)	$	0.20
Diluted	$	0.07		$	(0.12	)	$	(0.18	)	$	(0.03	)	$	0.18
Shares used in calculation:
Basic		64,350,893			63,757,395			63,471,235			63,094,422			55,429,673
Diluted		64,776,699			63,757,395			63,471,235			63,094,422			66,924,206
Consolidated Selected Balance Sheet Data:
Cash	$	5,142		$	1,496		$	2,773		$	2,474		$	3,734
Working capital		3,833			5,888			12,117			12,967			6,199
Goodwill and intangible assets, net		2,584			3,022			3,679			15,102			16,069
Total assets		47,492			39,293			52,523			77,073			75,534
Bank loan		7,920			5,612			8,888			16,654			5,408
Convertible notes payable, including interest		—			—			—			—			14,828
Notes payable		1,051			2,359			—			—			—
Total shareholders’ equity		15,788			12,126			16,878			29,491			24,097

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section contains forward-looking statements involving risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including those set out in Part I General Information, Item 1A Risk Factors elsewhere in this Annual Report. The following discussion should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Annual Report.

Overview

Our Business

Mad Catz designs, manufactures (primarily through third parties in Asia), markets and distributes innovative interactive entertainment products marketed under our Mad Catz (gaming), Tritton (audio), and Saitek (simulation) brands. Our products, which primarily include headsets, mice, keyboards, controllers, specialty controllers, and other accessories, cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, PC and Mac computers, smart phones, tablets and other mobile devices. We distribute our products through our online store as well as through many leading retailers around the globe. We are operationally headquartered in San Diego, California, and maintain offices in Europe and Asia.

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 video game platforms; the need to increase inventories in advance of our primary selling season; and timing of introductions of new products. See further discussion and sales by quarter under “Net Sales” below.

Foreign Currency

In fiscal 2015, approximately 72% of our annual sales were transacted outside the United States. 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 substantial 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 and we cannot predict the effect foreign currency fluctuations will have on us in the future.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenue and expenses during the reporting periods. The policies discussed below are considered by management to be critical because they are not only important to the portrayal of our financial condition and results of operations but also because application and interpretation of these policies requires both judgment and estimates of matters that are inherently uncertain and unknown. As a result, actual results may differ materially from our estimates.

Revenue Recognition

We recognize revenue when each of the following have occurred (1) there is persuasive evidence that an arrangement with our customer exists, which is generally a customer purchase order, (2) the products are delivered, which generally occurs when the products are shipped and risk of loss has been transferred to the customer,

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(3) the selling price is fixed or determinable and (4) collection of the customer receivable is deemed reasonably assured. Our payment arrangements with customers typically provide net 30- and 60-day terms. All of our arrangements are single element arrangements and there are no undelivered elements after the point of shipment.

Customer Marketing Programs

Where applicable, we record allowances for customer marketing programs, including certain rights of return, price protection, volume-based cash incentives and cooperative advertising. The estimated cost of these programs is accrued as a reduction to revenue when they are customer payments or incentives, or as an operating expense when they represent shared marketing expenses in the period we sell the product or commit to the program. Such amounts are estimated, based on historical experience and contractual terms, and periodically adjusted based on historical and anticipated rates of returns, inventory levels and other factors and are recorded as either operating expenses or a reduction of sales in accordance with authoritative guidance.

We grant limited rights of return for certain products. Estimates of expected future product returns are based on analyses of historical returns and information regarding inventory levels and the demand and acceptance of our products by the end consumer.

Consistent with industry standards and practices, on a product-by-product basis by customer, we allow price protection credits to be issued to retailers in the event of a subsequent price reduction. In general, price protection refers to the circumstances when we elect to decrease the price of a product and issue credits to our customers to protect the customers from lower profit margins on their then current inventory of the product. The decision to effect price reductions is influenced by retailer inventory levels, product lifecycle stage, market acceptance, competitive environment and new product introductions. Credits are issued based upon the number of units that customers have on hand at the date of the price reduction. Temporary price-protection credits may be issued to retailers for an agreed-upon promotional period. Credits are issued based upon the number of units sold by the retailer during the promotional period. Upon approval of a price protection program, reserves for the estimated amounts to be reimbursed to qualifying customers are established. Reserves are estimated based on analyses of qualified inventories on hand with retailers and distributors or projected sales during a promotional period.

We enter into cooperative advertising arrangements with many of our customers allowing customers to receive a credit for various advertising programs. The amounts of the credits are based on specific dollar-value programs or a percentage of sales, depending on the terms of the program negotiated with the individual customer. The objective of these programs is to encourage advertising and promotional events to increase sales of our products. Accruals for the estimated costs of these advertising programs are recorded based on the specific negotiations with individual customers in the period in which the revenue is recognized. We regularly evaluate the adequacy of these cooperative advertising program accruals.

We also offer other incentive programs to customers and record reserves for such programs as a reduction of revenue at the time revenue is recognized. Estimates of required reserves are determined based on programs negotiated with the specific customers.

Future market conditions and product transitions may require us to take action to increase customer programs and incentive offerings that could result in incremental reductions to revenue or increased operating expenses at the time the incentive is offered.

Allowance for Doubtful Accounts

We sell our products in the Americas, EMEA and APAC primarily through retailers. We generally do not require any collateral from our customers. However, we seek to control our credit risk through ongoing credit evaluations of our customers’ financial condition and by purchasing credit insurance on certain accounts receivable balances.

We regularly evaluate the collectability of our accounts receivable, and we maintain an allowance for doubtful accounts which we believe is adequate. The allowance is based on management’s assessment of the collectability of specific customer accounts, including their credit worthiness and financial condition, as well as historical experience with bad debts, receivables aging and current economic trends.

Our customer base is highly concentrated and a deterioration of a significant customer’s financial condition, or a decline in the general economic conditions could cause actual write-offs to be materially different from the

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estimated allowance. As of March 31, 2015, one customer represented 14% of total accounts receivable. Customers comprising the ten highest outstanding trade receivable balances accounted for approximately 68% of total accounts receivables as of March 31, 2015. If any of these customer’s receivable balances should be deemed uncollectible, we would have to make adjustments to our allowance for doubtful accounts, which could have a significant adverse effect on our financial condition and results of operations in the period the adjustments are made.

Inventory Valuation

We value inventories at the lower of cost or market value. If the estimated market value is determined to be less than the recorded cost of the inventory, a provision is made to reduce the carrying amount of the inventory item. Determination of the market value may be complex, and therefore, requires management to make assumptions and to apply a high degree of judgment. In order for management to make the appropriate determination of market value, the following items are commonly considered: inventory turnover statistics, inventory quantities on hand in our facilities and customer inventories, unfilled customer order quantities, forecasted consumer demand, current retail prices, competitive pricing, seasonality factors, consumer trends and performance of similar products or accessories. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded write-downs.

We have not made any significant changes in the methodology or assumptions used to establish our inventory valuation as reported during the past three fiscal years. We do not believe there is a reasonable likelihood that there will be a significant change in the future methodology or assumptions we use to calculate our inventory valuation. However, if our estimates regarding market value are inaccurate, or changes in consumer demand affect specific products in an unforeseen manner, we may be exposed to additional write-downs of our inventory that could be material.

Share-Based Payments

We measure stock-based compensation cost at the grant date, based on the fair value of the award, and recognize it as expense over the employee’s requisite service period.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model. The expected life of the options is based on a number of factors, including historical exercise experience, the vesting term of the award, and the expected volatility of our stock. The expected volatility is estimated based on the historical volatility (using daily pricing) of our stock. The risk-free interest rate is determined on a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the stock options. In accordance with authoritative guidance, we reduce the calculated Black-Scholes value by applying a forfeiture rate, based upon historical pre-vesting option cancellations. Estimated forfeitures are reassessed at each balance sheet date and may change based on new facts and circumstances.

Valuation of Deferred Income Taxes

We record valuation allowances to reduce our deferred tax assets to an amount that we believe is more likely than not to be realized. We consider estimated future taxable income and ongoing prudent and feasible tax planning strategies, including reversals of deferred tax liabilities, in assessing the need for a valuation allowance. If we were to determine that we will not realize all or part of our deferred tax assets in the future, we would make an adjustment to the carrying value of the deferred tax asset, which would be reflected as income tax expense. Conversely, if we were to determine that we will realize a deferred tax asset, which currently has a valuation allowance, we would reverse the valuation allowance which would be reflected as an income tax benefit or as an adjustment to stockholders’ equity, for tax assets related to stock options. In fiscal year 2015, we consolidated our research and development facilities away from the United States resulting in the transfer of risks associated with certain intellectual property to our Hong Kong subsidiary. As a result, we conducted a transfer pricing study to reflect the responsibilities, functions, and risks of our subsidiaries, which was completed during the fourth quarter of fiscal 2015, and accordingly, revised our transfer pricing policies to reflect changes in the business and the results of the study. As a result of the revised transfer pricing policies and an analysis of the timing of reversals and expiration of our temporary differences, the Company determined that it is more likely than not that

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a portion of the deferred tax assets in the U.S. will be realized and, accordingly, released $8.8 million of the valuation allowance against those deferred tax assets. The Company continues to record a valuation allowance of $1.2M against US deferred tax assets related to tax attributes that will expire prior to utilization. However, the revised transfer pricing policies also created uncertainties regarding the realization of the Company’s net deferred tax assets in Hong Kong due to the uncertainty over future profitability as well as the fact that the Company has a three-year cumulative book pre-tax loss position in Hong Kong. As a result, the Company has established a valuation allowance of $1.5 million against its Hong Kong deferred tax assets. Additionally, the Company continues to record a valuation allowance against certain other foreign deferred tax assets including a full valuation allowance against the deferred tax assets of the Company’s Canadian holding company, Mad Catz Interactive, Inc. (“MCII”). The Company believes there is insufficient evidence to conclude that realization of the benefit is more likely than not and, therefore, the Company continues to record a valuation allowance on these assets. MCII is a corporate entity, which has no revenue or other income, and incurs corporate-related expenses. Taxable losses are incurred each year and MCII has a history of operating losses. These circumstances are not anticipated to change and, therefore, the Company does not expect MCII to generate sufficient taxable income in the foreseeable future to enable the entity to utilize its tax loss carryforwards.

The Company has worldwide gross deferred tax assets and valuation allowances of approximately $19.0 million and $9.2 million, respectively, as of March 31, 2015. The Company will continue to evaluate the ability to realize its net deferred tax assets on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the ability to realize deferred tax assets and expects to release the valuation allowance when it has sufficient positive evidence, including but not limited to cumulative earnings in successive recent periods, to overcome such negative evidence.

In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the ability to recover deferred tax assets, which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes. In the ordinary course of our business, there are many transactions and calculations where the tax law and ultimate tax determination is uncertain. As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate prior to the completion and filing of tax returns for such periods. This process requires estimating both our geographic mix of income and our uncertain tax positions in each jurisdiction where we operate. These estimates involve complex issues and require us to make judgments about the likely application of the tax law to our situation, as well as with respect to other matters, such as anticipating the positions that we will take on tax returns prior to our actually preparing the returns and the outcomes of disputes with tax authorities. The ultimate resolution of these issues may take extended periods of time due to examinations by tax authorities and statutes of limitations. In addition, changes in our business, including acquisitions, changes in our international corporate structure, changes in the geographic location of business functions or assets, changes in the geographic mix and amount of income, as well as changes in our agreements with tax authorities, valuation allowances, applicable accounting rules, applicable tax laws and regulations, rulings and interpretations thereof, developments in tax audit and other matters, and variations in the estimated and actual level of annual pre-tax income can affect the overall effective income tax rate.

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing jurisdiction. If our estimates of these taxes are greater or less than actual results, an additional tax benefit or charge will result.

Results of Operations

Fiscal Year Ended March 31, 2015 Compared to Fiscal Year Ended March 31, 2014

Net Sales

Consolidated net sales for fiscal 2015 decreased 4% compared to fiscal 2014. The decrease in net sales during the current year was driven primarily by a decrease in sales of our products, primarily audio, designed for legacy consoles and universal platforms due to the launch of the PlayStation 4 and Xbox One consoles in November 2013. Although we are experiencing strong growth in products developed for these new consoles,

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which represented 21% of our sales this year compared to only 3% last year, the decline in sales of products related to the legacy consoles has been greater than we and others in the industry anticipated. As a result, sales of products designed for legacy consoles represented only 4% of our sales this year, compared to 19% in the prior year, and sales of our universal products represented 22% of our sales this year, compared to 29% in the prior year.

Our sales of products designed for the PC and Mac, which represented 46% of our sales during fiscal 2015, have been driven by growth in sales of our Saitek flight simulation products due to new product introductions and increased marketing activities, offset partially by declines in sales of our gaming mice and keyboards. The decline in sales of gaming mice and keyboards was driven primarily by a planned reduction in product placement at some U.S. accounts and an increase in aggressive pricing competition within this space.

We also experienced an increase in sales of products developed for smart devices, which represented 7% of our sales this year, compared to 2% in the prior year, driven primarily by controllers sold to a customer in APAC under a private label program.

Overall, the strengthening of the dollar against the currencies of our foreign operations also had a negative impact on sales growth, as the sales in local currency for our foreign operations are converted to fewer US dollars than they were a year ago. Had the exchange rates remained unchanged from prior year end the decrease in sales for fiscal 2015 compared to fiscal 2014 would have been 2%, instead of the actual decrease of 4%.

We expect net sales in fiscal 2016 to increase compared to fiscal 2015 driven primarily by the launch of the Rock Band 4 video game, for which we will serve as the co-publisher and hardware manufacturer, and expected growth in the installed base of PlayStation 4 and Xbox One consoles.

From a geographical perspective, our net sales for the fiscal years ended March 31, 2015 and 2014 were as follows (in thousands):

	Years Ended March 31,
	2015					2014					$ Change			% Change
	Net Sales		% of Total			Net Sales		% of Total
EMEA	$	46,247		54	%	$	53,132		59	%	$	(6,885	)		(13	)%
Americas		27,897		32	%		28,470		32	%		(573	)		(2	)%
APAC		12,079		14	%		8,027		9	%		4,052			50	%
	$	86,223		100	%	$	89,629		100	%	$	(3,406	)		(4	)%

Our sales by quarter were as follows (in thousands):

	Year Ended March 31, 2015					Year Ended March 31, 2014
	Net Sales		% of Total			Net Sales		% of Total
1st quarter	$	16,747		20	%	$	18,684		21	%
2nd quarter		22,467		26	%		17,839		20	%
3rd quarter		30,451		35	%		32,889		37	%
4th quarter		16,558		19	%		20,217		22	%
	$	86,223		100	%	$	89,629		100	%

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Our sales by platform as a percentage of gross sales were as follows:

	Years Ended March 31,
	2015			2014
PC and Mac		46	%		45	%
Universal		22	%		29	%
Next gen consoles (a)		21	%		3	%
Smart devices		7	%		2	%
Legacy consoles (b)		4	%		19	%
All others		—	%		2	%
		100	%		100	%

(a) Includes products developed for Xbox One, PlayStation 4 and Wii U.

(b) Includes products developed for Xbox 360, PlayStation 3 and Wii.

Our sales by product category as a percentage of gross sales were as follows:

	Years Ended March 31,
	2015			2014
Audio		42	%		47	%
Specialty controllers		25	%		16	%
Mice and keyboards		23	%		29	%
Controllers		6	%		1	%
Accessories		3	%		5	%
Games and other		1	%		2	%
		100	%		100	%

Our sales by brand as a percentage of gross sales were as follows:

	Years Ended March 31,
	2015			2014
Tritton		39	%		42	%
Mad Catz		34	%		41	%
Saitek		19	%		12	%
All others		8	%		5	%
		100	%		100	%

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, write-downs of inventory, cost of freight-in and freight-out and distribution center costs, including depreciation and other overhead costs.

The following table presents net sales, cost of sales and gross profit for fiscal years ended March 31, 2015 and 2014 (in thousands):

	Years Ended March 31,
	2015					2014
	Amount		% of Net Sales			Amount		% of Net Sales			$ Change			% Change
Net sales	$	86,223		100	%	$	89,629		100	%	$	(3,406	)		(4	)%
Cost of sales		62,379		72	%		66,731		74	%		4,352			7	%
Gross profit	$	23,844		28	%	$	22,898		26	%	$	946			4	%

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Although sales decreased 4% from fiscal 2014 to fiscal 2015, gross profit increased 4% due to an increase in gross margin to 28%. The increase in gross margin is due primarily to decreases in sales returns and discounts, inventory write-downs and royalties and licenses as a percentage of net sales. The improvements to gross margin were offset partially by an increase in freight expense, particularly air freight, as a percentage of net sales, and product mix. Additionally, the strengthening of the dollar against the currencies of our foreign operations had a negative impact on gross margin, as the sales in local currency for our foreign operations are converted to fewer US dollars than they were a year ago but the manufacturing costs are in US dollars. We expect gross profit in fiscal 2016 to increase compared to fiscal 2015, although we expect gross margin to decline due to lower margin sales of Rock Band 4 products.

Operating Expenses

Operating expenses for fiscal years ended March 31, 2015 and 2014 were as follows (in thousands):

	March 31, 2015		% of Net Sales			March 31, 2014		% of Net Sales			$ Change			% Change
Sales and marketing	$	11,253		13	%	$	12,656		14	%	$	(1,403	)		(11	)%
General and administrative		10,802		13	%		11,649		13	%		(847	)		(7	)%
Research and development		2,995		3	%		4,238		5	%		(1,243	)		(29	)%
Acquisition related items		0		—	%		134		—	%		(134	)		(100	)%
Amortization of intangibles		437		1	%		743		1	%		(306	)		(41	)%
	$	25,487		30	%	$	29,420		33	%	$	(3,933	)		(13	)%

Sales and Marketing Expenses.    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 decrease in sales and marketing expense of $1.4 million is primarily decreases in variable cooperative advertising expense as a result of decreased sales and a concerted effort to reduce overall operating expenses. We expect sales and marketing expenses in fiscal 2016, on an absolute dollar basis, to increase compared to fiscal 2015 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 of $0.8 million is primarily related to reductions in facility expenses, headcount reductions and lower incentive compensation expense. We expect general and administrative expenses in fiscal 2016, on an absolute dollar basis, to increase compared to fiscal 2015 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 of $1.2 million was primarily related to a reduction in software development expenses compared to the prior year. Additionally, during the year ended March 31, 2015, we received a reimbursement for engineering work performed on behalf of a third party of approximately $0.5 million. We expect research and development expenses in fiscal 2016 to increase compared to fiscal 2015 levels.

Acquisition Related Items.    Acquisition related items represent adjustments to the contingent consideration valuation related to the acquisition of Tritton Technologies, Inc. As the contingent consideration was converted to a note payable in fiscal 2014, these amounts related to the Tritton Technologies, Inc. acquisition are zero beginning in fiscal 2015.

Amortization of Intangibles.    Amortization expenses consist of the amortization of the acquired intangible assets from prior acquisitions. We expect amortization of intangibles in fiscal 2016 to decrease compared to fiscal 2015 levels.

Other (Expense) Income

Other (expense) income consists primarily of interest expense on our outstanding debt, foreign currency exchange gains or losses, change in fair value of the warrants issued in connection with Securities Purchase Agreements entered into by the Company in 2011 and 2015, and other items that may be specific to a reporting

34

period. The foreign currency exchange gains or losses are associated with fluctuations in the value of the functional currencies of our foreign subsidiaries, which include the Pound Sterling, the Euro, the Canadian dollar, the Hong Kong dollar, the Japanese yen, and the Chinese Yuan Renminbi (“CNY”), against the U.S. Dollar. Other expense was $0.8 million in fiscal 2015 compared to $1.3 million in fiscal 2014. The decrease in other expense of $0.5 million is primarily due to the change in the fair value of the warrant liabilities.

Income Tax Benefit (Expense)

Income tax benefit of $7.2 million and $0.4 million reflect effective tax rates of 295% and 5% for fiscal 2015 and 2014, respectively. Our effective tax rate is a blended rate for different jurisdictions in which the Company operates. Our effective tax rate fluctuates depending on the composition of our taxable income between the various jurisdictions in which we do business. The change in the effective tax rate in fiscal 2015 compared to fiscal 2014 is primarily due to an $8.8 million release of a valuation allowance against our U.S. deferred tax assets, offset partially by the establishment of a valuation allowance of $1.5 million against our Hong Kong deferred tax assets. The change in the valuation allowance was a result of a transfer pricing study completed in the fourth quarter, which changed the way income (loss) is allocated among our jurisdictions as a result of changes in the business. The Company will continue to evaluate the ability to realize its net deferred tax assets on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the deferred tax assets.

Fiscal Year Ended March 31, 2014 Compared to Fiscal Year Ended March 31, 2013

Net Sales

Consolidated net sales for fiscal 2014 decreased 27% compared to fiscal 2013. We experienced a decline in all regions due primarily to a decrease in demand, particularly with our larger retail customers, due to the gaming console transitions that occurred in November 2013. This decline in net sales was more pronounced in the Americas where a greater percentage of our net sales are of products developed for console gaming compared to EMEA, where a greater percentage are of products developed for gaming on the PC and Mac. Although we experienced a decline across all product categories, the largest impact was the reduction in sales of audio products, driven primarily by decreases in sales of higher priced headsets developed for specific gaming consoles, offset partially by increases in sales of headsets at lower price points.

From a geographical perspective, our net sales for the fiscal years ended March 31, 2014 and 2013 were as follows (in thousands):

	Years Ended March 31,
	2014					2013					$ Change			% Change
	Net Sales		% of Total			Net Sales		% of Total
EMEA	$	53,132		59	%	$	61,960		50	%	$	(8,828	)		(14	)%
Americas		28,470		32	%		51,316		42	%		(22,846	)		(45	)%
APAC		8,027		9	%		9,388		8	%		(1,361	)		(14	)%
	$	89,629		100	%	$	122,664		100	%	$	(33,035	)		(27	)%

Our sales by quarter were as follows (in thousands):

	Year Ended March 31, 2014					Year Ended March 31, 2013
	Net Sales		% of Total			Net Sales		% of Total
1st quarter	$	18,684		21	%	$	21,822		18	%
2nd quarter		17,839		20	%		31,215		25	%
3rd quarter		32,889		37	%		45,019		37	%
4th quarter		20,217		22	%		24,608		20	%
	$	89,629		100	%	$	122,664		100	%

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We generate a substantial percentage of our net sales in the last three months of every calendar year, our fiscal third quarter. In fiscal 2014, new gaming consoles were introduced during the fiscal third quarter, which resulted in a decline in a demand for products developed for the prior consoles starting several months prior to the release of the new consoles. The decline in net sales accelerated during our fiscal second quarter.

Our sales by platform as a percentage of gross sales were as follows:

	Years Ended March 31,
	2014			2013
PC and Mac		45	%		33	%
Universal		29	%		25	%
Next gen consoles (a)		3	%		1	%
Legacy consoles (b)		19	%		39	%
Smart devices		2	%		1	%
All others		2	%		1	%
		100	%		100	%

(a) Includes products developed for Xbox One, PlayStation 4 and Wii U.

(b) Includes products developed for Xbox 360, PlayStation 3 and Wii.

Our sales by product category as a percentage of gross sales were as follows:

	Years Ended March 31,
	2014			2013
Audio		47	%		48	%
Mice and Keyboards		29	%		21	%
Specialty controllers		16	%		14	%
Accessories		5	%		8	%
Controllers		1	%		5	%
Games and other		2	%		4	%
		100	%		100	%

Our sales by brand as a percentage of gross sales were as follows:

	Years Ended March 31,
	2014			2013
Mad Catz		41	%		45	%
Tritton		42	%		44	%
Saitek		12	%		9	%
All others		5	%		2	%
		100	%		100	%

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, write-downs of inventory, cost of freight-in and freight-out and distribution center costs, including depreciation and other overhead costs.

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The following table presents net sales, cost of sales and gross profit for fiscal years ended March 31, 2014 and 2013 (in thousands):

	Years Ended March 31,
	2014					2013
	Amount		% of Net Sales			Amount		% of Net Sales			$ Change			% Change
Net sales	$	89,629		100	%	$	122,664		100	%	$	(33,035	)		(27	)%
Cost of sales		66,731		74	%		88,148		72	%		(21,417	)		(24	)%
Gross profit	$	22,898		26	%	$	34,516		28	%	$	(11,618	)		(34	)%

The decrease in gross profit from fiscal 2013 to fiscal 2014 is due to the decrease in net sales and, to a lesser extent, the decrease in gross margin from 28% in fiscal 2013 to 26% in fiscal 2014. The decrease in gross margin was due primarily to an increase in distribution center costs, returns and allowances and inventory write-downs as a percentage of net sales, offset partially by a decrease in royalties and licenses as a percentage of net sales. The increase in inventory write-downs was driven primarily by a $1.0 million write-down of raw materials related to products for legacy gaming consoles. This also resulted in a write-off of $0.5 million of prepaid royalties related to these raw materials. Additionally, during the holiday season, we offered close-out pricing on some of our older slow moving inventory.

Operating Expenses

Operating expenses for fiscal years ended March 31, 2014 and 2013 were as follows (in thousands):

	March 31, 2014		% of Net Sales			March 31, 2013		% of Net Sales			$ Change			% Change
Sales and marketing	$	12,656		14	%	$	15,397		12	%	$	(2,741	)		(18	)%
General and administrative		11,649		13	%		11,941		10	%		(292	)		(2	)%
Research and development		4,238		5	%		4,205		3	%		33			1	%
Acquisition related items		134		—	%		1,088		1	%		(954	)		(88	)%
Amortization of intangibles		743		1	%		933		1	%		(190	)		(20	)%
Goodwill impairment		—		—	%		10,468		9	%		(10,468	)		(100	)%
	$	29,420		33	%	$	44,032		36	%	$	(14,612	)		(33	)%

Sales and Marketing Expenses.    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 decrease in sales and marketing expense of $2.7 million is primarily decreases in variable cooperative advertising expense as a result of decreased sales and a concerted effort to reduce overall operating expenses.

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 of $0.3 million is primarily related to a decrease in bonus expense, partially offset by an increase due primarily to an increase in employee related costs and an increase in professional fees.

Research and Development.    Research and development expenses, which increased slightly compared to prior year, include the costs of developing and enhancing new and existing products.

Acquisition Related Items.    Acquisition related items represent adjustments to the contingent consideration valuation related to the Tritton acquisition. As the contingent consideration was converted to a note payable in fiscal 2014, these amounts related to the Tritton acquisition are zero beginning in fiscal 2015.

Goodwill Impairment.    During fiscal 2013, the Company recorded a goodwill impairment charge of $10.5 million, which reduced the goodwill balance to zero.

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Amortization of Intangibles.    Amortization expenses consist of the amortization of the acquired intangible assets from prior acquisitions.

Other (Expense) Income

Other (expense) income consists primarily of interest expense on our outstanding debt, foreign currency exchange gains or losses, change in fair value of the warrants issued in connection with the Securities Purchase Agreement entered into by the Company in 2011 and other items that may be specific to a reporting period. The foreign currency exchange gains or losses are associated with fluctuations in the value of the functional currencies of our foreign subsidiaries, which include the Pound Sterling, the Euro, the Canadian dollar, the Hong Kong dollar, the Japanese yen, and the Chinese Yuan Renminbi (“CNY”), against the U.S. Dollar. Other expense was $1.3 million in fiscal 2014 compared to other income of $0.4 million in fiscal 2013. The change is primarily due to foreign currency exchange losses of $0.9 million in fiscal 2014 compared to foreign currency exchange gains of $0.6 million in fiscal 2013. Additionally, the change in the fair value of the warrant liability resulted in $0.1 million of income in fiscal 2014 compared to $0.5 million of income in fiscal 2013. Interest expense, net, decreased to $0.7 million during fiscal 2014 from $0.9 million in fiscal 2013 due to a reduction in the average debt balance during the current fiscal year.

Income Tax Benefit (Expense)

Income tax benefit of $0.4 million and income tax expense of $2.0 million reflect effective tax rates of 5% and (22%) for fiscal 2014 and 2013, respectively. The change in the effective tax rate in fiscal 2014 compared to fiscal 2013 is primarily due to recognized tax benefits for operating loss carryforwards generated in our Asian entities and the release of valuation allowances totaling $0.7 million against deferred tax assets related to net operating loss carryforwards in certain Canadian and European entities.

Liquidity and Capital Resources

The table below provides a summary of cash provided by (used in) operating, investing and financing activities during the fiscal years ended March 31, 2015, 2014 and 2013 (in thousands):

	Years Ended March 31,
	2015			2014			2013
Net cash provided by operating activities	$	1,472		$	4,087		$	10,190
Net cash used in investing activities		(2,067	)		(1,541	)		(1,046	)
Net cash provided by (used in) financing activities		4,424			(3,915	)		(8,739	)
Effect of foreign currency exchange rate changes on cash		(183	)		92			(106	)
Net increase (decrease) in cash	$	3,646		$	(1,277	)	$	299

Operating Activities

Net cash provided by operating activities for the year ended March 31, 2015 primarily reflects a decrease in inventory of $1.0 million and an increase in accounts payable of $1.6 million. These increases in cash were partially offset by the net loss for the period before non-cash items (i.e. depreciation, amortization, provision for deferred income taxes, stock-based compensation, and change in the fair value of warrant liabilities), and a decrease in accrued expenses of $1.1 million. Net cash provided by operating activities for the year ended March 31, 2014 primarily reflects a decrease in inventory of $7.3 million and a decrease in accounts receivable of $6.4 million. These increases in cash were partially offset by the net loss for the period before non-cash items (i.e. depreciation, amortization, provision for deferred income taxes, stock-based compensation, contingent consideration, and change in the fair value of warrant liability) and increases in accounts payable and accrued expenses of $1.9 million and $1.6 million, respectively. Net cash provided by operating activities for the year ended March 31, 2013 primarily related to a $1.2 million decrease in accounts receivable and a $7.6 million decrease in inventory, partially offset by a $2.4 million decrease in accounts payable. We are focused on effectively managing our overall liquidity position by continuously monitoring inventory levels and expenses, and managing our accounts receivable collection efforts.

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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. A large percentage of our annual sales are generated during our third fiscal quarter and, typically, our inventories decrease and accounts receivable increase as a result of the annual holiday selling. During our fourth fiscal 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.

Investing Activities

Net cash used in investing activities, which consisted primarily of capital expenditures to support our operations and were made up primarily of production molds, and to a lesser extent, computers and machinery and equipment, was $2.1 million, $1.5 million and $1.0 million during the years ended March 31, 2015, 2014 and 2013, respectively.

Financing Activities

Net cash provided by (used in) financing activities, which is primarily the result of net borrowings (repayments) under our line of credit described below, was $4.4 million, ($3.9) million and $8.7 million during the years ended March 31, 2015, 2014 and 2013, respectively. During the year ended March 31, 2015, we also received proceeds of $3.4 million from the issuance of common stock and warrants under a Securities Purchase Agreement.

We maintain a Credit Facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”) to borrow up to $25 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. Under the line of credit, interest accrues on the daily outstanding balance at an interest rate that ranges from U.S. prime rate plus 0.50% to U.S. prime rate plus 2.0% per annum or, at our option, LIBOR plus 2.50% to 3.50% with a LIBOR floor of 1.50%. At both March 31, 2015 and 2014, the interest rate was 5.25%. 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, and accounts receivable of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries. We are required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. Our trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, we were not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, we received a waiver of the covenant default from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and establishes the trailing twelve months’ Adjusted EBITDA covenant, as defined, from April 2015 through June 2016. However, there can be no assurance that we will be able to meet the covenants or that we would be able to obtain waivers from Wells Fargo to the extent we are not in compliance with the covenants.

In connection with our acquisition of Tritton in May 2010, we were obligated to make certain payments over a five-year period to former Tritton shareholders of up to $8.7 million based on the achievement of certain specific performance measures. The Company paid $1,650,000 under this arrangement during the year ended March 31, 2014, of which $800,000 is reflected in financing activities and $850,000 is reflected in operating activities. On February 27, 2014, the Company and individuals who held approximately 99% of Tritton prior to the purchase (the “Sellers”) entered into a Settlement and Release Agreement (the “Settlement Agreement”). Under the Settlement Agreement, the Company agreed to issue to the Sellers a Promissory Note (the “Note Payable”) providing for payments to the Sellers in an aggregate amount equal to $2,475,000 over a two-year period commencing in May 2014, which replaced the final two years of contingent consideration. The aggregate amount of the remaining payments was $1.1 million as of March 31, 2015, and is reflected in our consolidated balance sheet.

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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, and in the longer term, including any payments due on the note payable. We depend upon the availability of capital under our Credit Facility to finance our operations. Compliance with the Adjusted EBITDA covenants in fiscal 2016, which are tied closely to our internal forecasts and include significant contributions from anticipated sales of products related to the Rock Band 4 video game, depends on our ability to increase net sales and gross profit considerably. Also, we operate in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future sales and expenses. If we are unable to comply with the Adjusted EBITDA covenants contained in the Credit Facility, Wells Fargo may declare the outstanding borrowings under the facility immediately due and payable. If we need to obtain additional funds as a result of the termination of the Credit Facility or the acceleration of amounts due thereunder, there can be no assurance that alternative financing can be obtained on substantially similar or acceptable terms, or at all. Our failure to promptly obtain alternate financing could limit our ability to implement our business plan and have an immediate, severe and adverse impact on our business, results of operations, financial condition and liquidity. In the event that no alternative financing is available, we would be forced to drastically curtail operations, or dispose of assets, or cease operations altogether.

Contractual Obligations and Commitments

The following summarizes our contractual payment obligations at March 31, 2015 (in thousands):

	Payments Due
	Total		Less Than 1 Year		1-3 Years		4-5 Years		More Than 5 Years
Bank loan (see Note 7 of Notes to Consolidated Financial Statements)	$	7,920	$	7,920	$	—	$	—		—
Notes payable (see Note 3 of Notes to Consolidated Financial Statements)		1,051		1,015		36		—		—
Operating leases (see Note 11 of Notes to Consolidated Financial Statements)		5,271		1,521		3,058		692		—
Royalty & license guaranteed commitments (see Note 11 of Notes to Consolidated Financial Statements)		16,504		16,322		182		—		—
Total	$	30,746	$	26,778	$	3,276	$	692	$	—

As of March 31, 2015 and 2014, 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.

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Adjusted EBITDA (Loss)

Adjusted EBITDA (loss), a non-GAAP (“Generally Accepted Accounting Principles”) financial measure, represents net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, the gain/loss on the change in the fair value of the related warrant liabilities, goodwill impairment, if any, and acquisition related items. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it being presented as an alternative to operating or net income (loss) as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with 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 operating performance. We use Adjusted EBITDA as a measurement of operating performance in comparing our performance on a consistent basis over prior periods, as it removes from operating results the impact of our capital structure, including the interest expense resulting from our outstanding debt, and our asset base, including depreciation and amortization of our capital and intangible assets. In addition, Adjusted EBITDA is an important measure for our lender. We calculate Adjusted EBITDA as follows (in thousands):

	Years Ended March 31,
	2015			2014			2013
Net income (loss)	$	4,747		$	(7,441	)	$	(11,200	)
Adjustments:
Interest expense, net		775			659			894
Income tax(benefit) expense		(7,179	)		(394	)		2,036
Depreciation and amortization		2,050			2,607			3,029
Stock-based compensation		520			557			663
Change in fair value of warrant liabilities		(598	)		(74	)		(544	)
Acquisition related items		—			134			1,088
Goodwill impairment		—			—			10,468
Adjusted EBITDA (loss)	$	315		$	(3,952	)	$	6,434

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Market risk is the potential loss arising from changes in market rates and market prices. Our market risk exposure results primarily from fluctuations in foreign exchange rates and interest rates. Our views on market risk are not necessarily indicative of actual results that may occur and do not represent the maximum possible gains and losses that may occur, since actual gains and losses will differ from those estimated, based upon actual fluctuations in foreign currency exchange rates and interest rates and the timing of transactions.

Foreign Currency Exchange Rate Risk

A majority of our international business is presently conducted in currencies other than the U.S. dollar and may be exposed to financial market risk resulting from fluctuations in foreign currency exchange rates, particularly the Chinese Yuan Renminbi (“CNY”), the Pound Sterling, the Euro and the Canadian 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 difficulty in determining and obtaining predictable cash flow forecasts in our foreign operations based on the overall challenging environment and associated contract structures, we do not currently utilize any derivative financial instruments to hedge foreign currency risks. The volatility of the CNY, the Pound Sterling, the Euro and the Canadian dollar (and any other applicable currencies) will be monitored frequently throughout the coming year. If appropriate, we may enter into hedging transactions in

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order to mitigate our risk from foreign currency fluctuations. Due to the substantial 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. We estimate that an immediate 10% adverse change in foreign exchange rates not currently pegged to the U.S. dollar would have decreased our reported net income by approximately $2.8 million for the year ended March 31, 2015.

Interest Rate Risk

We are exposed to interest rate risk on borrowings under the Credit Facility at the U.S. prime rate plus 0.50% to 2.00%. We do not hedge our exposures to interest rate risk. We estimate that an increase of 1.0% in the interest rate under our Credit Facility would have decreased our reported net income by approximately $0.1 million for the year ended March 31, 2015.

Item 8.    Financial Statements and Supplementary Data

The Consolidated Financial Statements required by this Item, together with the reports of our independent registered public accounting firm, are set forth at the pages indicated on the Index to the Financial Statements on Page F-l included in Item 15 of this report.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes 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 necessarily is required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures. As required by Securities and Exchange Commission Rules 13a-15(b) we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (who is also the Chief Accounting Officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2015. In making its assessment, management used the framework set forth by the

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Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on its evaluation, management has concluded that, as of March 31, 2015, the Company’s internal control over financial reporting was effective based on these criteria.

Because we are a smaller reporting company, this Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm.

Changes in Internal Controls over Financial Reporting

There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal controls 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 this process.

Item 9B.    Other Information

None

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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

Certain information with respect to the executive officers of the Company is set forth in the section entitled “Executive Officers of the Registrant” in Part I of this Annual Report on Form 10-K.

The information required by this item with respect to the directors of the Company is incorporated herein by reference to the information under the caption “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” contained in the Company’s Management Proxy Circular for the Company’s 2015 Annual Meeting of Shareholders (the “Proxy Statement”).

We have adopted and maintain a code of business conduct and ethics that all executive officers and management employees must review and abide by (including our principal executive officer and principal financial officer), which we refer to as our Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available on our website, free of charge, at http://www.madcatz.com in the Investor Information section under the heading “Corporate Governance.”

Item 11.    Executive Compensation

The information required by Item 11 is incorporated herein by reference to the information in the Proxy Statement under the caption “Executive Compensation” specifically excluding the “Report of the Compensation Committee of the Board of Directors on Executive Compensation.”

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 is incorporated herein by reference to the information in the Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Item 13.    Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 is incorporated herein by reference to the information in the Proxy Statement under the caption “Certain Transactions.”

Item 14.    Principal Accounting Fees and Services

The information required by Item 14 is incorporated herein by reference to the information in the Proxy Statement under the caption “Principal Accountant Fees and Services.”

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PART IV

Item 15.    Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this report:

(1) Financial Statements

The consolidated financial statements of the Company are included herein as required under Item 8 of this report. See Index to Financial Statements on page F-1.

(2) Financial Statement Schedules

Schedules have been omitted because information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

(3) Exhibits (numbered in accordance with Item 601 of Regulation S-K)

The following exhibits are filed or incorporated by reference into this report.

1.1	Placement Agency Agreement, dated March 24, 2015, by and between Mad Catz Interactive, Inc. and Roth Capital Partners, LLC. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 25, 2015 and incorporated herein by reference.
3.1	Articles of Incorporation and Amendments thereto. This document was filed as an exhibit to the Registrant’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 25, 2014 and incorporated herein by reference.
3.2	By-Laws of the Company, as amended to date. This document was filed as an exhibit to the Registrant’s Current Report on Form 8K, filed with the Securities and Exchange Commission on November 9, 2011 and incorporated herein by reference.
4.1	Form of Warrant, issued April 21, 2011. This document was filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarterly period ended on June 30, 2011 and incorporated herein by reference.
4.2	Form of Warrant, issued March 24, 2015. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 25, 2015 and incorporated herein by reference.
4.3	Form of Indenture. This document was filed as an exhibit to the Registrant’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission on September 25, 2014 and incorporated herein by reference.
10.1	Guarantee dated September 25, 2000, by 1328158 Ontario Inc. in favor of Congress Financial Corporation (Canada). This document was filed as an exhibit to the Registrant’s Annual Report on Form 20-F filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2000 and incorporated herein by reference.
10.2	General Security Agreement dated September 25, 2000, by Mad Catz, Inc. and FX Unlimited, Inc. in favor of Congress Financial Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 20-F filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2000 and incorporated herein by reference.
10.3	Guarantee dated September 25, 2000, by Mad Catz, Inc. in favor of Congress Financial Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 20-F filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2000 and incorporated herein by reference.
10.4	Amended and Restated General Security Agreement dated as of November 30, 2001, by Mad Catz, Inc. and FX Unlimited, Inc. in favor of Congress Financial Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 20-F filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2002 and incorporated herein by reference.

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10.5	Xenon Game Peripheral Licensing Certification Agreement dated May 12, 2005, by and between Mad Catz, Inc. and Microsoft Corporation. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2005 and incorporated herein by reference.
10.6*	Amended and Restated Mad Catz Interactive, Inc. Stock Option Plan — 2007. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2013 and incorporated herein by reference.
10.7*	Stock Option Agreement under the Mad Catz Interactive, Inc. Stock Option Plan — 2007. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission October 9, 2007 and incorporated herein by reference.
10.8	Pledge and Security Agreement dated November 20, 2007, by Winkler Atlantic Holdings Limited in favor of Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 20, 2007 and incorporated herein by reference.
10.9	Guarantee dated November 20, 2007, by Saitek Industries Limited in favor of Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 20, 2007 and incorporated herein by reference.
10.10	General Security Agreement dated November 20, 2007, by Saitek Industries Limited in favor of Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 20, 2007 and incorporated herein by reference.
10.11*	Director Compensation Summary. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2014 and incorporated herein by reference.
10.12	General Security Agreement dated June 23, 2009, by Winkler Atlantic Holdings Limited in favor of and Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2009 and incorporated herein by reference.
10.13	Guarantee dated June 23, 2009, by Winkler Atlantic Holdings Limited in favor of Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2009 and incorporated herein by reference.
10.14	Negative Pledge Agreement dated June 23, 2009, by Saitek Elektronik Vertriebs Gmbh in favor of and Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2009 and incorporated herein by reference.
10.15	Guarantee dated June 23, 2009, by Saitek Elektronik Vertriebs Gmbh in favor of Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2009 and incorporated herein by reference.
10.16	First Amendment to Stock Pledge Agreement dated June 23, 2009, by and between Mad Catz, Inc. and Wachovia Capital Finance Corporation (Central). This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2009 and incorporated herein by reference.
10.17	Securities Purchase Agreement, dated April 17, 2011. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011 and incorporated herein by reference.

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10.18	Form of Registration Rights Agreement, dated April 21, 2011. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 18, 2011 and incorporated herein by reference.
10.19	Fourth Amended and Restated Loan Agreement, dated August 1, 2012, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 2, 2012 and incorporated herein by reference.
10.20	Amendment to Fourth Amended and Restated Loan Agreement, effective as of November 30, 2012, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. This document was filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarterly period ended December 31, 2012 and incorporated herein by reference.
10.21	Amendment to Fourth Amended and Restated Loan Agreement, effective as of June 5, 2013, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2013 and incorporated herein by reference.
10.22	Amendment to Fourth Amended and Restated Loan Agreement, effective as of August 22, 2013, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 26, 2013 and incorporated herein by reference.
10.23	Amendment to Fourth Amended and Restated Loan Agreement, effective as of November 6, 2013, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarterly period ended December 31, 2013 and incorporated herein by reference.
10.24	Amendment to Fourth Amended and Restated Loan Agreement, effective as of February 5, 2014, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2014 and incorporated herein by reference.
10.25	Amendment to Fourth Amended and Restated Loan Agreement, effective as of February 27, 2014, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2014 and incorporated herein by reference.
10.26	Amendment to Fourth Amended and Restated Loan Agreement, effective as of June 3, 2014, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarterly period ended June 30, 2014 and incorporated herein by reference.
10.27	Amendment to Fourth Amended and Restated Loan Agreement, effective as of February 2, 2015, between Mad Catz, Inc. and Wells Fargo Capital Finance, LLC. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5, 2015 and incorporated herein by reference.

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10.28	Settlement and Release Agreement, dated January 31, 2014, between Mad Catz Interactive Inc., Mad Catz, Inc. and certain former stockholders of Tritton Technologies, Inc. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2014 and incorporated herein by reference.
10.29	Promissory Note, dated February 27, 2014, issued by Mad Catz Interactive Inc. and Mad Catz, Inc. in favor of certain former stockholders of Tritton Technologies, Inc. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 4, 2014 and incorporated herein by reference.
10.30*	Employment Agreement effective April 22, 2014, by and between Mad Catz Interactive, Inc. and Darren Richardson. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2014 and incorporated herein by reference.
10.31*	Employment Agreement effective April 22, 2014, by and between Mad Catz Interactive, Inc. and Karen McGinnis. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2014 and incorporated herein by reference.
10.32*	Employment Agreement effective April 22, 2014, by and between Mad Catz Interactive, Inc. and Whitney Petersen. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2014 and incorporated herein by reference.
10.33*	Employment Agreement effective April 22, 2014, by and between Mad Catz Interactive, Inc. and Brian Anderson. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2014 and incorporated herein by reference.
10.34*	Employment Agreement effective April 22, 2014, by and between Mad Catz Interactive, Inc. and Andrew Young. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2014 and incorporated herein by reference.
10.35*	Form of Indemnification Agreement This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2014 and incorporated herein by reference.
10.36	Binding Term Sheet, effective March 4, 2015, for the Co-Publishing of Rock Band 4. Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2015 and incorporated herein by reference.
10.37	Securities Purchase Agreement, dated March 24, 2015. This document was filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 25, 2015 and incorporated herein by reference.
21.1	Subsidiaries of the Company. This document was filed as an exhibit to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended March 31, 2012 and incorporated herein by reference.
23.1	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
31.1	Certifications of Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certifications of Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

48

32.1	Certifications of Registrant’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002. These certifications are being furnished solely to accompany this Annual Report on Form 10-K and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company.
32.2	Certifications of Registrant’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002. These certifications are being furnished solely to accompany this Annual Report on Form 10-K and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company.
101	The following financial statements from the Mad Catz Interactive, Inc. Annual Report on Form 10-K for the year ended March 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.

* Denotes management contract or compensatory plan or arrangement.

49

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.
By:	/s/    DARREN RICHARDSON
	Darren Richardson
	President and Chief Executive Officer

Date: June 25, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/    DARREN RICHARDSON Darren Richardson	President and Chief Executive Officer (Principal Executive Officer)	June 25, 2015
/s/    KAREN MCGINNIS Karen McGinnis	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	June 25, 2015
/s/    THOMAS BROWN Thomas Brown	Director	June 25, 2015
/s/    SCOTT GUTHRIE Scott Guthrie	Director	June 25, 2015
/s/    JOHN NYHOLT John Nyholt	Director	June 25, 2015
Carlo Chiarello	Director	June 25, 2015

50

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Index to Consolidated Financial Statements	F-1
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Comprehensive Income (Loss)	F-5
Consolidated Statements of Shareholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Mad Catz Interactive, Inc.:

We have audited the accompanying consolidated balance sheets of Mad Catz Interactive, Inc. and subsidiaries (the Company) as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mad Catz Interactive, Inc. and subsidiaries as of March 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2015, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 2 to the consolidated financial statements, there are uncertainties about the Company’s ability to comply with certain debt covenants under their credit facility that is required to finance operations, which raises substantial doubt about their ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ KPMG LLP

San Diego, California

June 25, 2015

F-2

MAD CATZ INTERACTIVE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	March 31, 2015			March 31, 2014
ASSETS
Current assets:
Cash	$	5,142		$	1,496
Accounts receivable, net of allowances of $4,032 and $6,359 at March 31, 2015 and 2014, respectively		7,823			8,059
Other receivables		560			1,531
Inventories		15,479			17,189
Deferred tax assets		2,245			926
Income taxes receivable		967			895
Prepaid expenses and other current assets		1,293			1,605
Total current assets		33,509			31,701
Deferred tax assets		7,605			1,334
Other assets		418			499
Property and equipment, net		3,376			2,737
Intangible assets, net		2,584			3,022
Total assets	$	47,492		$	39,293
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank loan	$	7,920		$	5,612
Accounts payable		16,404			13,661
Accrued liabilities		4,196			4,874
Notes payable		1,015			1,336
Income taxes payable		141			330
Total current liabilities		29,676			25,813
Notes payable, less current portion		36			1,023
Warrant liabilities		1,187			75
Deferred tax liabilities		43			178
Deferred rent		762			78
Total liabilities		31,704			27,167
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value, unlimited shares authorized; 73,469,571 and 63,931,506 shares issued and outstanding at March 31, 2015 and 2014, respectively		63,128			60,847
Accumulated other comprehensive loss		(5,123	)		(1,757	)
Accumulated deficit		(42,217	)		(46,964	)
Total shareholders’ equity		15,788			12,126
Total liabilities and shareholders’ equity	$	47,492		$	39,293

See accompanying notes to consolidated financial statements.

F-3

MAD CATZ INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	Years Ended March 31,
	2015			2014			2013
Net sales	$	86,223		$	89,629		$	122,664
Cost of sales		62,379			66,731			88,148
Gross profit		23,844			22,898			34,516
Operating expenses:
Sales and marketing		11,253			12,656			15,397
General and administrative		10,802			11,649			11,941
Research and development		2,995			4,238			4,205
Acquisition related items		—			134			1,088
Amortization of intangible assets		437			743			933
Goodwill impairment		—			—			10,468
Total operating expenses		25,487			29,420			44,032
Operating loss		(1,643	)		(6,522	)		(9,516	)
Other (expense) income:
Interest expense, net		(775	)		(659	)		(894	)
Foreign exchange (loss) gain, net		(784	)		(870	)		615
Change in fair value of warrant liabilities		598			74			544
Other income		172			142			87
Total other (expense) income		(789	)		(1,313	)		352
Loss before income taxes		(2,432	)		(7,835	)		(9,164	)
Income tax benefit (expense)		7,179			394			(2,036	)
Net income (loss)	$	4,747		$	(7,441	)	$	(11,200	)
Net income (loss) per share:
Basic	$	0.07		$	(0.12	)	$	(0.18	)
Diluted	$	0.07		$	(0.12	)	$	(0.18	)
Shares used in per share computations:
Basic		64,350,893			63,757,395			63,471,235
Diluted		64,776,699			63,757,395			63,471,235

See accompanying notes to consolidated financial statements.

F-4

MAD CATZ INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Years Ended March 31,
	2015			2014			2013
Net income (loss)	$	4,747		$	(7,441	)	$	(11,200	)
Foreign currency translation adjustments		(3,366	)		1,944			(2,083	)
Comprehensive income (loss)	$	1,381		$	(5,497	)	$	(13,283	)

See accompanying notes to consolidated financial statements.

F-5

MAD CATZ INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

					Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Shareholders’ Equity
	Common Stock
	Shares		Amount
Balance at March 31, 2012		63,462,399	$	59,432	$	(1,618	)	$	(28,323	)	$	29,491
Stock option exercises		15,000		7		—			—			7
Stock-based compensation		—		663		—			—			663
Net loss		—		—		—			(11,200	)		(11,200	)
Other comprehensive loss		—		—		(2,083	)		—			(2,083	)
Balance at March 31, 2013		63,477,399	$	60,102	$	(3,701	)	$	(39,523	)	$	16,878
Stock option exercises		454,107		188		—			—			188
Stock-based compensation		—		557		—			—			557
Net loss		—		—		—			(7,441	)		(7,441	)
Other comprehensive income		—		—		1,944			—			1,944
Balance at March 31, 2014		63,931,506	$	60,847	$	(1,757	)	$	(46,964	)	$	12,126
Issuance of common stock in connection with securities purchase agreement, net of issuance costs and fair value of warrants		8,980,773		1,525		—			—			1,525
Stock option exercises		557,292		236		—			—			236
Stock-based compensation		—		520		—			—			520
Net income		—		—		—			4,747			4,747
Other comprehensive loss		—		—		(3,366	)		—			(3,366	)
Balance at March 31, 2015		73,469,571	$	63,128	$	(5,123	)	$	(42,217	)	$	15,788

See accompanying notes to consolidated financial statements.

F-6

MAD CATZ INTERACTIVE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Years Ended March 31,
	2015			2014			2013
Cash flows from operating activities:
Net income (loss)	$	4,747		$	(7,441	)	$	(11,200	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,050			2,568			3,022
Accrued and unpaid interest expense on note payable		10			11			—
Amortization of deferred financing fees		87			39			7
(Gain) loss on disposal of assets		(73	)		79			72
Stock-based compensation		520			557			663
Change in fair value of contingent consideration		—			(729	)		475
Change in fair value of warrant liabilities		(598	)		(74	)		(544	)
Goodwill impairment		—			—			10,468
(Benefit) provision for deferred income taxes		(8,039	)		(1,607	)		188
Changes in operating assets and liabilities:
Accounts receivable		141			6,406			1,221
Other receivables		582			(142	)		(200	)
Inventories		1,024			7,265			7,640
Prepaid expenses and other current assets		187			1,216			207
Other assets		47			(153	)		346
Accounts payable		1,627			(1,890	)		(2,367	)
Accrued liabilities		(1,131	)		(1,601	)		220
Deferred rent		410			—			—
Income taxes receivable/payable		(119	)		(417	)		(28	)
Net cash provided by operating activities		1,472			4,087			10,190
Cash flows from investing activities:
Purchases of property and equipment		(2,067	)		(1,461	)		(1,046	)
Purchases of intangible assets		—			(80	)		—
Net cash used in investing activities		(2,067	)		(1,541	)		(1,046	)
Cash flows from financing activities:
Borrowings on bank loan		65,442			69,810			90,640
Repayments on bank loan		(63,134	)		(73,086	)		(98,406	)
Payment of financing fees		(85	)		(40	)		—
Repayments on notes payable		(1,434	)		—			—
Proceeds from issuance of common stock		3,399			—			—
Proceeds from exercise of stock options		236			188			7
Payment of contingent consideration		—			(787	)		(980	)
Net cash provided by (used in) financing activities		4,424			(3,915	)		(8,739	)
Effects of foreign currency exchange rate changes on cash		(183	)		92			(106	)
Net increase (decrease) in cash		3,646			(1,277	)		299
Cash, beginning of year		1,496			2,773			2,474
Cash, end of year	$	5,142		$	1,496		$	2,773
Supplemental cash flow information:
Income taxes paid	$	870		$	1,656		$	2,979
Interest paid	$	671		$	532		$	777
Supplemental disclosures of noncash investing and financing activities:
Conversion of contingent consideration to note payable	$	—		$	2,348		$	—
Fair value of warrants issued	$	1,710		$	—		$	—

See accompanying notes to consolidated financial statements.

F-7

MAD CATZ INTERACTIVE, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(1)    Organization and Description of Business

Mad Catz Interactive, Inc. (“Mad Catz”) designs, manufactures (primarily through third parties in Asia), markets and distributes innovative interactive entertainment products marketed under its Mad Catz (gaming), Tritton (audio), and Saitek (simulation) brands. Mad Catz products, which primarily include headsets, mice, keyboards, controllers, specialty controllers, and other accessories, cater to passionate gamers across multiple platforms in including in-home gaming consoles, handheld gaming consoles, PC and Mac computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as through many leading retailers around the globe. Operationally headquartered in San Diego, California, Mad Catz also maintains offices in Europe and Asia.

(2)    Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Mad Catz Interactive, Inc. and its wholly-owned subsidiaries, collectively, the Company. All intercompany transactions and balances have been eliminated in consolidation. The Company refers to its fiscal years based on the fiscal year ending date. For instance, fiscal year 2015 refers to the fiscal year ending March 31, 2015. All currency amounts are presented in U.S. dollars.

The Company maintains a Credit Facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”) to borrow up to $25 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. Borrowings under the Credit Facility are secured by a first priority interest in the inventories, equipment, and accounts receivable of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries. The Company is required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. The Company’s trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, the Company was not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, the Company received a waiver of the covenant violations from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and modifies the trailing twelve months’ Adjusted EBITDA covenant, as defined, from June 2015 through June 2016.

The Company depends upon the availability of capital under the Credit Facility to finance operations. Compliance with the Adjusted EBITDA covenants in fiscal 2016, which are tied closely to our internal forecasts and include significant contributions from anticipated sales of products related to the Rock Band 4 video game, depends on the Company’s ability to increase net sales and gross profit considerably. Also, the Company operates in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future sales and expenses. If the Company is unable to comply with the revised Adjusted EBITDA covenants contained in the Credit Facility, Wells Fargo could declare the outstanding borrowings under the facility immediately due and payable. If the Company needs to obtain additional funds as a result of the termination of the Credit Facility or the acceleration of amounts due thereunder, there can be no assurance that alternative financing can be obtained on substantially similar or acceptable terms, or at all. The Company’s failure to promptly obtain alternate financing could limit our ability to implement our business plan and have an immediate, severe and adverse impact on our business, results of operations, financial condition and liquidity. In the event that no alternative financing is available, the Company would be forced to drastically curtail operations, or dispose of assets, or cease operations altogether.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

F-8

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the year. On an ongoing basis, the Company evaluates its estimates, including those related to asset impairments, reserves for accounts receivable and inventory, contingencies and litigation, valuation and recognition of share-based payments, warrant liabilities and income taxes. 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.

Concentration of Credit Risk

The Company’s credit risk is primarily concentrated in accounts receivable. The Company generally does not require collateral on accounts receivable because a majority of its customers are large, well-capitalized, established retail entities with operations throughout the United States, Canada and Europe. The Company maintains an allowance for doubtful accounts. For the year ended March 31, 2015, sales to the largest customer constituted 14% of gross sales and sales to the second largest customer constituted 10% of gross sales. For the year ended March 31, 2014, sales to the largest customer constituted 13% of gross sales and sales to the second largest customer constituted 11% of gross sales. For the year ended March 31, 2013, sales to the largest customer constituted 17% of gross sales. At March 31, 2015, two customers represented 14%, each, of accounts receivable and another customer represented 11% of accounts receivable. At March 31, 2014, one customer represented 15% of accounts receivable. For the years ended March 31, 2015, 2014 and 2013, there were no other customers which accounted for greater than 10% of gross sales and at March 31, 2015 and 2014, there were no other customers which represented greater than 10% of accounts receivable.

Fair Value of Financial Instruments and Fair Value Measurements

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 carrying value of the note payable approximates fair value as it represents the present value using an effective interest rate of 5.25%, which approximates the interest rate on the Company’s bank loan.

Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

Ÿ Level 1:    Quoted prices in active markets for identical assets or liabilities.

Ÿ Level 2:    Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Ÿ Level 3:    Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

F-9

The following table provides a summary of the recognized assets and liabilities carried at fair value on a recurring basis (in thousands):

	Balance as of March 31, 2015			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(1,187	)	$	—	$	—	$	(1,187	)
	Balance as of March 31, 2014			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(75	)	$	—	$	—	$	(75	)

The following tables provide a roll forward of the Company’s level three fair value measurements, which consist of the Company’s warrant liabilities, during the three years ended March 31, 2015 (in thousands):

Warrant liabilities:
Balance at March 31, 2012	$	(693	)
Change in fair value of warrant liabilities		544
Balance at March 31, 2013	$	(149	)
Change in fair value of warrant liabilities		74
Balance at March 31, 2014	$	(75	)
Securities purchase agreement		(1,710	)
Change in fair value of warrant liabilities		598
Balance at March 31, 2015	$	(1,187	)

Revenue Recognition

The Company recognizes revenue when (1) there is persuasive evidence that an arrangement with the customer exists, which is generally a customer purchase order, (2) the products are delivered, which occurs when the products are shipped and risk of loss has been transferred to the customer, (3) the selling price is fixed or determinable and (4) collection of the customer receivable is deemed reasonably assured. The Company’s payment arrangements with customers typically provide net 30- and 60-day terms. All of the Company’s arrangements are single element arrangements and there are no undelivered elements after the point of shipment.

Amounts billed to customers for shipping and handling are included in net sales, and costs incurred related to shipping and handling is included in cost of sales. The Company excludes sales and other taxes collected from customers from net sales.

Allowance for Doubtful Accounts and Other Allowances

Accounts receivable are recorded net of an allowance for doubtful accounts and other sales related allowances. When evaluating the adequacy of the allowance for doubtful accounts, the Company analyzes known uncollectible accounts, the aging of accounts receivable, historical bad debts, customer credit-worthiness and current economic trends. The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. To date, the Company has not experienced significant credit related losses.

The Company records allowances for customer marketing programs, including certain rights of return, price protection, volume-based cash incentives and cooperative advertising. The estimated cost of these programs is accrued as a reduction to revenue when they are customer payments or incentives, or as an operating expense when they represent shared marketing expenses in the period the Company sells the product or

F-10

commits to the program. Such amounts are estimated, based on historical experience and contractual terms, and periodically adjusted based on historical and anticipated rates of returns, inventory levels and other factors.

Inventories

Raw materials, packaging materials and accessories are valued at the lower of cost, determined by the first-in, first-out method, or market. Finished goods are valued at the lower of cost or market, with cost being determined on an average cost basis. The Company regularly reviews inventory quantities on hand and in the retail channel, consumer demand and seasonality factors in order to recognize any loss of utility in the period incurred.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives of the assets as follows:

Molds	3 years
Computer equipment and software	3 years
Manufacturing and office equipment	3 - 5 years
Furniture and fixtures	5 - 6 years
Leasehold improvements	Shorter of estimated useful life or remaining life of lease

Major improvements and betterments are capitalized.

Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are amortized over the estimated useful lives of the assets on a straight-line basis. The range of useful lives is as follows:

	Useful Life (Years)
Trademarks		6 - 15
Customer relationships		6 - 8

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. The Company did not record impairment of long-lived assets in fiscal years 2015, 2014 and 2013.

Royalties and Intellectual Property Licenses

Royalty and license expenses consist of royalties and license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of the Company’s products. Royalty-based payments that are paid in advance are generally capitalized and expensed to cost of sales at the greater of the contractual or effective royalty rate based on net product sales.

F-11

Advertising

Advertising costs which totaled $2,132,000, $2,575,000, and $3,513,000 for the years ended March 31, 2015, 2014 and 2013, respectively, are expensed as incurred. Cooperative advertising with retailers is recorded when revenue is recognized and such amounts are included in sales and marketing expense if there is a separate identifiable benefit with a fair value. Otherwise, such costs are recognized as a reduction of sales.

Research and Development

Research and development costs, which totaled $2,995,000, $4,238,000 and $4,205,000 for the years ended March 31, 2015, 2014 and 2013, respectively, are expensed as incurred.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under the asset and liability method of accounting for income taxes, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that it is not “more likely than not” that a deferred tax asset will be realized, a valuation allowance is provided. Significant management judgment is required in assessing the ability to realize the Company’s deferred tax assets. In performing this assessment, management considers whether it is more likely than not that some portion or all of the assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income in each tax jurisdiction during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Foreign Currency Translation

For each of the Company’s foreign operating subsidiaries the functional currency is its local currency. Assets and liabilities of foreign operations are translated into U.S. dollars using month-end exchange rates, and revenue and expenses are translated into U.S. dollars using monthly average exchange rates. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive loss in shareholders’ equity.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency.

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding, increased by potentially dilutive securities. Potentially dilutive securities are calculated using the treasury stock method and represent incremental shares issuable upon exercise of outstanding stock options and warrants. However, potentially dilutive securities are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive. As a result, the denominator for diluted loss per share is the same as the weighted average common shares in periods when a net loss is reported.

F-12

The following table sets forth the computation of diluted weighted average common and potential common shares outstanding for the years ended March 31, 2015, 2014 and 2013 (in thousands, except share and per share amounts):

	Years Ended March 31,
	2015		2014			2013
Numerator:
Net income (loss)	$	4,747	$	(7,441	)	$	(11,200	)
Denominator:
Weighted average common shares		64,350,893		63,757,395			63,471,235
Effect of dilutive share-based awards		425,806		—			—
Denominator for diluted net income (loss) per share		64,776,699		63,757,395			63,471,235
Income (loss) per share:
Basic	$	0.07	$	(0.12	)	$	(0.18	)
Diluted	$	0.07	$	(0.12	)	$	(0.18	)
Anti-dilutive securities excluded from the computation of diluted income (loss) per share:
Outstanding options		7,034,897		7,644,948			8,832,288
Outstanding warrants		2,639,337		2,540,918			2,540,918

Stock-Based Compensation

The Company records compensation expense associated with stock-based awards made to employees and directors based upon their grant date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is four years, except for grants to Board of Directors, which vest in one year.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model, using the assumptions noted in Note 8 — Stock-Based Compensation. The expected life of the options is based on a number of factors, including historical exercise experience, the vesting term of the award, and the expected volatility of the Company’s stock. The expected volatility is estimated based on the historical volatility (using daily pricing) of the Company’s stock. The risk-free interest rate is determined based on a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the stock options. The Company reduces the calculated stock-based compensation expense for estimated forfeitures by applying a forfeiture rate, based upon historical pre-vesting option cancelations. Estimated forfeitures are reassessed at each balance sheet date and may change based on new facts and circumstances.

See Note 8 — Stock-Based Compensation for additional information regarding the Company’s stock-based compensation plans.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and certain changes in equity that are excluded from net income (loss). Accumulated other comprehensive loss represents net unrealized gains and losses from foreign currency translation adjustments.

Recently Issued Accounting Standards

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendment is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those annual periods with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

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In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The effective date of ASU 2014-09 is for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern for a one year period subsequent to the date of the financial statements. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The guidance is effective for all entities for the first annual period ending after December 15, 2016 and interim periods thereafter, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s financial statements.

(3)    Note Payable

In May 2010, the Company acquired all of the outstanding stock of Tritton Technologies Inc. (“Tritton”) for $1,400,000 cash, subject to a working capital adjustment, and contingent 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 $8,700,000. Through May 2013, the Company paid $4,788,000 for the first three years of the five-year contingent period. In February 2014, the Company and individuals who held approximately 99% of Tritton prior to the purchase (the “Sellers”) entered into a Settlement and Release Agreement (the “Settlement Agreement”). Under the Settlement Agreement, the Company agreed to issue to the Sellers a Promissory Note (the “Note Payable”) providing for payments to the Sellers in an aggregate amount equal to $2,475,000 over a two-year period commencing in May 2014, which replaced the final two years of contingent consideration. As of March 31, 2015, the liability for contingent consideration is $0 and the present value of the Note Payable is $1,023,000, with an effective interest rate of 5.25%.

(4)    Inventories

Inventories consist of the following (in thousands):

	March 31,
	2015		2014
Raw materials	$	735	$	1,032
Finished goods		14,744		16,157
	$	15,479	$	17,189

The amount of inventory pledged as debt obligation collateral totaled $13,665,000 at March 31, 2015.

(5)    Property and Equipment

Property and equipment, net, consist of the following (in thousands):

	March 31,
	2015			2014
Molds	$	9,503		$	8,707
Computer equipment and software		2,112			2,529
Manufacturing and office equipment		1,701			1,376
Furniture and fixtures		478			518
Leasehold improvements		1,052			984
		14,846			14,114
Less: Accumulated depreciation and amortization		(11,470	)		(11,377	)
	$	3,376		$	2,737

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Depreciation expense related to property and equipment totaled $1,524,000, $1,825,000, and $2,089,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

(6)    Intangible Assets

Acquired intangible assets, net, consist of the following (in thousands):

	March 31, 2015						March 31, 2014
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Trademarks	$	3,984	$	1,756	$	2,228	$	4,154	$	1,601	$	2,553
Customer relationships		900		544		356		3,852		3,383		469
Intangible assets	$	4,884	$	2,300	$	2,584	$	8,006	$	4,984	$	3,022

Amortization of intangible assets was approximately $437,000, $743,000 and $933,000 in fiscal 2015, 2014 and 2013, respectively.

As of March 31, 2015, the future estimated amortization expense for these acquired intangible assets for the next five years and thereafter is expected to be as follows (in thousands):

Years ending March 31:
2016	$	437
2017		437
2018		438
2019		344
2020		325
Thereafter		603
	$	2,584

(7)    Bank Loan

The Company maintains a Credit Facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”) to borrow up to $25 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. Under the line of credit, interest accrues on the daily outstanding balance at an interest rate that ranges from U.S. prime rate plus 0.50% to U.S. prime rate plus 2.0% per annum or, at the Company’s option, LIBOR plus 2.50% to 3.50% with a LIBOR floor of 1.50%. At both March 31, 2015 and 2014, the interest rate was 5.25%. The Company is 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, and accounts receivable of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries. The Company is required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. The Company’s trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, the Company was not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, the Company received a waiver of the covenant default from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and modifies the trailing twelve months’ Adjusted EBITDA covenant, as defined, from April 2015 through June 2016. However, there can be no assurance that the Company will be able to meet the covenants subsequent to March 31, 2015 or that the Company would be able to obtain waivers from Wells Fargo to the extent we are not in compliance with the covenants.

(8)    Stock-Based Compensation

The Company’s Stock Option Plan (the “2007 Plan”) allows the Company to grant options to purchase common stock to employees, officers and directors up to a maximum of 10,300,000 shares of common stock. Options granted under the 2007 Plan expire ten years from the date of grant and generally vest over a period of

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four years, with the first 25% vesting on the one-year anniversary of the grant date and the remainder vesting monthly over the remaining 36 months. At March 31, 2015, a total of 252,918 shares were available for future grant under the 2007 Plan.

A summary of option activity is presented as follows:

	Years Ended March 31,
	2015					2014					2013
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding, beginning of year		7,199,982		$	0.66		9,364,744		$	0.66		7,951,463		$	0.66
Granted		1,875,000			0.56		362,054			0.50		1,500,000			0.67
Exercised		(557,292	)		0.42		(454,107	)		0.41		(15,000	)		0.47
Expired/canceled		(575,879	)		0.88		(2,072,709	)		0.89		(71,719	)		0.49
Outstanding, end of year		7,941,811		$	0.64		7,199,982		$	0.66		9,364,744		$	0.66
Exercisable, end of year		5,368,481		$	0.66		5,542,304		$	0.65		6,320,370		$	0.61
Vested and expected to vest, end of year		7,718,407		$	0.64		6,716,143		$	0.66		8,812,244		$	0.66

As of March 31, 2015, the aggregate intrinsic value of options outstanding was $13,000 and the weighted average remaining contractual term of these options was 6.3 years; the aggregate intrinsic value of options exercisable was $13,000, and the remaining weighted average contractual term of these options was 5.1 years. The aggregate intrinsic value of options exercised in fiscal years 2015, 2014 and 2013 was $72,000, $101,000 and $3,000, respectively. As of March 31, 2015, the total unrecognized compensation cost related to unvested options was $839,000, which is expected to be recognized over a weighted-average period of 2.0 years.

The weighted average per share fair value of the options granted during the years ended March 31, 2015, 2014 and 2013 were $0.34, $0.35 and $0.47, respectively.

The Company estimated the fair value of each stock option grant on the date of grant using the Black-Scholes model with the following assumptions for the years ended March 31, 2015, 2014 and 2013:

	Years Ended March 31,
	2015	2014	2013
Assumptions:
Expected volatility	76% - 77%	84% - 90%	92%
Risk-free interest rate	1.53% - 1.78%	0.68% - 1.72%	0.71%
Dividend yield	—	—	—
Expected term	5 years	5 - 7 years	5 years

The Company’s net income for the year ended March 31, 2015, and net loss for the years ended 2014 and 2013 has been (decreased) increased by stock-based compensation expense, net of taxes, of approximately ($365,000), $485,000 and $481,000, respectively.

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(9)    Income Taxes

The components of loss before income taxes and income tax (benefit) expense are summarized as follows (in thousands):

	Years Ended March 31,
	2015			2014			2013
Loss before income taxes:
Domestic (U.S.)	$	744		$	(4,324	)	$	(8,711	)
Foreign		(3,176	)		(3,511	)		(453	)
	$	(2,432	)	$	(7,835	)	$	(9,164	)
Income tax (benefit) expense:
Current:
Federal (U.S.)	$	—		$	—		$	—
State (U.S.)		(33	)		55			(33	)
Foreign		611			527			1,881
		578			582			1,848
Deferred:
Federal (U.S.)		(6,667	)		—			—
State (U.S.)		(2,088	)		—			—
Foreign		998			(976	)		188
		(7,757	)		(976	)		188
Income tax (benefit) expense	$	(7,179	)	$	(394	)	$	2,036

The following schedule reconciles the difference between reported income tax (benefit) expense and the amount computed by multiplying loss before income taxes by the Company’s applicable Canadian statutory tax rate of approximately 26.5% (in thousands):

	Years Ended March 31,
	2015			2014			2013
Income tax benefit using the Company’s Canadian statutory tax rates	$	(645	)	$	(2,076	)	$	(2,428	)
Income taxed in jurisdictions other than Canada		1,172			(405	)		(1,715	)
Prior year true-up		841			181			(219	)
Change in valuation allowance		(8,538	)		1,572			2,987
Goodwill impairment		—			—			2,827
Other tax increases due to nondeductible expenses		120			126			489
Gain on change in fair value of warrant liabilities		(152	)		(9	)		(141	)
Tax rate changes		0			189			64
Other		23			28			172
Income tax (benefit) expense	$	(7,179	)	$	(394	)	$	2,036
Effective tax rate		295.2	%		5.0	%		(22.2	)%

F-17

The sources of significant temporary differences that give rise to the deferred tax assets and liabilities are as follows (in thousands):

	March 31,
	2015			2014
Deferred tax assets:
Tax loss carryforwards	$	15,186		$	16,583
Difference between book and tax basis of inventories		645			835
Difference between book and tax basis of accounts receivables		313			322
Deferred fees not currently deductible		163			147
Accruals and reserves not currently deductible		710			652
Difference between book and tax basis of intangible assets, property & equipment		825			978
Unclaimed depreciation on property and equipment		124			204
Goodwill and intangibles		683			842
Unclaimed scientific research expenditures		166			190
Foreign tax credits		1,553			1,615
Other		194			175
		20,562			22,543
Less valuation allowance		(9,157	)		(18,730	)
	$	11,405		$	3,813
Deferred tax liabilities:
Federal liability on state tax loss	$	702		$	699
Prepaid liabilities		58			46
Intangibles		838			986
	$	1,598		$	1,731
Net deferred tax assets	$	9,807		$	2,082

In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in each tax jurisdiction during the periods in which temporary differences in those jurisdictions become deductible. Management considers the scheduled reversal of deferred liabilities, projected future taxable income, and tax planning strategies in making this assessment. The valuation allowance is based on our assessment that it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future in each tax jurisdiction.

In fiscal year 2015, we consolidated our research and development facilities away from the United States resulting in the transfer of risks associated with certain intellectual property to our Hong Kong subsidiary. As a result, we conducted a transfer pricing study to reflect the responsibilities, functions, and risks of our subsidiaries, which was completed during the fourth quarter of fiscal 2015, and accordingly, revised our transfer pricing policies to reflect changes in the business and the results of the study. As a result of the revised transfer pricing policies and an analysis of the timing of reversals and expirations of our temporary differences, the Company determined that it is more likely than not that a portion of the deferred tax assets in the U.S. will be realized and, accordingly, released $8.8 million of the valuation allowance against those deferred tax assets. The Company continues to record a valuation allowance of $1.2M against US deferred tax assets related to tax attributes that will expire prior to utilization. However, the revised transfer pricing policies also created uncertainties regarding the realization of the Company’s net deferred tax assets in Hong Kong due to the uncertainty over future profitability as well as the fact that the Company has a three-year cumulative book pre-tax loss position in Hong Kong. As a result, the Company has established a valuation allowance of $1.5 million against its Hong Kong deferred tax assets. Additionally, the Company continues to record a valuation allowance against certain

F-18

other foreign deferred tax assets including a full valuation allowance against the deferred tax assets of the Company’s Canadian holding company, Mad Catz Interactive, Inc. (“MCII”). The Company believes there is insufficient evidence to conclude that realization of the benefit is more likely than not and, therefore, the Company continues to record a valuation allowance on these assets. MCII is a corporate entity, which has no revenue or other income, and incurs corporate-related expenses. Taxable losses are incurred each year and MCII has a history of operating losses. These circumstances are not anticipated to change and, therefore, the Company does not expect MCII to generate sufficient taxable income in the foreseeable future to enable the entity to utilize its tax loss carryforwards.

The Company will continue to evaluate the ability to realize its deferred tax asset on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the ability to realize its deferred tax assets.

The following schedule represents the Company’s net operating loss carryforwards as of March 31, 2015 and the year they start to expire (in thousands):

	Amount		Year Start to Expire
United States Federal	$	16,210	2022(a)
California State		23,342	2016(a)
Canada		10,382	2015
Hong Kong		9,466	No expiration
United Kingdom		7,308	No expiration
France		2,984	No expiration
Japan		497	2021

(a) The Internal Revenue Code (the “Code”) limits the future availability of net operating loss and tax credit carryforwards that arose prior to certain cumulative changes in a corporation’s ownership resulting in a change of control. As a result of an acquisition in 2007, the Company acquired federal and state net operating loss carryforwards of approximately $2.8 million and $3.6 million, respectively, which are subject to an annual limitation based on the ownership change.

The Company also has net capital loss carryforwards in Canada of $2.5 million, which are available indefinitely to offset taxable capital gains.

The Company does not record deferred income taxes on the approximate $37.5 million of undistributed earnings of its non-Canadian subsidiaries based upon the Company’s intention to permanently reinvest undistributed earnings. The Company may be subject to income and withholding taxes if earnings of the non-Canadian subsidiaries were distributed. Considering tax loss carry forwards in Canada and the related valuation allowance, the deferred tax liability on the Company’s undistributed earnings would be no more than $2.4 million at March 31, 2015.

There were no unrecognized tax benefits at March 31, 2015 and 2014, and the Company does not foresee any material changes to unrecognized tax benefits within the next twelve months. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits, if applicable, in income tax expense.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. The Company’s historical tax years are subject to examination by the Internal Revenue Service and various state jurisdictions for fiscal years ended March 31, 2012 to the present. With few exceptions, the Company is no longer subject to foreign examinations by tax authorities for fiscal years ended before March 31, 2011. In certain of the Company’s foreign subsidiaries, all of historical tax years are subject to examination by various foreign tax authorities due to the generation of net operating losses.

(10)    Securities Purchase Agreements

2015 Securities Purchase Agreement

On March 24, 2015, the Company entered into a Securities Purchase Agreement (the “2015 Securities Purchase Agreement”) with certain accredited investors, pursuant to which the Company sold (a) an aggregate of 8,980,773 shares of its common stock (the “2015 Shares”) and (b) warrants to purchase an aggregate of

F-19

4,490,387 shares of common stock of the Company (“2015 Warrants” and, together with the 2015 Shares, the “2015 Securities”). The 2015 Securities were issued at a price equal to $0.41 per share for aggregate gross proceeds of approximately $3,682,000. The 2015 Warrants become exercisable on September 24, 2015 at a per share exercise price equal to $0.61 and expire on September 24, 2020. The 2015 Warrants are subject to limitation on exercise if the Holder or its affiliates would beneficially own more than 9.99%/4.99% of the total number of the Company’s shares of common stock following such exercise. The 2015 Warrants also provide that in the event of a Company Controlled Fundamental Transaction (as defined in the 2015 Warrants), the Company may, at the election of the 2015 Warrant holder, be required to redeem all or a portion of the 2015 Warrants for cash in an amount equal to the Black-Scholes Option Pricing Model value. As a result of this cash settlement provision, the 2015 Warrants are classified as liabilities. The fair value of the 2015 Warrants decreased from $1,710,388 as of the initial valuation date to $1,171,991 as of March 31, 2015, which resulted in a $538,000 gain from the change in fair value of warrants for the year ended March 31, 2015. The 2015 Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the of the warrant liability using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2015
Expected term		5.5 years
Common stock market price	$	0.37
Risk-free interest rate		1.46	%
Volatility		100	%

Volatility is prescribed in the agreement as the greater of 100% or the expected volatility. 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 2015 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 the 2015 Warrants. The Company currently has no reason to believe future volatility over the expected remaining life of the 2015 Warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the 2015 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 2015 Warrants.

Fluctuations in the fair value of the 2015 Warrants are impacted by unobservable inputs, most significantly the Company’s common stock market price. Significant increases (decreases) in this input in isolation would result in a significantly higher (lower) fair value measurement.

2011 Securities Purchase Agreement

In April 2011, the Company entered into a Securities Purchase Agreement (the “2011 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 “2011 Shares”) and (b) warrants to purchase an aggregate of 2,540,918 shares of common stock of the Company (“2011 Warrants” and, together with the 2011 Shares, the “2011 Securities”). The 2011 Securities were issued at a price equal to $1.92 per share for aggregate gross proceeds of approximately $12,196,000. The 2011 Warrants became exercisable on October 21, 2011 at a per share exercise price equal to $2.56 and expire on October 21, 2016. 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 2011 Warrants.

The Company accounts for the 2011 Warrants with exercise price reset as liabilities carried at fair value, with changes in fair value included in net income (loss) until such time as the 2011 Warrants are exercised or expire. As a result of the March 2015 offering, described above, and pursuant to the terms of the 2011 Warrants, the exercise price of the 2011 Warrants was adjusted to $2.30 per share.

The fair value of the 2011 Warrants decreased from $3,250,000 as of the initial valuation date to $693,000 as of March 31, 2012, which resulted in a $2,557,000 gain from the change in fair value of warrants for the year ended March 31, 2012. The fair value of the 2011 Warrants decreased from $693,000 as of March 31, 2012 to $149,000 as of March 31, 2013, which resulted in a $544,000 gain from the change in fair value of warrants for the year ended March 31, 2013. The fair value of the 2011 Warrants decreased from $149,000 as of March 31,

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2013 to $75,000 as of March 31, 2014, which resulted in a $74,000 gain from the change in fair value of warrants for the year ended March 31, 2014. The fair value of the 2011 Warrants decreased from $75,000 as of March 31, 2014 to $15,000 as of March 31, 2015, which resulted in a $60,000 gain from the change in fair value of warrants for the year ended March 31, 2015.

The 2011 Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the 2011 Warrants using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2015			March 31, 2014
Expected term		1.5 years			2.5 years
Common stock market price	$	0.37		$	0.48
Risk-free interest rate		0.41	%		0.67	%
Expected volatility		73.53	%		68.56	%

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 2011 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 the 2011 Warrants. The Company currently has no reason to believe future volatility over the expected remaining life of the 2011 Warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the 2011 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 2011 Warrants.

Fluctuations in the fair value of the 2011 Warrants are impacted by unobservable inputs, most significantly the Company’s common stock market price and the assumption with regards to future equity issuances and their impact to the down-round protection feature. Significant increases (decreases) in these inputs in isolation would result in a significantly higher (lower) fair value measurement.

(11)    Commitments and Contingencies

Litigation

On October 3, 2013, the Company filed a complaint for patent infringement styled Mad Catz Interactive, Inc. v. Razer USA, Ltd., Case No. 13-cv-02371-GPC-JLB, in the United States District Court for the Southern District of California against Razer USA, Ltd. (“Razer”). The complaint alleges that the Company holds an exclusive license, within the United States, to make, use, sell, offer for sale, import, gift or otherwise dispose of the any product falling within the scope of one or more claims of U.S. Patent No. 6,157,370 (the “‘370 Patent”), including all right, power and interest to enforce the ‘370 Patent against any and all third parties, as well as exclusive standing to bring suit against any third party infringing the ‘370 Patent. The complaint further alleges that Razer has infringed and continues to infringe the ‘370 Patent by making, using, offering for sale, selling, and/or importing in the United States certain products covered by one of more claims of the ‘370 Patent, including Razer’s “Ouroboros” computer mouse. On January 10, 2014, Razer filed a counterclaim against the Company for alleged infringement of U.S. Patent No. 8,605,063 (the “‘063 Patent”). Razer further contends that the ‘370 Patent is invalid and unenforceable, and denies infringement. Mad Catz also contends that the ‘063 Patent is invalid and unenforceable, and denies infringement. No trial date has been set in the matter. On August 22, 2014, the Court heard oral argument regarding the parties’ patent claims construction positions and took the matter of patent claims construction under submission at that time. The Court has not yet issued an order regarding claims construction. The parties are currently conducting discovery. The Company believes that Razer’s allegations lack merit and intends to vigorously defend all claims asserted. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability is not probable and any range of potential future charge cannot be reasonably estimated at this time.

On March 11, 2014, the Better Mouse Company, LLC (“BMC”) filed a complaint against the Company and its subsidiary, Mad Catz, Inc., for patent infringement in the United States District Court for the Eastern District of Texas. The action is styled Better Mouse Company, LLC v. Steelseries Aps et al, Lead Civil Action No. 2:14-CV-198. By its complaint, the plaintiff alleges that the Company and its subsidiary have infringed and continue to infringe U.S. Patent No. 7,532,200. The Company answered the complaint on July 17, 2014 and has denied all

F-21

substantive allegations of infringement and damage. The parties are currently conducting discovery and the Court has set oral argument regarding the parties’ patent claims construction positions for June 2, 2015. Trial in the matter is set for December 12, 2015. The Company believes that BMC’s allegations lack merit and intends to vigorously defend all claims asserted. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability is not probable and any range of potential future charge cannot be reasonably estimated at this time.

On November 21, 2014, Samsung Electronics Co., Ltd. and Samsung Austin Semiconductor, LLC (collectively, “Samsung”) filed a complaint against the Company (and numerous third parties, including Nvidia Corporation) for patent infringement in the United States International Trade Commission. The complaint is styled In the Matter of Certain Graphics Processing Chips, Systems on a Chip, and Products Containing the Same, Investigation No. 377-TA-941 and alleges that the defendants have infringed and continue to infringe U.S. Patent Nos. 6,147,385, 6,173,349, 7,056,776, and 7,804,734 by offering for sale, selling, and/or importing into the United States certain graphics processing units, systems on a chip, and products containing the same that, allegedly, are covered by one of more claims of the above-cited patents. Specifically, as to the Company, Samsung alleges that the Company’s M.O.J.O. micro-console for Android product, which utilizes the Nvidia Tegra 4 T40S systems on a chip, directly infringes one of more claims of at least one of the patents at issue. On December 30, 2014, the United States International Trade Commission (the “Commission”) instituted an investigation into the matter to determine whether there is a violation of the Tariff Act of 1930, as amended, by reason of the alleged infringement of the above-cited patents. The Commission’s initial determination is due on or before December 22, 2015 and the target date for completion of the Commission’s investigation is April 22, 2016. The Company has entered into an indemnity agreement with NVIDIA, whereby NIVIDIA has agreed to defend and indemnify the Company in this matter. Therefore, we have not recorded any accrual for a contingent liability associated with this legal proceeding.

In addition to the foregoing matters, from time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. 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.

Leases

The Company is obligated under certain non-cancelable operating leases, primarily for warehouses and office space. Rent expense for operating leases was approximately $1,881,000, $2,274,000 and $2,104,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

Annual future minimum rental payments required under operating leases as of March 31, 2015 are as follows (in thousands):

Years ending March 31:
2016	$	1,521
2017		1,466
2018		911
2019		681
Thereafter		692
	$	5,271

Royalty and License Agreements

Royalty and license expenses consist of royalties and license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of the Company’s products. The Company has royalty and license agreements to utilize trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of its products. Royalty and license expenses were $1,845,000, $3,294,000 and $6,319,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

F-22

Annual future minimum payments required under royalty and license agreements as of March 31, 2015 are as follows (in thousands):

Years ending March 31:
2016	$	16,322
2017		67
2018		57
2019		58
Thereafter		—
	$	16,504

Royalty commitments in fiscal year end 2016 primarily represent guaranteed minimum royalty payments associated with Rock Band 4.

Employment Contracts

The Company has employment contracts with five executive officers under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances associated with a change in control of the Company. If the termination occurs under certain circumstances associated with a change in control, in addition to the severance payments, vesting of stock-based compensation would accelerate upon termination. If severance payments under the current employment agreements were to become payable, the individual severance payments, as of March 31, 2015, would range from $291,000 to $847,000, and total severance payments for all five executive officers would be approximately $2,337,000.

Indemnifications

The Company has entered into separate indemnification agreements with our executive officers and with each of its directors. These agreements require the Company, among other requirements, to indemnify such officers and directors against expenses (including attorneys’ fees), judgments and settlements paid by such individuals in connection with any action arising out of such individuals’ status or service as executive officers or directors (subject to exceptions such as where the individuals failed to act in good faith or in a manner the individuals reasonably believed to be in or not opposed to the best interests of Mad Catz) and to advance expenses when such individuals may be entitled to indemnification by the Company. There are no pending legal proceedings that involve the indemnification of any executive officers or directors.

(12)    Employee Savings Plan

The Company has an employee savings plan in the U.S. that permits eligible participants to make contributions by salary reduction pursuant to section 401(k) of the Internal Revenue Code. The Company may make discretionary matches of employee contributions. During the years ended March 31, 2015, 2014 and 2013, the Company matched 50% of the first 8% of compensation that was contributed by each participating employee to the plan. The Company’s discretionary contributions to the plan were $126,000, $138,000 and $164,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

(13)    Geographic and Product Line Data

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

	Years Ended March 31,
	2015		2014		2013
Net sales:
EMEA	$	46,247	$	53,132	$	61,960
Americas		27,897		28,470		51,316
APAC		12,079		8,027		9,388
	$	86,223	$	89,629	$	122,664

F-23

Revenue is attributed to geographic regions based on the location of the customer.

The Company’s property and equipment, net, are attributed to the following geographic regions (in thousands):

	2015		2014
Property and equipment, net:
Americas	$	1,088	$	417
EMEA		96		92
APAC		2,192		2,228
	$	3,376	$	2,737

Our sales by platform were as follows:

	Years Ended March 31,
	2015			2014
PC and Mac		46	%		45	%
Universal		22	%		29	%
Next gen consoles (a)		21	%		3	%
Smart devices		7	%		2	%
Legacy consoles (b)		4	%		19	%
All others		—	%		2	%
		100	%		100	%

(a) Includes products developed for Xbox One, PlayStation 4 and Wii U.

(b) Includes products developed for Xbox 360, PlayStation 3 and Wii.

Our sales by product category were as follows:

	Years Ended March 31,
	2015			2014
Audio		42	%		47	%
Specialty controllers		25	%		16	%
Mice and Keyboards		23	%		29	%
Controllers		6	%		1	%
Accessories		3	%		5	%
Games and other		1	%		2	%
		100	%		100	%

Our sales by brand were as follows:

	Years Ended March 31,
	2014			2014
Tritton		39	%		42	%
Mad Catz		34	%		41	%
Saitek		19	%		12	%
All others		8	%		5	%
		100	%		100	%

F-24

(14)    Quarterly Financial and Market Information (Unaudited)

	Quarter Ended
	June 30			Sept. 30			Dec. 31			Mar. 31
	(Amounts in thousands, except per share data)
Fiscal 2015:
Net sales	$	16,747		$	22,467		$	30,451		$	16,558
Gross profit		5,063			6,731			8,178			3,872
Operating (loss) income		(1,131	)		(424	)		2,207			(2,295	)
Net (loss) income		(1,245	)		(922	)		1,358			5,556
Net (loss) income per share — basic		(0.02	)		(0.01	)		0.02			0.09
Net (loss) income per share — diluted		(0.02	)		(0.01	)		0.02			0.09
Common stock price per share:
High		0.78			0.72			0.57			0.54
Low		0.47			0.38			0.38			0.35
Fiscal 2014:
Net sales	$	18,684		$	17,839		$	32,889		$	20,217
Gross profit		5,365			4,770			7,925			4,838
Operating (loss) income		(2,118	)		(3,617	)		902			(1,689	)
Net loss		(2,065	)		(4,545	)		(566	)		(265	)
Net loss per share — basic		(0.03	)		(0.07	)		(0.01	)		(0.00	)
Net loss per share — diluted		(0.03	)		(0.07	)		(0.01	)		(0.00	)
Common stock price per share:
High		0.50			0.90			0.81			0.54
Low		0.38			0.46			0.44			0.42

F-25

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Mad Catz Interactive, Inc.:

We consent to incorporation by reference in the registration statements No. 333-103798, No. 333-176813 and No. 333-169947 on Form S-8 and No. 333-173892 and No. 333-198930 on Form S-3 and S-3A of Mad Catz Interactive, Inc. of our report dated June 25, 2015, with respect to the consolidated balance sheets of Mad Catz Interactive, Inc. and subsidiaries as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended March 31, 2015, which report appears in the March 31, 2015 Annual Report on Form 10-K of Mad Catz Interactive, Inc.

Our report dated June 25, 2015 contains an explanatory paragraph that states there are uncertainties about the Company’s ability to comply with certain debt covenants under their credit facility, which raises substantial doubt about their ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ KPMG LLP

San Diego, California

June 25, 2015

EX-31.1

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 annual report on Form 10-K 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;

4. 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:

a) 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;

b) 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;

c) 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

d) 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):

a) 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

b) 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.

Date: June 25, 2015	/s/ DARREN RICHARDSON
	Darren Richardson, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

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

I, Karen McGinnis, certify that:

1. I have reviewed this annual report on Form 10-K 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;

4. 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:

a) 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;

b) 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;

c) 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

d) 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):

a) 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

b) 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.

Date: June 25, 2015	/S/ KAREN MCGINNIS
	Karen McGinnis, Chief Financial Officer

EX-32.1

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 Annual Report on Form 10-K of the Company for the period ended March 31, 2015 (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.

Date: June 25, 2015	/s/ DARREN RICHARDSON
	Darren Richardson,
	President and Chief Executive Officer

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

EXHIBIT 32.2

Certification of Chief Financial 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 Annual Report on Form 10-K of the Company for the period ended March 31, 2015 (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.

Date: June 25, 2015	/S/ KAREN MCGINNIS
	Karen McGinnis,
	Chief Financial Officer

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.

XML

Note Payable - Additional Information (Detail) - Tritton [Member] - USD ($)	1 Months Ended
	Feb. 28, 2014	May. 31, 2013	May. 31, 2010	Mar. 31, 2015
Debt Instrument [Line Items]
Cash paid for the acquisition			$ 1,400,000
Contingent consideration paid for acquisition		$ 4,788,000
Additional consideration based on percentage of future sales to be paid to former owners, period			5 years
Ownership percentage	99.00%
Promissory Note, amount	$ 2,475,000
Term of the Note	2 years
Liability for contingent consideration				$ 0
Promissory Note, interest rate				5.25%
Promissory Note, present value				$ 1,023,000
Maximum [Member]
Debt Instrument [Line Items]
Contingent consideration paid for acquisition			$ 8,700,000

XML

Income Taxes - Schedule of Significant Temporary Differences of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Deferred tax assets:
Tax loss carryforwards	$ 15,186	$ 16,583
Difference between book and tax basis of inventories	645	835
Difference between book and tax basis of accounts receivables	313	322
Deferred fees not currently deductible	163	147
Accruals and reserves not currently deductible	710	652
Difference between book and tax basis of intangible assets, property & equipment	825	978
Unclaimed depreciation on property and equipment	124	204
Goodwill and intangibles	683	842
Unclaimed scientific research expenditures	166	190
Foreign tax credits	1,553	1,615
Other	194	175
Deferred tax assets	20,562	22,543
Less valuation allowance	(9,157)	(18,730)
Net deferred tax assets	11,405	3,813
Deferred tax liabilities:
Federal liability on state tax loss	702	699
Prepaid liabilities	58	46
Intangibles	838	986
Net deferred tax liabilities	1,598	1,731
Net deferred tax assets	$ 9,807	$ 2,082

XML

Stock-Based Compensation - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options outstanding	$ 13,000
Weighted average remaining contractual term of options outstanding	6 years 3 months 26 days
Aggregate intrinsic value of options exercisable	$ 13,000
Weighted average remaining contractual term of options exercisable	5 years 1 month 6 days
Aggregate intrinsic value of options exercised	$ 72,000	$ 101,000	$ 3,000
Unrecognized compensation cost related to unvested options	$ 839,000
Unrecognized compensation cost expected to recognized weighted-average period	2 years
Weighted average per share fair value of the options granted	$ 0.34	$ 0.35	$ 0.47
Increase (decrease) in stock-based compensation expense, net of taxes	$ (365,000)	$ 485,000	$ 481,000
2007 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum shares of common stock granted to purchase	10,300,000
Options granted, expiry period from date of grant	10 years
Options granted, vesting period	4 years
Options granted, vesting period on grant date	1 year
Options granted, remaining vesting period	36 months
Shares available for future grant	252,918
2007 Plan [Member] | One-Year Anniversary [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted, vesting percentage	25.00%

XML

Income Taxes - Schedule of Net Operating Loss Carryforwards (Detail) - Mar. 31, 2015 - USD ($) $ in Thousands	Total
United States Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 16,210
California State [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	23,342
Canada [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	10,382
Hong Kong [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	9,466
United Kingdom [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	7,308
France [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	2,984
Japan [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	$ 497
Year Start [Member] | United States Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards, Year Start to Expire	2022
Year Start [Member] | California State [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards, Year Start to Expire	2016
Year Start [Member] | Canada [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards, Year Start to Expire	2015
Year Start [Member] | Japan [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards, Year Start to Expire	2021

XML

Intangible Assets - Future Estimated Amortization Expense for Acquired Intangible Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
2016	$ 437
2017	437
2018	438
2019	344
2020	325
Thereafter	603
Intangible assets, net	$ 2,584	$ 3,022

XML

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)		12 Months Ended
	Jun. 23, 2015	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Summary Of Significant Accounting Policies [Line Items]
Credit facility maximum borrowing capacity		$ 25,000,000
Credit facility expiration date		Jul. 31, 2016
Impairment of long-lived assets		$ 0	$ 0	$ 0
Advertising costs		2,132,000	2,575,000	3,513,000
Research and development costs		$ 2,995,000	$ 4,238,000	$ 4,205,000
Requisite service period of award		4 years
Subsequent events [Member]
Summary Of Significant Accounting Policies [Line Items]
Credit facility expiration date	Jul. 31, 2016
Board of Directors [Member]
Summary Of Significant Accounting Policies [Line Items]
Award vesting period		1 year
Customer Concentration Risk [Member] | Largest customer [Member] | Sales [Member]
Summary Of Significant Accounting Policies [Line Items]
Customers accounted for revenue and accounts receivable, Percentage		14.00%	13.00%	17.00%
Customer Concentration Risk [Member] | Second largest customer [Member] | Sales [Member]
Summary Of Significant Accounting Policies [Line Items]
Customers accounted for revenue and accounts receivable, Percentage		10.00%	11.00%
Credit Concentration Risk [Member] | Customer one [Member] | Accounts receivable [Member]
Summary Of Significant Accounting Policies [Line Items]
Customers accounted for revenue and accounts receivable, Percentage		14.00%	15.00%
Credit Concentration Risk [Member] | Customer two [Member] | Accounts receivable [Member]
Summary Of Significant Accounting Policies [Line Items]
Customers accounted for revenue and accounts receivable, Percentage		14.00%
Credit Concentration Risk [Member] | Customer three [Member] | Accounts receivable [Member]
Summary Of Significant Accounting Policies [Line Items]
Customers accounted for revenue and accounts receivable, Percentage		11.00%
Notes payable [Member]
Summary Of Significant Accounting Policies [Line Items]
Note payable, interest rate percentage		5.25%
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Payment arrangements with customers, terms		30 days
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Payment arrangements with customers, terms		60 days

XML

Securities Purchase Agreement - Additional Information (Detail) - USD ($)					1 Months Ended	12 Months Ended
	Sep. 24, 2015	Mar. 31, 2015	Mar. 24, 2015	Oct. 21, 2011	Apr. 30, 2011	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Sale of common stock		73,469,571				73,469,571	63,931,506
Proceeds from issuance of Securities						$ 3,399,000
Fair value of warrants		$ 1,187,000				1,187,000	$ 75,000
Change in fair value of warrant liability						$ (598,000)	$ (74,000)	$ (544,000)
2015 Securities Purchase Agreement [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale of common stock			8,980,773
Warrants to purchase shares of common stock			4,490,387
Securities issued price per share		$ 0.37	$ 0.41			$ 0.37
Proceeds from issuance of Securities			$ 3,682,000
Warrants exercise price		$ 2.30
Warrants expiration date						Sep. 24, 2020
Common stock warrants exercise, description						The 2015 Warrants are subject to limitation on exercise if the Holder or its affiliates would beneficially own more than 9.99%/4.99% of the total number of the Company's shares of common stock following such exercise.
Fair value of warrants		$ 1,171,991		$ 1,710,388		$ 1,171,991
Change in fair value of warrant liability						$ (538,000)
Expected volatility						100.00%
2015 Securities Purchase Agreement [Member] | Common Stockholders [Member]
Schedule of Available-for-sale Securities [Line Items]
Ownership percentage						9.99%
2015 Securities Purchase Agreement [Member] | Affiliates [Member]
Schedule of Available-for-sale Securities [Line Items]
Ownership percentage						4.99%
2015 Securities Purchase Agreement [Member] | Scenario, Forecast [Member]
Schedule of Available-for-sale Securities [Line Items]
Warrants exercise price	$ 0.61
2011 Securities Purchase Agreement [Member]
Schedule of Available-for-sale Securities [Line Items]
Sale of common stock					6,352,293
Warrants to purchase shares of common stock					2,540,918
Securities issued price per share		$ 0.37			$ 1.92	$ 0.37	$ 0.48
Proceeds from issuance of Securities					$ 12,196,000
Warrants exercise price				$ 2.56
Warrants expiration date						Oct. 21, 2016
Fair value of warrants		$ 15,000				$ 15,000	$ 75,000	149,000	$ 693,000	$ 3,250,000
Change in fair value of warrant liability						$ (60,000)	$ (74,000)	$ (544,000)	$ 2,557,000
Expected volatility						73.53%	68.56%

XML

Property and Equipment (Tables)

12 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Components of Property and Equipment, Net

Property and equipment, net, consist of the following (in thousands):

	March 31,
	2015			2014
Molds	$	9,503		$	8,707
Computer equipment and software		2,112			2,529
Manufacturing and office equipment		1,701			1,376
Furniture and fixtures		478			518
Leasehold improvements		1,052			984
		14,846			14,114
Less: Accumulated depreciation and amortization		(11,470	)		(11,377	)
	$	3,376		$	2,737

XML

Stock-Based Compensation - Schedule of Estimated Fair Value of Each Stock Option Grant (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Assumptions:
Expected volatility			92.00%
Risk-free interest rate			0.71%
Dividend yield	$ 0	$ 0	$ 0
Expected term	5 years		5 years
Minimum [Member]
Assumptions:
Expected volatility	76.00%	84.00%
Risk-free interest rate	1.53%	0.68%
Expected term		5 years
Maximum [Member]
Assumptions:
Expected volatility	77.00%	90.00%
Risk-free interest rate	1.78%	1.72%
Expected term		7 years

XML

Property and Equipment - Components of Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 14,846	$ 14,114
Less: Accumulated depreciation and amortization	(11,470)	(11,377)
Property and equipment, net	3,376	2,737
Molds [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	9,503	8,707
Computer equipment and software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,112	2,529
Manufacturing and office equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,701	1,376
Furniture and fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	478	518
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,052	$ 984

XML

Summary of Significant Accounting Policies - Estimated Useful Lives of Intangible Assets (Detail)	12 Months Ended
	Mar. 31, 2015
Minimum [Member] | Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)	6 years
Minimum [Member] | Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)	6 years
Maximum [Member] | Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)	15 years
Maximum [Member] | Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life (Years)	8 years

XML

Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Taxes [Line Items]
Deferred tax assets valuation allowance	$ 9,157,000	$ 18,730,000
Cumulative pretax book loss	3 years
Undistributed earnings of non-Canadian subsidiaries	$ 37,500,000
Deferred tax liability on undistributed earnings	2,400,000
Unrecognized tax benefits	$ 0	$ 0
Canada [Member]
Income Taxes [Line Items]
Canadian statutory tax rate	26.50%
Capital tax losses	$ 2,500,000
United States Federal [Member]
Income Taxes [Line Items]
Deferred tax assets valuation allowance	1,200,000
United States Federal [Member] | Deferred Tax Asset Related to Consolidation of Research and Development Facilities [Member]
Income Taxes [Line Items]
Deferred tax assets valuation allowance	8,800,000
Hong Kong [Member]
Income Taxes [Line Items]
Deferred tax assets valuation allowance	$ 1,500,000

XML

Geographic and Product Line Data - Summary of Sales by Brand (Detail) - Brand [Member] - Sales [Member]	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Concentration Risk [Line Items]
Percentage of sales by brand	100.00%	100.00%
Tritton [Member]
Concentration Risk [Line Items]
Percentage of sales by brand	39.00%	42.00%
Mad Catz [Member]
Concentration Risk [Line Items]
Percentage of sales by brand	34.00%	41.00%
Saitek [Member]
Concentration Risk [Line Items]
Percentage of sales by brand	19.00%	12.00%
All others [Member]
Concentration Risk [Line Items]
Percentage of sales by brand	8.00%	5.00%

XML

Commitments and Contingencies - Annual Future Minimum Payments Required Under Royalty and License Agreements (Detail) $ in Thousands	Mar. 31, 2015 USD ($)
Leases [Abstract]
2016	$ 16,322
2017	67
2018	57
2019	58
Thereafter	0
Total	$ 16,504

XML

Bank Loan - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Line of Credit Facility [Line Items]
Credit facility maximum borrowing capacity	$ 25,000,000
Credit facility, interest rate	5.25%	5.25%
Credit facility, monthly service fee	$ 1,500
Credit facility, service fee percentage on unused portion of the loan	0.25%
Credit facility expiration date	Jul. 31, 2016
LIBOR plus [Member]
Line of Credit Facility [Line Items]
LIBOR floor rate	1.50%
Minimum [Member] | U.S. prime rate plus [Member]
Line of Credit Facility [Line Items]
Interest rate	0.50%
Minimum [Member] | LIBOR plus [Member]
Line of Credit Facility [Line Items]
Interest rate	2.50%
Maximum [Member] | U.S. prime rate plus [Member]
Line of Credit Facility [Line Items]
Interest rate	2.00%
Maximum [Member] | LIBOR plus [Member]
Line of Credit Facility [Line Items]
Interest rate	3.50%

XML

Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(2)    Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Mad Catz Interactive, Inc. and its wholly-owned subsidiaries, collectively, the Company. All intercompany transactions and balances have been eliminated in consolidation. The Company refers to its fiscal years based on the fiscal year ending date. For instance, fiscal year 2015 refers to the fiscal year ending March 31, 2015. All currency amounts are presented in U.S. dollars.

The Company maintains a Credit Facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”) to borrow up to $25 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. Borrowings under the Credit Facility are secured by a first priority interest in the inventories, equipment, and accounts receivable of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries. The Company is required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. The Company’s trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, the Company was not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, the Company received a waiver of the covenant violations from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and modifies the trailing twelve months’ Adjusted EBITDA covenant, as defined, from June 2015 through June 2016.

The Company depends upon the availability of capital under the Credit Facility to finance operations. Compliance with the Adjusted EBITDA covenants in fiscal 2016, which are tied closely to our internal forecasts and include significant contributions from anticipated sales of products related to the Rock Band 4 video game, depends on the Company’s ability to increase net sales and gross profit considerably. Also, the Company operates in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future sales and expenses. If the Company is unable to comply with the revised Adjusted EBITDA covenants contained in the Credit Facility, Wells Fargo could declare the outstanding borrowings under the facility immediately due and payable. If the Company needs to obtain additional funds as a result of the termination of the Credit Facility or the acceleration of amounts due thereunder, there can be no assurance that alternative financing can be obtained on substantially similar or acceptable terms, or at all. The Company’s failure to promptly obtain alternate financing could limit our ability to implement our business plan and have an immediate, severe and adverse impact on our business, results of operations, financial condition and liquidity. In the event that no alternative financing is available, the Company would be forced to drastically curtail operations, or dispose of assets, or cease operations altogether.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the year. On an ongoing basis, the Company evaluates its estimates, including those related to asset impairments, reserves for accounts receivable and inventory, contingencies and litigation, valuation and recognition of share-based payments, warrant liabilities and income taxes. 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.

Concentration of Credit Risk

The Company’s credit risk is primarily concentrated in accounts receivable. The Company generally does not require collateral on accounts receivable because a majority of its customers are large, well-capitalized, established retail entities with operations throughout the United States, Canada and Europe. The Company maintains an allowance for doubtful accounts. For the year ended March 31, 2015, sales to the largest customer constituted 14% of gross sales and sales to the second largest customer constituted 10% of gross sales. For the year ended March 31, 2014, sales to the largest customer constituted 13% of gross sales and sales to the second largest customer constituted 11% of gross sales. For the year ended March 31, 2013, sales to the largest customer constituted 17% of gross sales. At March 31, 2015, two customers represented 14%, each, of accounts receivable and another customer represented 11% of accounts receivable. At March 31, 2014, one customer represented 15% of accounts receivable. For the years ended March 31, 2015, 2014 and 2013, there were no other customers which accounted for greater than 10% of gross sales and at March 31, 2015 and 2014, there were no other customers which represented greater than 10% of accounts receivable.

Fair Value of Financial Instruments and Fair Value Measurements

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 carrying value of the note payable approximates fair value as it represents the present value using an effective interest rate of 5.25%, which approximates the interest rate on the Company’s bank loan.

Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

Ÿ Level 1:    Quoted prices in active markets for identical assets or liabilities.

Ÿ Level 2:    Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Ÿ Level 3:    Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

The following table provides a summary of the recognized assets and liabilities carried at fair value on a recurring basis (in thousands):

	Balance as of March 31, 2015			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(1,187	)	$	—	$	—	$	(1,187	)
	Balance as of March 31, 2014			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(75	)	$	—	$	—	$	(75	)

The following tables provide a roll forward of the Company’s level three fair value measurements, which consist of the Company’s warrant liabilities, during the three years ended March 31, 2015 (in thousands):

Warrant liabilities:
Balance at March 31, 2012	$	(693	)
Change in fair value of warrant liabilities		544
Balance at March 31, 2013	$	(149	)
Change in fair value of warrant liabilities		74
Balance at March 31, 2014	$	(75	)
Securities purchase agreement		(1,710	)
Change in fair value of warrant liabilities		598
Balance at March 31, 2015	$	(1,187	)

Revenue Recognition

The Company recognizes revenue when (1) there is persuasive evidence that an arrangement with the customer exists, which is generally a customer purchase order, (2) the products are delivered, which occurs when the products are shipped and risk of loss has been transferred to the customer, (3) the selling price is fixed or determinable and (4) collection of the customer receivable is deemed reasonably assured. The Company’s payment arrangements with customers typically provide net 30- and 60-day terms. All of the Company’s arrangements are single element arrangements and there are no undelivered elements after the point of shipment.

Amounts billed to customers for shipping and handling are included in net sales, and costs incurred related to shipping and handling is included in cost of sales. The Company excludes sales and other taxes collected from customers from net sales.

Allowance for Doubtful Accounts and Other Allowances

Accounts receivable are recorded net of an allowance for doubtful accounts and other sales related allowances. When evaluating the adequacy of the allowance for doubtful accounts, the Company analyzes known uncollectible accounts, the aging of accounts receivable, historical bad debts, customer credit-worthiness and current economic trends. The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. To date, the Company has not experienced significant credit related losses.

The Company records allowances for customer marketing programs, including certain rights of return, price protection, volume-based cash incentives and cooperative advertising. The estimated cost of these programs is accrued as a reduction to revenue when they are customer payments or incentives, or as an operating expense when they represent shared marketing expenses in the period the Company sells the product or commits to the program. Such amounts are estimated, based on historical experience and contractual terms, and periodically adjusted based on historical and anticipated rates of returns, inventory levels and other factors.

Inventories

Raw materials, packaging materials and accessories are valued at the lower of cost, determined by the first-in, first-out method, or market. Finished goods are valued at the lower of cost or market, with cost being determined on an average cost basis. The Company regularly reviews inventory quantities on hand and in the retail channel, consumer demand and seasonality factors in order to recognize any loss of utility in the period incurred.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives of the assets as follows:

Molds	3 years
Computer equipment and software	3 years
Manufacturing and office equipment	3 - 5 years
Furniture and fixtures	5 - 6 years
Leasehold improvements	Shorter of estimated useful life or remaining life of lease

Major improvements and betterments are capitalized.

Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are amortized over the estimated useful lives of the assets on a straight-line basis. The range of useful lives is as follows:

	Useful Life (Years)
Trademarks		6 - 15
Customer relationships		6 - 8

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. The Company did not record impairment of long-lived assets in fiscal years 2015, 2014 and 2013.

Royalties and Intellectual Property Licenses

Royalty and license expenses consist of royalties and license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of the Company’s products. Royalty-based payments that are paid in advance are generally capitalized and expensed to cost of sales at the greater of the contractual or effective royalty rate based on net product sales.

Advertising

Advertising costs which totaled $2,132,000, $2,575,000, and $3,513,000 for the years ended March 31, 2015, 2014 and 2013, respectively, are expensed as incurred. Cooperative advertising with retailers is recorded when revenue is recognized and such amounts are included in sales and marketing expense if there is a separate identifiable benefit with a fair value. Otherwise, such costs are recognized as a reduction of sales.

Research and Development

Research and development costs, which totaled $2,995,000, $4,238,000 and $4,205,000 for the years ended March 31, 2015, 2014 and 2013, respectively, are expensed as incurred.

Income Taxes

Income taxes are accounted for using the asset and liability method. Under the asset and liability method of accounting for income taxes, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that it is not “more likely than not” that a deferred tax asset will be realized, a valuation allowance is provided. Significant management judgment is required in assessing the ability to realize the Company’s deferred tax assets. In performing this assessment, management considers whether it is more likely than not that some portion or all of the assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income in each tax jurisdiction during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Foreign Currency Translation

For each of the Company’s foreign operating subsidiaries the functional currency is its local currency. Assets and liabilities of foreign operations are translated into U.S. dollars using month-end exchange rates, and revenue and expenses are translated into U.S. dollars using monthly average exchange rates. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive loss in shareholders’ equity.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency.

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding, increased by potentially dilutive securities. Potentially dilutive securities are calculated using the treasury stock method and represent incremental shares issuable upon exercise of outstanding stock options and warrants. However, potentially dilutive securities are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive. As a result, the denominator for diluted loss per share is the same as the weighted average common shares in periods when a net loss is reported.

The following table sets forth the computation of diluted weighted average common and potential common shares outstanding for the years ended March 31, 2015, 2014 and 2013 (in thousands, except share and per share amounts):

	Years Ended March 31,
	2015		2014			2013
Numerator:
Net income (loss)	$	4,747	$	(7,441	)	$	(11,200	)
Denominator:
Weighted average common shares		64,350,893		63,757,395			63,471,235
Effect of dilutive share-based awards		425,806		—			—
Denominator for diluted net income (loss) per share		64,776,699		63,757,395			63,471,235
Income (loss) per share:
Basic	$	0.07	$	(0.12	)	$	(0.18	)
Diluted	$	0.07	$	(0.12	)	$	(0.18	)
Anti-dilutive securities excluded from the computation of diluted income (loss) per share:
Outstanding options		7,034,897		7,644,948			8,832,288
Outstanding warrants		2,639,337		2,540,918			2,540,918

Stock-Based Compensation

The Company records compensation expense associated with stock-based awards made to employees and directors based upon their grant date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is four years, except for grants to Board of Directors, which vest in one year.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model, using the assumptions noted in Note 8 — Stock-Based Compensation. The expected life of the options is based on a number of factors, including historical exercise experience, the vesting term of the award, and the expected volatility of the Company’s stock. The expected volatility is estimated based on the historical volatility (using daily pricing) of the Company’s stock. The risk-free interest rate is determined based on a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the stock options. The Company reduces the calculated stock-based compensation expense for estimated forfeitures by applying a forfeiture rate, based upon historical pre-vesting option cancelations. Estimated forfeitures are reassessed at each balance sheet date and may change based on new facts and circumstances.

See Note 8 — Stock-Based Compensation for additional information regarding the Company’s stock-based compensation plans.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and certain changes in equity that are excluded from net income (loss). Accumulated other comprehensive loss represents net unrealized gains and losses from foreign currency translation adjustments.

Recently Issued Accounting Standards

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendment is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those annual periods with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The effective date of ASU 2014-09 is for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern for a one year period subsequent to the date of the financial statements. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The guidance is effective for all entities for the first annual period ending after December 15, 2016 and interim periods thereafter, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s financial statements.

XML

Employee Savings Plan - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Compensation and Retirement Disclosure [Abstract]
Matched contribution by employer	50.00%	50.00%	50.00%
Employee's contribution to plan	8.00%	8.00%	8.00%
Discretionary contributions to the plan	$ 126,000	$ 138,000	$ 164,000

XML

Property and Equipment - Additional Information (Detail) - USD ($)	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Property, Plant and Equipment [Abstract]
Depreciation expense related to property and equipment total	$ 1,524,000	$ 1,825,000	$ 2,089,000

XML

Securities Purchase Agreements (Tables)

12 Months Ended

Mar. 31, 2015

2015 Securities Purchase Agreement [Member]

Estimated Fair Value of Warrants

The 2015 Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the of the warrant liability using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2015
Expected term		5.5 years
Common stock market price	$	0.37
Risk-free interest rate		1.46	%
Volatility		100	%

2011 Securities Purchase Agreement [Member]

Estimated Fair Value of Warrants

The 2011 Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the 2011 Warrants using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2015			March 31, 2014
Expected term		1.5 years			2.5 years
Common stock market price	$	0.37		$	0.48
Risk-free interest rate		0.41	%		0.67	%
Expected volatility		73.53	%		68.56	%

XML

Income Taxes (Tables)

12 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Components of Loss Before Income Taxes and Income Tax (Benefit) Expense

The components of loss before income taxes and income tax (benefit) expense are summarized as follows (in thousands):

	Years Ended March 31,
	2015			2014			2013
Loss before income taxes:
Domestic (U.S.)	$	744		$	(4,324	)	$	(8,711	)
Foreign		(3,176	)		(3,511	)		(453	)
	$	(2,432	)	$	(7,835	)	$	(9,164	)
Income tax (benefit) expense:
Current:
Federal (U.S.)	$	—		$	—		$	—
State (U.S.)		(33	)		55			(33	)
Foreign		611			527			1,881
		578			582			1,848
Deferred:
Federal (U.S.)		(6,667	)		—			—
State (U.S.)		(2,088	)		—			—
Foreign		998			(976	)		188
		(7,757	)		(976	)		188
Income tax (benefit) expense	$	(7,179	)	$	(394	)	$	2,036

Schedule of Income Tax (Benefit) Expense Reconciliation

The following schedule reconciles the difference between reported income tax (benefit) expense and the amount computed by multiplying loss before income taxes by the Company’s applicable Canadian statutory tax rate of approximately 26.5% (in thousands):

	Years Ended March 31,
	2015			2014			2013
Income tax benefit using the Company’s Canadian statutory tax rates	$	(645	)	$	(2,076	)	$	(2,428	)
Income taxed in jurisdictions other than Canada		1,172			(405	)		(1,715	)
Prior year true-up		841			181			(219	)
Change in valuation allowance		(8,538	)		1,572			2,987
Goodwill impairment		—			—			2,827
Other tax increases due to nondeductible expenses		120			126			489
Gain on change in fair value of warrant liabilities		(152	)		(9	)		(141	)
Tax rate changes		0			189			64
Other		23			28			172
Income tax (benefit) expense	$	(7,179	)	$	(394	)	$	2,036
Effective tax rate		295.2	%		5.0	%		(22.2	)%

Schedule of Significant Temporary Differences of Deferred Tax Assets and Liabilities

The sources of significant temporary differences that give rise to the deferred tax assets and liabilities are as follows (in thousands):

	March 31,
	2015			2014
Deferred tax assets:
Tax loss carryforwards	$	15,186		$	16,583
Difference between book and tax basis of inventories		645			835
Difference between book and tax basis of accounts receivables		313			322
Deferred fees not currently deductible		163			147
Accruals and reserves not currently deductible		710			652
Difference between book and tax basis of intangible assets, property & equipment		825			978
Unclaimed depreciation on property and equipment		124			204
Goodwill and intangibles		683			842
Unclaimed scientific research expenditures		166			190
Foreign tax credits		1,553			1,615
Other		194			175
		20,562			22,543
Less valuation allowance		(9,157	)		(18,730	)
	$	11,405		$	3,813
Deferred tax liabilities:
Federal liability on state tax loss	$	702		$	699
Prepaid liabilities		58			46
Intangibles		838			986
	$	1,598		$	1,731
Net deferred tax assets	$	9,807		$	2,082

Schedule of Net Operating Loss Carryforwards

The following schedule represents the Company’s net operating loss carryforwards as of March 31, 2015 and the year they start to expire (in thousands):

	Amount		Year Start to Expire
United States Federal	$	16,210	2022(a)
California State		23,342	2016(a)
Canada		10,382	2015
Hong Kong		9,466	No expiration
United Kingdom		7,308	No expiration
France		2,984	No expiration
Japan		497	2021

(a) The Internal Revenue Code (the “Code”) limits the future availability of net operating loss and tax credit carryforwards that arose prior to certain cumulative changes in a corporation’s ownership resulting in a change of control. As a result of an acquisition in 2007, the Company acquired federal and state net operating loss carryforwards of approximately $2.8 million and $3.6 million, respectively, which are subject to an annual limitation based on the ownership change.

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Income Taxes - Schedule of Net Operating Loss Carryforwards (Parenthetical) (Detail) $ in Millions	Mar. 31, 2015 USD ($)
United States Federal [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards acquired	$ 2.8
California State [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards acquired	$ 3.6

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Intangible Assets - Summary of Acquired Intangible Assets, Net (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Cost	$ 4,884	$ 8,006
Accumulated Amortization	2,300	4,984
Intangible assets, net	2,584	3,022
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	3,984	4,154
Accumulated Amortization	1,756	1,601
Intangible assets, net	2,228	2,553
Customer relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	900	3,852
Accumulated Amortization	544	3,383
Intangible assets, net	$ 356	$ 469

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Commitments and Contingencies (Tables)

12 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Annual Future Minimum Rental Payments Required Under Operating Leases

Annual future minimum rental payments required under operating leases as of March 31, 2015 are as follows (in thousands):

Years ending March 31:
2016	$	1,521
2017		1,466
2018		911
2019		681
Thereafter		692
	$	5,271

Annual Future Minimum Payments Required Under Royalty and License Agreements

Annual future minimum payments required under royalty and license agreements as of March 31, 2015 are as follows (in thousands):

Years ending March 31:
2016	$	16,322
2017		67
2018		57
2019		58
Thereafter		—
	$	16,504

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Geographic and Product Line Data (Tables)

12 Months Ended

Mar. 31, 2015

Sales Attributed to Geographic Regions

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

	Years Ended March 31,
	2015		2014		2013
Net sales:
EMEA	$	46,247	$	53,132	$	61,960
Americas		27,897		28,470		51,316
APAC		12,079		8,027		9,388
	$	86,223	$	89,629	$	122,664

Property and Equipment [Member]

Property and Equipment, Net, Attributed to Geographic Regions

The Company’s property and equipment, net, are attributed to the following geographic regions (in thousands):

	2015		2014
Property and equipment, net:
Americas	$	1,088	$	417
EMEA		96		92
APAC		2,192		2,228
	$	3,376	$	2,737

Platform [Member]

Summary of Sales by Platform, Product Category and Brand

Our sales by platform were as follows:

	Years Ended March 31,
	2015			2014
PC and Mac		46	%		45	%
Universal		22	%		29	%
Next gen consoles (a)		21	%		3	%
Smart devices		7	%		2	%
Legacy consoles (b)		4	%		19	%
All others		—	%		2	%
		100	%		100	%

(a) Includes products developed for Xbox One, PlayStation 4 and Wii U.

(b) Includes products developed for Xbox 360, PlayStation 3 and Wii.

Product Category [Member]

Summary of Sales by Platform, Product Category and Brand

Our sales by product category were as follows:

	Years Ended March 31,
	2015			2014
Audio		42	%		47	%
Specialty controllers		25	%		16	%
Mice and Keyboards		23	%		29	%
Controllers		6	%		1	%
Accessories		3	%		5	%
Games and other		1	%		2	%
		100	%		100	%

Brand [Member]

Summary of Sales by Platform, Product Category and Brand

Our sales by brand were as follows:

	Years Ended March 31,
	2014			2014
Tritton		39	%		42	%
Mad Catz		34	%		41	%
Saitek		19	%		12	%
All others		8	%		5	%
		100	%		100	%

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Organization and Description of Business

12 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Organization and Description of Business

(1)    Organization and Description of Business

Mad Catz Interactive, Inc. (“Mad Catz”) designs, manufactures (primarily through third parties in Asia), markets and distributes innovative interactive entertainment products marketed under its Mad Catz (gaming), Tritton (audio), and Saitek (simulation) brands. Mad Catz products, which primarily include headsets, mice, keyboards, controllers, specialty controllers, and other accessories, cater to passionate gamers across multiple platforms in including in-home gaming consoles, handheld gaming consoles, PC and Mac computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as through many leading retailers around the globe. Operationally headquartered in San Diego, California, Mad Catz also maintains offices in Europe and Asia.

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Quarterly Financial and Market Information (Tables)

12 Months Ended

Mar. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Financial and Market Information

	Quarter Ended
	June 30			Sept. 30			Dec. 31			Mar. 31
	(Amounts in thousands, except per share data)
Fiscal 2015:
Net sales	$	16,747		$	22,467		$	30,451		$	16,558
Gross profit		5,063			6,731			8,178			3,872
Operating (loss) income		(1,131	)		(424	)		2,207			(2,295	)
Net (loss) income		(1,245	)		(922	)		1,358			5,556
Net (loss) income per share — basic		(0.02	)		(0.01	)		0.02			0.09
Net (loss) income per share — diluted		(0.02	)		(0.01	)		0.02			0.09
Common stock price per share:
High		0.78			0.72			0.57			0.54
Low		0.47			0.38			0.38			0.35
Fiscal 2014:
Net sales	$	18,684		$	17,839		$	32,889		$	20,217
Gross profit		5,365			4,770			7,925			4,838
Operating (loss) income		(2,118	)		(3,617	)		902			(1,689	)
Net loss		(2,065	)		(4,545	)		(566	)		(265	)
Net loss per share — basic		(0.03	)		(0.07	)		(0.01	)		(0.00	)
Net loss per share — diluted		(0.03	)		(0.07	)		(0.01	)		(0.00	)
Common stock price per share:
High		0.50			0.90			0.81			0.54
Low		0.38			0.46			0.44			0.42

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Inventories - Schedule of Inventory (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 735	$ 1,032
Finished goods	14,744	16,157
Inventories	$ 15,479	$ 17,189

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Income Taxes - Schedule of Income Tax (Benefit) Expense Reconciliation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Income Tax Reconciliation [Line Items]
Income taxed in jurisdictions other than Canada	$ 1,172	$ (405)	$ (1,715)
Prior year true-up	841	181	(219)
Change in valuation allowance	(8,538)	1,572	2,987
Goodwill impairment			2,827
Other tax increases due to nondeductible expenses	120	126	489
Gain on change in fair value of warrant liabilities	(152)	(9)	(141)
Tax rate changes	0	189	64
Other	23	28	172
Income tax (benefit) expense	$ (7,179)	$ (394)	$ 2,036
Effective tax rate	295.20%	5.00%	(22.20%)
Canada [Member]
Income Tax Reconciliation [Line Items]
Income tax benefit using the Company's Canadian statutory tax rates	$ (645)	$ (2,076)	$ (2,428)

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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Current assets:
Cash	$ 5,142	$ 1,496
Accounts receivable, net of allowances of $4,032 and $6,359 at March 31, 2015 and 2014, respectively	7,823	8,059
Other receivables	560	1,531
Inventories	15,479	17,189
Deferred tax assets	2,245	926
Income taxes receivable	967	895
Prepaid expenses and other current assets	1,293	1,605
Total current assets	33,509	31,701
Deferred tax assets	7,605	1,334
Other assets	418	499
Property and equipment, net	3,376	2,737
Intangible assets, net	2,584	3,022
Total assets	47,492	39,293
Current liabilities:
Bank loan	7,920	5,612
Accounts payable	16,404	13,661
Accrued liabilities	4,196	4,874
Notes payable	1,015	1,336
Income taxes payable	141	330
Total current liabilities	29,676	25,813
Notes payable, less current portion	36	1,023
Warrant liabilities	1,187	75
Deferred tax liabilities	43	178
Deferred rent	762	78
Total liabilities	$ 31,704	$ 27,167
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, unlimited shares authorized; 73,469,571 and 63,931,506 shares issued and outstanding at March 31, 2015 and 2014, respectively	$ 63,128	$ 60,847
Accumulated other comprehensive loss	(5,123)	(1,757)
Accumulated deficit	(42,217)	(46,964)
Total shareholders' equity	15,788	12,126
Total liabilities and shareholders' equity	$ 47,492	$ 39,293

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Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 437	$ 743	$ 933

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]
Balance at Mar. 31, 2012	$ 29,491	$ 59,432	$ (1,618)	$ (28,323)
Balance, Shares at Mar. 31, 2012		63,462,399
Stock option exercises	7	$ 7
Stock option exercises, Shares		15,000
Stock-based compensation	663	$ 663
Net income (loss)	(11,200)			(11,200)
Other comprehensive income (loss)	(2,083)		(2,083)
Balance at Mar. 31, 2013	16,878	$ 60,102	(3,701)	(39,523)
Balance, Shares at Mar. 31, 2013		63,477,399
Stock option exercises	188	$ 188
Stock option exercises, Shares		454,107
Stock-based compensation	557	$ 557
Net income (loss)	(7,441)			(7,441)
Other comprehensive income (loss)	1,944		1,944
Balance at Mar. 31, 2014	12,126	$ 60,847	(1,757)	(46,964)
Balance, Shares at Mar. 31, 2014		63,931,506
Issuance of common stock in connection with securities purchase agreement, net of issuance costs and fair value of warrants	1,525	$ 1,525
Issuance of common stock in connection with securities purchase agreement, net of issuance costs and fair value of warrants, Shares		8,980,773
Stock option exercises	236	$ 236
Stock option exercises, Shares		557,292
Stock-based compensation	520	$ 520
Net income (loss)	4,747			4,747
Other comprehensive income (loss)	(3,366)		(3,366)
Balance at Mar. 31, 2015	$ 15,788	$ 63,128	$ (5,123)	$ (42,217)
Balance, Shares at Mar. 31, 2015		73,469,571

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Commitments and Contingencies - Additional Information (Detail)	12 Months Ended
	Mar. 31, 2015 USD ($) Litigation Officers	Mar. 31, 2014 USD ($)	Mar. 31, 2013 USD ($)
Loss Contingencies [Line Items]
Rent expense for operating leases	$ 1,881,000	$ 2,274,000	$ 2,104,000
Aggregate severance cost	$ 2,337,000
Indemnification Agreement [Member]
Loss Contingencies [Line Items]
Number of pending legal proceedings | Litigation	0
Minimum [Member]
Loss Contingencies [Line Items]
Severance payment	$ 291,000
Maximum [Member]
Loss Contingencies [Line Items]
Severance payment	$ 847,000
Executive Officer [Member]
Loss Contingencies [Line Items]
Number of officers | Officers	5
Royalty and License Agreements [Member]
Loss Contingencies [Line Items]
Royalty and license expenses	$ 1,845,000	$ 3,294,000	$ 6,319,000

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Summary of Significant Accounting Policies - Fair Value Measurements of Warrant Liabilities (Detail) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Warrant liabilities:
Beginning Balance	$ (75)
Change in fair value of warrant liabilities	598	$ 74	$ 544
Ending Balance	(1,187)	(75)
Level 3 [Member]
Warrant liabilities:
Beginning Balance	(75)	(149)	(693)
Securities purchase agreement	(1,710)
Change in fair value of warrant liabilities	598	74	544
Ending Balance	$ (1,187)	$ (75)	$ (149)

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Geographic and Product Line Data - Summary of Sales by Platform (Detail) - Platform [Member] - Sales [Member]	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Concentration Risk [Line Items]
Percentage of sales by platform	100.00%	100.00%
PC and Mac [Member]
Concentration Risk [Line Items]
Percentage of sales by platform	46.00%	45.00%
Universal [Member]
Concentration Risk [Line Items]
Percentage of sales by platform	22.00%	29.00%
Next gen consoles [Member]
Concentration Risk [Line Items]
Percentage of sales by platform	21.00%	3.00%
Smart devices [Member]
Concentration Risk [Line Items]
Percentage of sales by platform	7.00%	2.00%
Legacy consoles [Member]
Concentration Risk [Line Items]
Percentage of sales by platform	4.00%	19.00%
All others [Member]
Concentration Risk [Line Items]
Percentage of sales by platform		2.00%

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of Mad Catz Interactive, Inc. and its wholly-owned subsidiaries, collectively, the Company. All intercompany transactions and balances have been eliminated in consolidation. The Company refers to its fiscal years based on the fiscal year ending date. For instance, fiscal year 2015 refers to the fiscal year ending March 31, 2015. All currency amounts are presented in U.S. dollars.

The Company maintains a Credit Facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”) to borrow up to $25 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. Borrowings under the Credit Facility are secured by a first priority interest in the inventories, equipment, and accounts receivable of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries. The Company is required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. The Company’s trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, the Company was not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, the Company received a waiver of the covenant violations from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and modifies the trailing twelve months’ Adjusted EBITDA covenant, as defined, from June 2015 through June 2016.

The Company depends upon the availability of capital under the Credit Facility to finance operations. Compliance with the Adjusted EBITDA covenants in fiscal 2016, which are tied closely to our internal forecasts and include significant contributions from anticipated sales of products related to the Rock Band 4 video game, depends on the Company’s ability to increase net sales and gross profit considerably. Also, the Company operates in a rapidly evolving and often unpredictable business environment that may change the timing or amount of expected future sales and expenses. If the Company is unable to comply with the revised Adjusted EBITDA covenants contained in the Credit Facility, Wells Fargo could declare the outstanding borrowings under the facility immediately due and payable. If the Company needs to obtain additional funds as a result of the termination of the Credit Facility or the acceleration of amounts due thereunder, there can be no assurance that alternative financing can be obtained on substantially similar or acceptable terms, or at all. The Company’s failure to promptly obtain alternate financing could limit our ability to implement our business plan and have an immediate, severe and adverse impact on our business, results of operations, financial condition and liquidity. In the event that no alternative financing is available, the Company would be forced to drastically curtail operations, or dispose of assets, or cease operations altogether.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the year. On an ongoing basis, the Company evaluates its estimates, including those related to asset impairments, reserves for accounts receivable and inventory, contingencies and litigation, valuation and recognition of share-based payments, warrant liabilities and income taxes. 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.

Concentration of Credit Risk

Concentration of Credit Risk

The Company’s credit risk is primarily concentrated in accounts receivable. The Company generally does not require collateral on accounts receivable because a majority of its customers are large, well-capitalized, established retail entities with operations throughout the United States, Canada and Europe. The Company maintains an allowance for doubtful accounts. For the year ended March 31, 2015, sales to the largest customer constituted 14% of gross sales and sales to the second largest customer constituted 10% of gross sales. For the year ended March 31, 2014, sales to the largest customer constituted 13% of gross sales and sales to the second largest customer constituted 11% of gross sales. For the year ended March 31, 2013, sales to the largest customer constituted 17% of gross sales. At March 31, 2015, two customers represented 14%, each, of accounts receivable and another customer represented 11% of accounts receivable. At March 31, 2014, one customer represented 15% of accounts receivable. For the years ended March 31, 2015, 2014 and 2013, there were no other customers which accounted for greater than 10% of gross sales and at March 31, 2015 and 2014, there were no other customers which represented greater than 10% of accounts receivable.

Fair Value of Financial Instruments and Fair Value Measurements

Fair Value of Financial Instruments and Fair Value Measurements

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 carrying value of the note payable approximates fair value as it represents the present value using an effective interest rate of 5.25%, which approximates the interest rate on the Company’s bank loan.

Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

Ÿ Level 1:    Quoted prices in active markets for identical assets or liabilities.

Ÿ Level 2:    Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets.

Ÿ Level 3:    Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets.

The following table provides a summary of the recognized assets and liabilities carried at fair value on a recurring basis (in thousands):

	Balance as of March 31, 2015			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(1,187	)	$	—	$	—	$	(1,187	)
	Balance as of March 31, 2014			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(75	)	$	—	$	—	$	(75	)

The following tables provide a roll forward of the Company’s level three fair value measurements, which consist of the Company’s warrant liabilities, during the three years ended March 31, 2015 (in thousands):

Warrant liabilities:
Balance at March 31, 2012	$	(693	)
Change in fair value of warrant liabilities		544
Balance at March 31, 2013	$	(149	)
Change in fair value of warrant liabilities		74
Balance at March 31, 2014	$	(75	)
Securities purchase agreement		(1,710	)
Change in fair value of warrant liabilities		598
Balance at March 31, 2015	$	(1,187	)

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when (1) there is persuasive evidence that an arrangement with the customer exists, which is generally a customer purchase order, (2) the products are delivered, which occurs when the products are shipped and risk of loss has been transferred to the customer, (3) the selling price is fixed or determinable and (4) collection of the customer receivable is deemed reasonably assured. The Company’s payment arrangements with customers typically provide net 30- and 60-day terms. All of the Company’s arrangements are single element arrangements and there are no undelivered elements after the point of shipment.

Amounts billed to customers for shipping and handling are included in net sales, and costs incurred related to shipping and handling is included in cost of sales. The Company excludes sales and other taxes collected from customers from net sales.

Allowance for Doubtful Accounts and Other Allowances

Allowance for Doubtful Accounts and Other Allowances

Accounts receivable are recorded net of an allowance for doubtful accounts and other sales related allowances. When evaluating the adequacy of the allowance for doubtful accounts, the Company analyzes known uncollectible accounts, the aging of accounts receivable, historical bad debts, customer credit-worthiness and current economic trends. The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. To date, the Company has not experienced significant credit related losses.

The Company records allowances for customer marketing programs, including certain rights of return, price protection, volume-based cash incentives and cooperative advertising. The estimated cost of these programs is accrued as a reduction to revenue when they are customer payments or incentives, or as an operating expense when they represent shared marketing expenses in the period the Company sells the product or commits to the program. Such amounts are estimated, based on historical experience and contractual terms, and periodically adjusted based on historical and anticipated rates of returns, inventory levels and other factors.

Inventories

Inventories

Raw materials, packaging materials and accessories are valued at the lower of cost, determined by the first-in, first-out method, or market. Finished goods are valued at the lower of cost or market, with cost being determined on an average cost basis. The Company regularly reviews inventory quantities on hand and in the retail channel, consumer demand and seasonality factors in order to recognize any loss of utility in the period incurred.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives of the assets as follows:

Molds	3 years
Computer equipment and software	3 years
Manufacturing and office equipment	3 - 5 years
Furniture and fixtures	5 - 6 years
Leasehold improvements	Shorter of estimated useful life or remaining life of lease

Major improvements and betterments are capitalized.

Intangible Assets

Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are amortized over the estimated useful lives of the assets on a straight-line basis. The range of useful lives is as follows:

	Useful Life (Years)
Trademarks		6 - 15
Customer relationships		6 - 8

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. The Company did not record impairment of long-lived assets in fiscal years 2015, 2014 and 2013.

Royalties and Intellectual Property Licenses

Royalties and Intellectual Property Licenses

Royalty and license expenses consist of royalties and license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of the Company’s products. Royalty-based payments that are paid in advance are generally capitalized and expensed to cost of sales at the greater of the contractual or effective royalty rate based on net product sales.

Advertising

Advertising

Advertising costs which totaled $2,132,000, $2,575,000, and $3,513,000 for the years ended March 31, 2015, 2014 and 2013, respectively, are expensed as incurred. Cooperative advertising with retailers is recorded when revenue is recognized and such amounts are included in sales and marketing expense if there is a separate identifiable benefit with a fair value. Otherwise, such costs are recognized as a reduction of sales.

Research and Development

Research and Development

Research and development costs, which totaled $2,995,000, $4,238,000 and $4,205,000 for the years ended March 31, 2015, 2014 and 2013, respectively, are expensed as incurred.

Income Taxes

Income Taxes

Income taxes are accounted for using the asset and liability method. Under the asset and liability method of accounting for income taxes, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that it is not “more likely than not” that a deferred tax asset will be realized, a valuation allowance is provided. Significant management judgment is required in assessing the ability to realize the Company’s deferred tax assets. In performing this assessment, management considers whether it is more likely than not that some portion or all of the assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income in each tax jurisdiction during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Foreign Currency Translation

Foreign Currency Translation

For each of the Company’s foreign operating subsidiaries the functional currency is its local currency. Assets and liabilities of foreign operations are translated into U.S. dollars using month-end exchange rates, and revenue and expenses are translated into U.S. dollars using monthly average exchange rates. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive loss in shareholders’ equity.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency.

Net Income (Loss) per Share

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding, increased by potentially dilutive securities. Potentially dilutive securities are calculated using the treasury stock method and represent incremental shares issuable upon exercise of outstanding stock options and warrants. However, potentially dilutive securities are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive. As a result, the denominator for diluted loss per share is the same as the weighted average common shares in periods when a net loss is reported.

The following table sets forth the computation of diluted weighted average common and potential common shares outstanding for the years ended March 31, 2015, 2014 and 2013 (in thousands, except share and per share amounts):

	Years Ended March 31,
	2015		2014			2013
Numerator:
Net income (loss)	$	4,747	$	(7,441	)	$	(11,200	)
Denominator:
Weighted average common shares		64,350,893		63,757,395			63,471,235
Effect of dilutive share-based awards		425,806		—			—
Denominator for diluted net income (loss) per share		64,776,699		63,757,395			63,471,235
Income (loss) per share:
Basic	$	0.07	$	(0.12	)	$	(0.18	)
Diluted	$	0.07	$	(0.12	)	$	(0.18	)
Anti-dilutive securities excluded from the computation of diluted income (loss) per share:
Outstanding options		7,034,897		7,644,948			8,832,288
Outstanding warrants		2,639,337		2,540,918			2,540,918

Stock-Based Compensation

Stock-Based Compensation

The Company records compensation expense associated with stock-based awards made to employees and directors based upon their grant date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is four years, except for grants to Board of Directors, which vest in one year.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model, using the assumptions noted in Note 8 — Stock-Based Compensation. The expected life of the options is based on a number of factors, including historical exercise experience, the vesting term of the award, and the expected volatility of the Company’s stock. The expected volatility is estimated based on the historical volatility (using daily pricing) of the Company’s stock. The risk-free interest rate is determined based on a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the stock options. The Company reduces the calculated stock-based compensation expense for estimated forfeitures by applying a forfeiture rate, based upon historical pre-vesting option cancelations. Estimated forfeitures are reassessed at each balance sheet date and may change based on new facts and circumstances.

See Note 8 — Stock-Based Compensation for additional information regarding the Company’s stock-based compensation plans.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and certain changes in equity that are excluded from net income (loss). Accumulated other comprehensive loss represents net unrealized gains and losses from foreign currency translation adjustments.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendment is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those annual periods with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The effective date of ASU 2014-09 is for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern for a one year period subsequent to the date of the financial statements. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The guidance is effective for all entities for the first annual period ending after December 15, 2016 and interim periods thereafter, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s financial statements.

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Summary of Significant Accounting Policies - Estimated Useful Lives of Property and Equipment (Detail)	12 Months Ended
	Mar. 31, 2015
Molds [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Computer equipment and software [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Manufacturing and office equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Manufacturing and office equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Furniture and fixtures [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Furniture and fixtures [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	6 years
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	Shorter of estimated useful life or remaining life of lease

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Inventories (Tables)

12 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventories consist of the following (in thousands):

	March 31,
	2015		2014
Raw materials	$	735	$	1,032
Finished goods		14,744		16,157
	$	15,479	$	17,189

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Quarterly Financial and Market Information - Summary of Quarterly Financial and Market Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 16,558	$ 30,451	$ 22,467	$ 16,747	$ 20,217	$ 32,889	$ 17,839	$ 18,684	$ 86,223	$ 89,629	$ 122,664
Gross profit	3,872	8,178	6,731	5,063	4,838	7,925	4,770	5,365	23,844	22,898	34,516
Operating (loss) income	(2,295)	2,207	(424)	(1,131)	(1,689)	902	(3,617)	(2,118)	(1,643)	(6,522)	(9,516)
Net (loss) income	$ 5,556	$ 1,358	$ (922)	$ (1,245)	$ (265)	$ (566)	$ (4,545)	$ (2,065)	$ 4,747	$ (7,441)	$ (11,200)
Net (loss) income per share - basic	$ 0.09	$ 0.02	$ (0.01)	$ (0.02)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.03)	$ 0.07	$ (0.12)	$ (0.18)
Net (loss) income per share - diluted	0.09	0.02	(0.01)	(0.02)	0.00	(0.01)	(0.07)	(0.03)	$ 0.07	$ (0.12)	$ (0.18)
Common stock price per share:
High	0.54	0.57	0.72	0.78	0.54	0.81	0.90	0.50
Low	$ 0.35	$ 0.38	$ 0.38	$ 0.47	$ 0.42	$ 0.44	$ 0.46	$ 0.38

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income (loss)	$ 4,747	$ (7,441)	$ (11,200)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,050	2,568	3,022
Accrued and unpaid interest expense on note payable	10	11
Amortization of deferred financing fees	87	39	7
(Gain) loss on disposal of assets	(73)	79	72
Stock-based compensation	520	557	663
Change in fair value of contingent consideration		(729)	475
Change in fair value of warrant liabilities	(598)	(74)	(544)
Goodwill impairment			10,468
(Benefit) provision for deferred income taxes	(8,039)	(1,607)	188
Changes in operating assets and liabilities:
Accounts receivable	141	6,406	1,221
Other receivables	582	(142)	(200)
Inventories	1,024	7,265	7,640
Prepaid expenses and other current assets	187	1,216	207
Other assets	47	(153)	346
Accounts payable	1,627	(1,890)	(2,367)
Accrued liabilities	(1,131)	(1,601)	220
Deferred rent	410
Income taxes receivable/payable	(119)	(417)	(28)
Net cash provided by operating activities	1,472	4,087	10,190
Cash flows from investing activities:
Purchases of property and equipment	(2,067)	(1,461)	(1,046)
Purchases of intangible assets		(80)
Net cash used in investing activities	(2,067)	(1,541)	(1,046)
Cash flows from financing activities:
Borrowings on bank loan	65,442	69,810	90,640
Repayments on bank loan	(63,134)	(73,086)	(98,406)
Payment of financing fees	(85)	(40)
Repayments on notes payable	(1,434)
Proceeds from issuance of common stock	3,399
Proceeds from exercise of stock options	236	188	7
Payment of contingent consideration		(787)	(980)
Net cash provided by (used in) financing activities	4,424	(3,915)	(8,739)
Effects of foreign currency exchange rate changes on cash	(183)	92	(106)
Net increase (decrease) in cash	3,646	(1,277)	299
Cash, beginning of year	1,496	2,773	2,474
Cash, end of year	5,142	1,496	2,773
Supplemental cash flow information:
Income taxes paid	870	1,656	2,979
Interest paid	671	532	$ 777
Supplemental disclosures of noncash investing and financing activities:
Conversion of contingent consideration to note payable		$ 2,348
Fair value of warrants issued	$ 1,710

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands, None in scaling factor is -9223372036854775296		Mar. 31, 2015	Mar. 31, 2014
Statement of Financial Position [Abstract]
Allowance for accounts receivable		$ 4,032	$ 6,359
Common stock, par value
Common stock, shares authorized	[1]
Common stock, shares issued		73,469,571	63,931,506
Common stock, shares outstanding		73,469,571	63,931,506

[1] unlimited

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Securities Purchase Agreements

12 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Securities Purchase Agreements

(10)    Securities Purchase Agreements

2015 Securities Purchase Agreement

On March 24, 2015, the Company entered into a Securities Purchase Agreement (the “2015 Securities Purchase Agreement”) with certain accredited investors, pursuant to which the Company sold (a) an aggregate of 8,980,773 shares of its common stock (the “2015 Shares”) and (b) warrants to purchase an aggregate of 4,490,387 shares of common stock of the Company (“2015 Warrants” and, together with the 2015 Shares, the “2015 Securities”). The 2015 Securities were issued at a price equal to $0.41 per share for aggregate gross proceeds of approximately $3,682,000. The 2015 Warrants become exercisable on September 24, 2015 at a per share exercise price equal to $0.61 and expire on September 24, 2020. The 2015 Warrants are subject to limitation on exercise if the Holder or its affiliates would beneficially own more than 9.99%/4.99% of the total number of the Company’s shares of common stock following such exercise. The 2015 Warrants also provide that in the event of a Company Controlled Fundamental Transaction (as defined in the 2015 Warrants), the Company may, at the election of the 2015 Warrant holder, be required to redeem all or a portion of the 2015 Warrants for cash in an amount equal to the Black-Scholes Option Pricing Model value. As a result of this cash settlement provision, the 2015 Warrants are classified as liabilities. The fair value of the 2015 Warrants decreased from $1,710,388 as of the initial valuation date to $1,171,991 as of March 31, 2015, which resulted in a $538,000 gain from the change in fair value of warrants for the year ended March 31, 2015. The 2015 Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the of the warrant liability using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2015
Expected term		5.5 years
Common stock market price	$	0.37
Risk-free interest rate		1.46	%
Volatility		100	%

Volatility is prescribed in the agreement as the greater of 100% or the expected volatility. 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 2015 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 the 2015 Warrants. The Company currently has no reason to believe future volatility over the expected remaining life of the 2015 Warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the 2015 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 2015 Warrants.

Fluctuations in the fair value of the 2015 Warrants are impacted by unobservable inputs, most significantly the Company’s common stock market price. Significant increases (decreases) in this input in isolation would result in a significantly higher (lower) fair value measurement.

2011 Securities Purchase Agreement

In April 2011, the Company entered into a Securities Purchase Agreement (the “2011 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 “2011 Shares”) and (b) warrants to purchase an aggregate of 2,540,918 shares of common stock of the Company (“2011 Warrants” and, together with the 2011 Shares, the “2011 Securities”). The 2011 Securities were issued at a price equal to $1.92 per share for aggregate gross proceeds of approximately $12,196,000. The 2011 Warrants became exercisable on October 21, 2011 at a per share exercise price equal to $2.56 and expire on October 21, 2016. 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 2011 Warrants.

The Company accounts for the 2011 Warrants with exercise price reset as liabilities carried at fair value, with changes in fair value included in net income (loss) until such time as the 2011 Warrants are exercised or expire. As a result of the March 2015 offering, described above, and pursuant to the terms of the 2011 Warrants, the exercise price of the 2011 Warrants was adjusted to $2.30 per share.

The fair value of the 2011 Warrants decreased from $3,250,000 as of the initial valuation date to $693,000 as of March 31, 2012, which resulted in a $2,557,000 gain from the change in fair value of warrants for the year ended March 31, 2012. The fair value of the 2011 Warrants decreased from $693,000 as of March 31, 2012 to $149,000 as of March 31, 2013, which resulted in a $544,000 gain from the change in fair value of warrants for the year ended March 31, 2013. The fair value of the 2011 Warrants decreased from $149,000 as of March 31, 2013 to $75,000 as of March 31, 2014, which resulted in a $74,000 gain from the change in fair value of warrants for the year ended March 31, 2014. The fair value of the 2011 Warrants decreased from $75,000 as of March 31, 2014 to $15,000 as of March 31, 2015, which resulted in a $60,000 gain from the change in fair value of warrants for the year ended March 31, 2015.

The 2011 Warrants are not traded in an active securities market, and as such, the Company estimates the fair value of the 2011 Warrants using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2015			March 31, 2014
Expected term		1.5 years			2.5 years
Common stock market price	$	0.37		$	0.48
Risk-free interest rate		0.41	%		0.67	%
Expected volatility		73.53	%		68.56	%

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 2011 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 the 2011 Warrants. The Company currently has no reason to believe future volatility over the expected remaining life of the 2011 Warrants is likely to differ materially from historical volatility. The expected life is based on the remaining contractual term of the 2011 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 2011 Warrants.

Fluctuations in the fair value of the 2011 Warrants are impacted by unobservable inputs, most significantly the Company’s common stock market price and the assumption with regards to future equity issuances and their impact to the down-round protection feature. Significant increases (decreases) in these inputs in isolation would result in a significantly higher (lower) fair value measurement.

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Document and Entity Information - USD ($)	12 Months Ended
	Mar. 31, 2015	Jun. 18, 2015	Sep. 30, 2014
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY
Trading Symbol	MCZ
Entity Registrant Name	MAD CATZ INTERACTIVE INC
Entity Central Index Key	0001088162
Current Fiscal Year End Date	--03-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		73,469,571
Entity Public Float			$ 25,150,631

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Commitments and Contingencies

12 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

(11)    Commitments and Contingencies

Litigation

On October 3, 2013, the Company filed a complaint for patent infringement styled Mad Catz Interactive, Inc. v. Razer USA, Ltd., Case No. 13-cv-02371-GPC-JLB, in the United States District Court for the Southern District of California against Razer USA, Ltd. (“Razer”). The complaint alleges that the Company holds an exclusive license, within the United States, to make, use, sell, offer for sale, import, gift or otherwise dispose of the any product falling within the scope of one or more claims of U.S. Patent No. 6,157,370 (the “‘370 Patent”), including all right, power and interest to enforce the ‘370 Patent against any and all third parties, as well as exclusive standing to bring suit against any third party infringing the ‘370 Patent. The complaint further alleges that Razer has infringed and continues to infringe the ‘370 Patent by making, using, offering for sale, selling, and/or importing in the United States certain products covered by one of more claims of the ‘370 Patent, including Razer’s “Ouroboros” computer mouse. On January 10, 2014, Razer filed a counterclaim against the Company for alleged infringement of U.S. Patent No. 8,605,063 (the “‘063 Patent”). Razer further contends that the ‘370 Patent is invalid and unenforceable, and denies infringement. Mad Catz also contends that the ‘063 Patent is invalid and unenforceable, and denies infringement. No trial date has been set in the matter. On August 22, 2014, the Court heard oral argument regarding the parties’ patent claims construction positions and took the matter of patent claims construction under submission at that time. The Court has not yet issued an order regarding claims construction. The parties are currently conducting discovery. The Company believes that Razer’s allegations lack merit and intends to vigorously defend all claims asserted. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability is not probable and any range of potential future charge cannot be reasonably estimated at this time.

On March 11, 2014, the Better Mouse Company, LLC (“BMC”) filed a complaint against the Company and its subsidiary, Mad Catz, Inc., for patent infringement in the United States District Court for the Eastern District of Texas. The action is styled Better Mouse Company, LLC v. Steelseries Aps et al, Lead Civil Action No. 2:14-CV-198. By its complaint, the plaintiff alleges that the Company and its subsidiary have infringed and continue to infringe U.S. Patent No. 7,532,200. The Company answered the complaint on July 17, 2014 and has denied all substantive allegations of infringement and damage. The parties are currently conducting discovery and the Court has set oral argument regarding the parties’ patent claims construction positions for June 2, 2015. Trial in the matter is set for December 12, 2015. The Company believes that BMC’s allegations lack merit and intends to vigorously defend all claims asserted. We have not recorded any accrual for a contingent liability associated with this legal proceeding based on our belief that a liability is not probable and any range of potential future charge cannot be reasonably estimated at this time.

On November 21, 2014, Samsung Electronics Co., Ltd. and Samsung Austin Semiconductor, LLC (collectively, “Samsung”) filed a complaint against the Company (and numerous third parties, including Nvidia Corporation) for patent infringement in the United States International Trade Commission. The complaint is styled In the Matter of Certain Graphics Processing Chips, Systems on a Chip, and Products Containing the Same, Investigation No. 377-TA-941 and alleges that the defendants have infringed and continue to infringe U.S. Patent Nos. 6,147,385, 6,173,349, 7,056,776, and 7,804,734 by offering for sale, selling, and/or importing into the United States certain graphics processing units, systems on a chip, and products containing the same that, allegedly, are covered by one of more claims of the above-cited patents. Specifically, as to the Company, Samsung alleges that the Company’s M.O.J.O. micro-console for Android product, which utilizes the Nvidia Tegra 4 T40S systems on a chip, directly infringes one of more claims of at least one of the patents at issue. On December 30, 2014, the United States International Trade Commission (the “Commission”) instituted an investigation into the matter to determine whether there is a violation of the Tariff Act of 1930, as amended, by reason of the alleged infringement of the above-cited patents. The Commission’s initial determination is due on or before December 22, 2015 and the target date for completion of the Commission’s investigation is April 22, 2016. The Company has entered into an indemnity agreement with NVIDIA, whereby NIVIDIA has agreed to defend and indemnify the Company in this matter. Therefore, we have not recorded any accrual for a contingent liability associated with this legal proceeding.

In addition to the foregoing matters, from time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. 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.

Leases

The Company is obligated under certain non-cancelable operating leases, primarily for warehouses and office space. Rent expense for operating leases was approximately $1,881,000, $2,274,000 and $2,104,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

Annual future minimum rental payments required under operating leases as of March 31, 2015 are as follows (in thousands):

Years ending March 31:
2016	$	1,521
2017		1,466
2018		911
2019		681
Thereafter		692
	$	5,271

Royalty and License Agreements

Royalty and license expenses consist of royalties and license fees paid to intellectual property rights holders for use of their trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of the Company’s products. The Company has royalty and license agreements to utilize trademarks, copyrights, software, technology or other intellectual property or proprietary rights in the development or sale of its products. Royalty and license expenses were $1,845,000, $3,294,000 and $6,319,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

Annual future minimum payments required under royalty and license agreements as of March 31, 2015 are as follows (in thousands):

Years ending March 31:
2016	$	16,322
2017		67
2018		57
2019		58
Thereafter		—
	$	16,504

Royalty commitments in fiscal year end 2016 primarily represent guaranteed minimum royalty payments associated with Rock Band 4.

Employment Contracts

The Company has employment contracts with five executive officers under which severance payments would become payable in the event of specified terminations without cause or terminations under certain circumstances associated with a change in control of the Company. If the termination occurs under certain circumstances associated with a change in control, in addition to the severance payments, vesting of stock-based compensation would accelerate upon termination. If severance payments under the current employment agreements were to become payable, the individual severance payments, as of March 31, 2015, would range from $291,000 to $847,000, and total severance payments for all five executive officers would be approximately $2,337,000.

Indemnifications

The Company has entered into separate indemnification agreements with our executive officers and with each of its directors. These agreements require the Company, among other requirements, to indemnify such officers and directors against expenses (including attorneys’ fees), judgments and settlements paid by such individuals in connection with any action arising out of such individuals’ status or service as executive officers or directors (subject to exceptions such as where the individuals failed to act in good faith or in a manner the individuals reasonably believed to be in or not opposed to the best interests of Mad Catz) and to advance expenses when such individuals may be entitled to indemnification by the Company. There are no pending legal proceedings that involve the indemnification of any executive officers or directors.

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Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Net sales	$ 86,223	$ 89,629	$ 122,664
Cost of sales	62,379	66,731	88,148
Gross profit	23,844	22,898	34,516
Operating expenses:
Sales and marketing	11,253	12,656	15,397
General and administrative	10,802	11,649	11,941
Research and development	2,995	4,238	4,205
Acquisition related items		134	1,088
Amortization of intangible assets	437	743	933
Goodwill impairment			10,468
Total operating expenses	25,487	29,420	44,032
Operating loss	(1,643)	(6,522)	(9,516)
Other (expense) income:
Interest expense, net	(775)	(659)	(894)
Foreign exchange (loss) gain, net	(784)	(870)	615
Change in fair value of warrant liabilities	598	74	544
Other income	172	142	87
Total other (expense) income	(789)	(1,313)	352
Loss before income taxes	(2,432)	(7,835)	(9,164)
Income tax benefit (expense)	7,179	394	(2,036)
Net income (loss)	$ 4,747	$ (7,441)	$ (11,200)
Net income (loss) per share:
Basic	$ 0.07	$ (0.12)	$ (0.18)
Diluted	$ 0.07	$ (0.12)	$ (0.18)
Shares used in per share computations:
Basic	64,350,893	63,757,395	63,471,235
Diluted	64,776,699	63,757,395	63,471,235

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Property and Equipment

12 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

(5)    Property and Equipment

Property and equipment, net, consist of the following (in thousands):

	March 31,
	2015			2014
Molds	$	9,503		$	8,707
Computer equipment and software		2,112			2,529
Manufacturing and office equipment		1,701			1,376
Furniture and fixtures		478			518
Leasehold improvements		1,052			984
		14,846			14,114
Less: Accumulated depreciation and amortization		(11,470	)		(11,377	)
	$	3,376		$	2,737

Depreciation expense related to property and equipment totaled $1,524,000, $1,825,000, and $2,089,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

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Inventories

12 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

(4)    Inventories

Inventories consist of the following (in thousands):

	March 31,
	2015		2014
Raw materials	$	735	$	1,032
Finished goods		14,744		16,157
	$	15,479	$	17,189

The amount of inventory pledged as debt obligation collateral totaled $13,665,000 at March 31, 2015.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Recognized Assets and Liabilities Carried at Fair Value on Recurring Basis

The following table provides a summary of the recognized assets and liabilities carried at fair value on a recurring basis (in thousands):

	Balance as of March 31, 2015			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(1,187	)	$	—	$	—	$	(1,187	)
	Balance as of March 31, 2014			Basis of Fair Value Measurements
				Level 1		Level 2		Level 3
Liabilities:
Warrant liabilities (Note 10)	$	(75	)	$	—	$	—	$	(75	)

Fair Value Measurements of Warrant Liabilities

The following tables provide a roll forward of the Company’s level three fair value measurements, which consist of the Company’s warrant liabilities, during the three years ended March 31, 2015 (in thousands):

Warrant liabilities:
Balance at March 31, 2012	$	(693	)
Change in fair value of warrant liabilities		544
Balance at March 31, 2013	$	(149	)
Change in fair value of warrant liabilities		74
Balance at March 31, 2014	$	(75	)
Securities purchase agreement		(1,710	)
Change in fair value of warrant liabilities		598
Balance at March 31, 2015	$	(1,187	)

Estimated Useful Lives of Property and Equipment

Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives of the assets as follows:

Molds	3 years
Computer equipment and software	3 years
Manufacturing and office equipment	3 - 5 years
Furniture and fixtures	5 - 6 years
Leasehold improvements	Shorter of estimated useful life or remaining life of lease

Estimated Useful Lives of Intangible Assets

The range of useful lives is as follows:

	Useful Life (Years)
Trademarks		6 - 15
Customer relationships		6 - 8

Computation of Diluted Weighted Average Common and Potential Common Shares Outstanding

The following table sets forth the computation of diluted weighted average common and potential common shares outstanding for the years ended March 31, 2015, 2014 and 2013 (in thousands, except share and per share amounts):

	Years Ended March 31,
	2015		2014			2013
Numerator:
Net income (loss)	$	4,747	$	(7,441	)	$	(11,200	)
Denominator:
Weighted average common shares		64,350,893		63,757,395			63,471,235
Effect of dilutive share-based awards		425,806		—			—
Denominator for diluted net income (loss) per share		64,776,699		63,757,395			63,471,235
Income (loss) per share:
Basic	$	0.07	$	(0.12	)	$	(0.18	)
Diluted	$	0.07	$	(0.12	)	$	(0.18	)
Anti-dilutive securities excluded from the computation of diluted income (loss) per share:
Outstanding options		7,034,897		7,644,948			8,832,288
Outstanding warrants		2,639,337		2,540,918			2,540,918

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Employee Savings Plan

12 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Savings Plan

(12)    Employee Savings Plan

The Company has an employee savings plan in the U.S. that permits eligible participants to make contributions by salary reduction pursuant to section 401(k) of the Internal Revenue Code. The Company may make discretionary matches of employee contributions. During the years ended March 31, 2015, 2014 and 2013, the Company matched 50% of the first 8% of compensation that was contributed by each participating employee to the plan. The Company’s discretionary contributions to the plan were $126,000, $138,000 and $164,000 for the years ended March 31, 2015, 2014 and 2013, respectively.

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Stock-Based Compensation

12 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

(8)    Stock-Based Compensation

The Company’s Stock Option Plan (the “2007 Plan”) allows the Company to grant options to purchase common stock to employees, officers and directors up to a maximum of 10,300,000 shares of common stock. Options granted under the 2007 Plan expire ten years from the date of grant and generally vest over a period of four years, with the first 25% vesting on the one-year anniversary of the grant date and the remainder vesting monthly over the remaining 36 months. At March 31, 2015, a total of 252,918 shares were available for future grant under the 2007 Plan.

A summary of option activity is presented as follows:

	Years Ended March 31,
	2015					2014					2013
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding, beginning of year		7,199,982		$	0.66		9,364,744		$	0.66		7,951,463		$	0.66
Granted		1,875,000			0.56		362,054			0.50		1,500,000			0.67
Exercised		(557,292	)		0.42		(454,107	)		0.41		(15,000	)		0.47
Expired/canceled		(575,879	)		0.88		(2,072,709	)		0.89		(71,719	)		0.49
Outstanding, end of year		7,941,811		$	0.64		7,199,982		$	0.66		9,364,744		$	0.66
Exercisable, end of year		5,368,481		$	0.66		5,542,304		$	0.65		6,320,370		$	0.61
Vested and expected to vest, end of year		7,718,407		$	0.64		6,716,143		$	0.66		8,812,244		$	0.66

As of March 31, 2015, the aggregate intrinsic value of options outstanding was $13,000 and the weighted average remaining contractual term of these options was 6.3 years; the aggregate intrinsic value of options exercisable was $13,000, and the remaining weighted average contractual term of these options was 5.1 years. The aggregate intrinsic value of options exercised in fiscal years 2015, 2014 and 2013 was $72,000, $101,000 and $3,000, respectively. As of March 31, 2015, the total unrecognized compensation cost related to unvested options was $839,000, which is expected to be recognized over a weighted-average period of 2.0 years.

The weighted average per share fair value of the options granted during the years ended March 31, 2015, 2014 and 2013 were $0.34, $0.35 and $0.47, respectively.

The Company estimated the fair value of each stock option grant on the date of grant using the Black-Scholes model with the following assumptions for the years ended March 31, 2015, 2014 and 2013:

	Years Ended March 31,
	2015	2014	2013
Assumptions:
Expected volatility	76% - 77%	84% - 90%	92%
Risk-free interest rate	1.53% - 1.78%	0.68% - 1.72%	0.71%
Dividend yield	—	—	—
Expected term	5 years	5 - 7 years	5 years

The Company’s net income for the year ended March 31, 2015, and net loss for the years ended 2014 and 2013 has been (decreased) increased by stock-based compensation expense, net of taxes, of approximately ($365,000), $485,000 and $481,000, respectively.

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Commitments and Contingencies - Annual Future Minimum Rental Payments Required Under Operating Leases (Detail) $ in Thousands	Mar. 31, 2015 USD ($)
Leases [Abstract]
2016	$ 1,521
2017	1,466
2018	911
2019	681
Thereafter	692
Total	$ 5,271

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Intangible Assets

12 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

(6)    Intangible Assets

Acquired intangible assets, net, consist of the following (in thousands):

	March 31, 2015						March 31, 2014
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Trademarks	$	3,984	$	1,756	$	2,228	$	4,154	$	1,601	$	2,553
Customer relationships		900		544		356		3,852		3,383		469
Intangible assets	$	4,884	$	2,300	$	2,584	$	8,006	$	4,984	$	3,022

Amortization of intangible assets was approximately $437,000, $743,000 and $933,000 in fiscal 2015, 2014 and 2013, respectively.

As of March 31, 2015, the future estimated amortization expense for these acquired intangible assets for the next five years and thereafter is expected to be as follows (in thousands):

Years ending March 31:
2016	$	437
2017		437
2018		438
2019		344
2020		325
Thereafter		603
	$	2,584

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Bank Loan

12 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Bank Loan

(7)    Bank Loan

The Company maintains a Credit Facility with Wells Fargo Capital Finance, LLC (“Wells Fargo”) to borrow up to $25 million under a revolving line of credit subject to the availability of eligible collateral (accounts receivable and inventories), which changes throughout the year. Under the line of credit, interest accrues on the daily outstanding balance at an interest rate that ranges from U.S. prime rate plus 0.50% to U.S. prime rate plus 2.0% per annum or, at the Company’s option, LIBOR plus 2.50% to 3.50% with a LIBOR floor of 1.50%. At both March 31, 2015 and 2014, the interest rate was 5.25%. The Company is 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, and accounts receivable of certain of our subsidiaries and by a pledge of all of the capital stock of our subsidiaries. The Company is required to meet a monthly financial covenant based on a trailing twelve months’ Adjusted EBITDA, as defined. The Company’s trailing twelve months’ Adjusted EBITDA as of March 31, 2015 and April 30, 2015 was lower than the required threshold and, accordingly, the Company was not in compliance with this covenant as of March 31, 2015 and April 30, 2015. On June 23, 2015, the Company received a waiver of the covenant default from Wells Fargo and entered into an amendment to the Credit Facility that extends the expiration of the credit facility to July 31, 2016 and modifies the trailing twelve months’ Adjusted EBITDA covenant, as defined, from April 2015 through June 2016. However, there can be no assurance that the Company will be able to meet the covenants subsequent to March 31, 2015 or that the Company would be able to obtain waivers from Wells Fargo to the extent we are not in compliance with the covenants.

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Income Taxes

12 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

(9)    Income Taxes

The components of loss before income taxes and income tax (benefit) expense are summarized as follows (in thousands):

	Years Ended March 31,
	2015			2014			2013
Loss before income taxes:
Domestic (U.S.)	$	744		$	(4,324	)	$	(8,711	)
Foreign		(3,176	)		(3,511	)		(453	)
	$	(2,432	)	$	(7,835	)	$	(9,164	)
Income tax (benefit) expense:
Current:
Federal (U.S.)	$	—		$	—		$	—
State (U.S.)		(33	)		55			(33	)
Foreign		611			527			1,881
		578			582			1,848
Deferred:
Federal (U.S.)		(6,667	)		—			—
State (U.S.)		(2,088	)		—			—
Foreign		998			(976	)		188
		(7,757	)		(976	)		188
Income tax (benefit) expense	$	(7,179	)	$	(394	)	$	2,036

The following schedule reconciles the difference between reported income tax (benefit) expense and the amount computed by multiplying loss before income taxes by the Company’s applicable Canadian statutory tax rate of approximately 26.5% (in thousands):

	Years Ended March 31,
	2015			2014			2013
Income tax benefit using the Company’s Canadian statutory tax rates	$	(645	)	$	(2,076	)	$	(2,428	)
Income taxed in jurisdictions other than Canada		1,172			(405	)		(1,715	)
Prior year true-up		841			181			(219	)
Change in valuation allowance		(8,538	)		1,572			2,987
Goodwill impairment		—			—			2,827
Other tax increases due to nondeductible expenses		120			126			489
Gain on change in fair value of warrant liabilities		(152	)		(9	)		(141	)
Tax rate changes		0			189			64
Other		23			28			172
Income tax (benefit) expense	$	(7,179	)	$	(394	)	$	2,036
Effective tax rate		295.2	%		5.0	%		(22.2	)%

The sources of significant temporary differences that give rise to the deferred tax assets and liabilities are as follows (in thousands):

	March 31,
	2015			2014
Deferred tax assets:
Tax loss carryforwards	$	15,186		$	16,583
Difference between book and tax basis of inventories		645			835
Difference between book and tax basis of accounts receivables		313			322
Deferred fees not currently deductible		163			147
Accruals and reserves not currently deductible		710			652
Difference between book and tax basis of intangible assets, property & equipment		825			978
Unclaimed depreciation on property and equipment		124			204
Goodwill and intangibles		683			842
Unclaimed scientific research expenditures		166			190
Foreign tax credits		1,553			1,615
Other		194			175
		20,562			22,543
Less valuation allowance		(9,157	)		(18,730	)
	$	11,405		$	3,813
Deferred tax liabilities:
Federal liability on state tax loss	$	702		$	699
Prepaid liabilities		58			46
Intangibles		838			986
	$	1,598		$	1,731
Net deferred tax assets	$	9,807		$	2,082

In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in each tax jurisdiction during the periods in which temporary differences in those jurisdictions become deductible. Management considers the scheduled reversal of deferred liabilities, projected future taxable income, and tax planning strategies in making this assessment. The valuation allowance is based on our assessment that it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future in each tax jurisdiction.

In fiscal year 2015, we consolidated our research and development facilities away from the United States resulting in the transfer of risks associated with certain intellectual property to our Hong Kong subsidiary. As a result, we conducted a transfer pricing study to reflect the responsibilities, functions, and risks of our subsidiaries, which was completed during the fourth quarter of fiscal 2015, and accordingly, revised our transfer pricing policies to reflect changes in the business and the results of the study. As a result of the revised transfer pricing policies and an analysis of the timing of reversals and expirations of our temporary differences, the Company determined that it is more likely than not that a portion of the deferred tax assets in the U.S. will be realized and, accordingly, released $8.8 million of the valuation allowance against those deferred tax assets. The Company continues to record a valuation allowance of $1.2M against US deferred tax assets related to tax attributes that will expire prior to utilization. However, the revised transfer pricing policies also created uncertainties regarding the realization of the Company’s net deferred tax assets in Hong Kong due to the uncertainty over future profitability as well as the fact that the Company has a three-year cumulative book pre-tax loss position in Hong Kong. As a result, the Company has established a valuation allowance of $1.5 million against its Hong Kong deferred tax assets. Additionally, the Company continues to record a valuation allowance against certain other foreign deferred tax assets including a full valuation allowance against the deferred tax assets of the Company’s Canadian holding company, Mad Catz Interactive, Inc. (“MCII”). The Company believes there is insufficient evidence to conclude that realization of the benefit is more likely than not and, therefore, the Company continues to record a valuation allowance on these assets. MCII is a corporate entity, which has no revenue or other income, and incurs corporate-related expenses. Taxable losses are incurred each year and MCII has a history of operating losses. These circumstances are not anticipated to change and, therefore, the Company does not expect MCII to generate sufficient taxable income in the foreseeable future to enable the entity to utilize its tax loss carryforwards.

The Company will continue to evaluate the ability to realize its deferred tax asset on an ongoing basis to identify whether any significant changes in circumstances or assumptions have occurred that could materially affect the ability to realize its deferred tax assets.

The following schedule represents the Company’s net operating loss carryforwards as of March 31, 2015 and the year they start to expire (in thousands):

	Amount		Year Start to Expire
United States Federal	$	16,210	2022(a)
California State		23,342	2016(a)
Canada		10,382	2015
Hong Kong		9,466	No expiration
United Kingdom		7,308	No expiration
France		2,984	No expiration
Japan		497	2021

(a) The Internal Revenue Code (the “Code”) limits the future availability of net operating loss and tax credit carryforwards that arose prior to certain cumulative changes in a corporation’s ownership resulting in a change of control. As a result of an acquisition in 2007, the Company acquired federal and state net operating loss carryforwards of approximately $2.8 million and $3.6 million, respectively, which are subject to an annual limitation based on the ownership change.

The Company also has net capital loss carryforwards in Canada of $2.5 million, which are available indefinitely to offset taxable capital gains.

The Company does not record deferred income taxes on the approximate $37.5 million of undistributed earnings of its non-Canadian subsidiaries based upon the Company’s intention to permanently reinvest undistributed earnings. The Company may be subject to income and withholding taxes if earnings of the non-Canadian subsidiaries were distributed. Considering tax loss carry forwards in Canada and the related valuation allowance, the deferred tax liability on the Company’s undistributed earnings would be no more than $2.4 million at March 31, 2015.

There were no unrecognized tax benefits at March 31, 2015 and 2014, and the Company does not foresee any material changes to unrecognized tax benefits within the next twelve months. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits, if applicable, in income tax expense.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. The Company’s historical tax years are subject to examination by the Internal Revenue Service and various state jurisdictions for fiscal years ended March 31, 2012 to the present. With few exceptions, the Company is no longer subject to foreign examinations by tax authorities for fiscal years ended before March 31, 2011. In certain of the Company’s foreign subsidiaries, all of historical tax years are subject to examination by various foreign tax authorities due to the generation of net operating losses.

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Geographic and Product Line Data - Property and Equipment, Net, Attributed to Geographic Regions (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014
Property and equipment, net:
Property and equipment, net	$ 3,376	$ 2,737
Americas [Member]
Property and equipment, net:
Property and equipment, net	1,088	417
EMEA [Member]
Property and equipment, net:
Property and equipment, net	96	92
APAC [Member]
Property and equipment, net:
Property and equipment, net	$ 2,192	$ 2,228

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Geographic and Product Line Data - Summary of Sales by Product Category (Detail) - Product Category [Member] - Sales [Member]	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Concentration Risk [Line Items]
Percentage of sales by product category	100.00%	100.00%
Audio [Member]
Concentration Risk [Line Items]
Percentage of sales by product category	42.00%	47.00%
Specialty controllers [Member]
Concentration Risk [Line Items]
Percentage of sales by product category	25.00%	16.00%
Mice and Keyboards [Member]
Concentration Risk [Line Items]
Percentage of sales by product category	23.00%	29.00%
Controllers [Member]
Concentration Risk [Line Items]
Percentage of sales by product category	6.00%	1.00%
Accessories [Member]
Concentration Risk [Line Items]
Percentage of sales by product category	3.00%	5.00%
Games and other [Member]
Concentration Risk [Line Items]
Percentage of sales by product category	1.00%	2.00%

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Geographic and Product Line Data - Sales Attributed to Geographic Regions (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Net sales:
Net sales	$ 16,558	$ 30,451	$ 22,467	$ 16,747	$ 20,217	$ 32,889	$ 17,839	$ 18,684	$ 86,223	$ 89,629	$ 122,664
EMEA [Member]
Net sales:
Net sales									46,247	53,132	61,960
Americas [Member]
Net sales:
Net sales									27,897	28,470	51,316
APAC [Member]
Net sales:
Net sales									$ 12,079	$ 8,027	$ 9,388

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Summary of Significant Accounting Policies - Recognized Assets and Liabilities Carried at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2012
Liabilities:
Warrant liabilities (Note 10)	$ (1,187)	$ (75)
Outstanding warrants [Member]
Liabilities:
Warrant liabilities (Note 10)	(1,187)	(75)
Level 3 [Member]
Liabilities:
Warrant liabilities (Note 10)	(1,187)	(75)	$ (149)	$ (693)
Level 3 [Member] | Outstanding warrants [Member]
Liabilities:
Warrant liabilities (Note 10)	$ (1,187)	$ (75)

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Income Taxes - Components of Loss Before Income Taxes and Income Tax (Benefit) Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Loss before income taxes:
Domestic (U.S.)	$ 744	$ (4,324)	$ (8,711)
Foreign	(3,176)	(3,511)	(453)
Loss before income taxes	(2,432)	(7,835)	(9,164)
Current:
Federal (U.S.)	0	0	0
State (U.S.)	(33)	55	(33)
Foreign	611	527	1,881
Total current	578	582	1,848
Deferred:
Federal (U.S.)	(6,667)
State (U.S.)	(2,088)
Foreign	998	(976)	188
Total deferred	(7,757)	(976)	188
Income tax (benefit) expense	$ (7,179)	$ (394)	$ 2,036

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Quarterly Financial and Market Information

12 Months Ended

Mar. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial and Market Information

(14)    Quarterly Financial and Market Information (Unaudited)

	Quarter Ended
	June 30			Sept. 30			Dec. 31			Mar. 31
	(Amounts in thousands, except per share data)
Fiscal 2015:
Net sales	$	16,747		$	22,467		$	30,451		$	16,558
Gross profit		5,063			6,731			8,178			3,872
Operating (loss) income		(1,131	)		(424	)		2,207			(2,295	)
Net (loss) income		(1,245	)		(922	)		1,358			5,556
Net (loss) income per share — basic		(0.02	)		(0.01	)		0.02			0.09
Net (loss) income per share — diluted		(0.02	)		(0.01	)		0.02			0.09
Common stock price per share:
High		0.78			0.72			0.57			0.54
Low		0.47			0.38			0.38			0.35
Fiscal 2014:
Net sales	$	18,684		$	17,839		$	32,889		$	20,217
Gross profit		5,365			4,770			7,925			4,838
Operating (loss) income		(2,118	)		(3,617	)		902			(1,689	)
Net loss		(2,065	)		(4,545	)		(566	)		(265	)
Net loss per share — basic		(0.03	)		(0.07	)		(0.01	)		(0.00	)
Net loss per share — diluted		(0.03	)		(0.07	)		(0.01	)		(0.00	)
Common stock price per share:
High		0.50			0.90			0.81			0.54
Low		0.38			0.46			0.44			0.42

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Intangible Assets (Tables)

12 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Acquired Intangible Assets, Net

Acquired intangible assets, net, consist of the following (in thousands):

	March 31, 2015						March 31, 2014
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Trademarks	$	3,984	$	1,756	$	2,228	$	4,154	$	1,601	$	2,553
Customer relationships		900		544		356		3,852		3,383		469
Intangible assets	$	4,884	$	2,300	$	2,584	$	8,006	$	4,984	$	3,022

Future Estimated Amortization Expense for Acquired Intangible Assets

As of March 31, 2015, the future estimated amortization expense for these acquired intangible assets for the next five years and thereafter is expected to be as follows (in thousands):

Years ending March 31:
2016	$	437
2017		437
2018		438
2019		344
2020		325
Thereafter		603
	$	2,584

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Stock-Based Compensation - Summary of Option Activity (Detail) - Options [Member] - $ / shares	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Outstanding, beginning of year	7,199,982	9,364,744	7,951,463
Options, Granted	1,875,000	362,054	1,500,000
Options, Exercised	(557,292)	(454,107)	(15,000)
Options, Expired/canceled	(575,879)	(2,072,709)	(71,719)
Options, Outstanding, end of year	7,941,811	7,199,982	9,364,744
Options, Exercisable, end of year	5,368,481	5,542,304	6,320,370
Options, Vested and expected to vest, end of year	7,718,407	6,716,143	8,812,244
Weighted Average Exercise Price, Outstanding, beginning of year	$ 0.66	$ 0.66	$ 0.66
Weighted Average Exercise Price, Granted	0.56	0.50	0.67
Weighted Average Exercise Price, Exercised	0.42	0.41	0.47
Weighted Average Exercise Price, Expired/canceled	0.88	0.89	0.49
Weighted Average Exercise Price, Outstanding, end of year	0.64	0.66	0.66
Weighted Average Exercise Price, Exercisable, end of year	0.66	0.65	0.61
Weighted Average Exercise Price, Vested and expected to vest, end of year	$ 0.64	$ 0.66	$ 0.66

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Inventories - Additional Information (Detail)	Mar. 31, 2015 USD ($)
Pledged as debt obligation collateral [Member]
Inventory [Line Items]
Amount of inventory pledged as debt obligation collateral	$ 13,665,000

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 4,747	$ (7,441)	$ (11,200)
Foreign currency translation adjustments	(3,366)	1,944	(2,083)
Comprehensive income (loss)	$ 1,381	$ (5,497)	$ (13,283)

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Note Payable

12 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Note Payable

(3)    Note Payable

In May 2010, the Company acquired all of the outstanding stock of Tritton Technologies Inc. (“Tritton”) for $1,400,000 cash, subject to a working capital adjustment, and contingent 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 $8,700,000. Through May 2013, the Company paid $4,788,000 for the first three years of the five-year contingent period. In February 2014, the Company and individuals who held approximately 99% of Tritton prior to the purchase (the “Sellers”) entered into a Settlement and Release Agreement (the “Settlement Agreement”). Under the Settlement Agreement, the Company agreed to issue to the Sellers a Promissory Note (the “Note Payable”) providing for payments to the Sellers in an aggregate amount equal to $2,475,000 over a two-year period commencing in May 2014, which replaced the final two years of contingent consideration. As of March 31, 2015, the liability for contingent consideration is $0 and the present value of the Note Payable is $1,023,000, with an effective interest rate of 5.25%.

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Securities Purchase Agreement - Estimated Fair Value of Warrants (Detail) - $ / shares	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 24, 2015	Apr. 30, 2011
2015 Securities Purchase Agreement [Member]
Schedule of Available-for-sale Securities [Line Items]
Expected term	5 years 6 months
Common stock market price	$ 0.37		$ 0.41
Risk-free interest rate	1.46%
Expected volatility	100.00%
2011 Securities Purchase Agreement [Member]
Schedule of Available-for-sale Securities [Line Items]
Expected term	1 year 6 months	2 years 6 months
Common stock market price	$ 0.37	$ 0.48		$ 1.92
Risk-free interest rate	0.41%	0.67%
Expected volatility	73.53%	68.56%

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Stock-Based Compensation (Tables)

12 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Option Activity

A summary of option activity is presented as follows:

	Years Ended March 31,
	2015					2014					2013
	Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price		Options			Weighted Average Exercise Price
Outstanding, beginning of year		7,199,982		$	0.66		9,364,744		$	0.66		7,951,463		$	0.66
Granted		1,875,000			0.56		362,054			0.50		1,500,000			0.67
Exercised		(557,292	)		0.42		(454,107	)		0.41		(15,000	)		0.47
Expired/canceled		(575,879	)		0.88		(2,072,709	)		0.89		(71,719	)		0.49
Outstanding, end of year		7,941,811		$	0.64		7,199,982		$	0.66		9,364,744		$	0.66
Exercisable, end of year		5,368,481		$	0.66		5,542,304		$	0.65		6,320,370		$	0.61
Vested and expected to vest, end of year		7,718,407		$	0.64		6,716,143		$	0.66		8,812,244		$	0.66

Schedule of Estimated Fair Value of Each Stock Option Grant

The Company estimated the fair value of each stock option grant on the date of grant using the Black-Scholes model with the following assumptions for the years ended March 31, 2015, 2014 and 2013:

	Years Ended March 31,
	2015	2014	2013
Assumptions:
Expected volatility	76% - 77%	84% - 90%	92%
Risk-free interest rate	1.53% - 1.78%	0.68% - 1.72%	0.71%
Dividend yield	—	—	—
Expected term	5 years	5 - 7 years	5 years

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Summary of Significant Accounting Policies - Computation of Diluted Weighted Average Common and Potential Common Shares Outstanding (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2013
Numerator:
Net income (loss)	$ 5,556	$ 1,358	$ (922)	$ (1,245)	$ (265)	$ (566)	$ (4,545)	$ (2,065)	$ 4,747	$ (7,441)	$ (11,200)
Denominator:
Weighted average common shares									64,350,893	63,757,395	63,471,235
Effect of dilutive share-based awards									425,806
Denominator for diluted net income (loss) per share									64,776,699	63,757,395	63,471,235
Income (loss) per share:
Basic	$ 0.09	$ 0.02	$ (0.01)	$ (0.02)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.03)	$ 0.07	$ (0.12)	$ (0.18)
Diluted	$ 0.09	$ 0.02	$ (0.01)	$ (0.02)	$ 0.00	$ (0.01)	$ (0.07)	$ (0.03)	$ 0.07	$ (0.12)	$ (0.18)
Outstanding options [Member]
Anti-dilutive securities excluded from the computation of diluted income (loss) per share:
Anti-dilutive securities excluded from the computation of diluted income (loss) per share									7,034,897	7,644,948	8,832,288
Outstanding warrants [Member]
Anti-dilutive securities excluded from the computation of diluted income (loss) per share:
Anti-dilutive securities excluded from the computation of diluted income (loss) per share									2,639,337	2,540,918	2,540,918

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Geographic and Product Line Data

12 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Geographic and Product Line Data

(13)    Geographic and Product Line Data

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

	Years Ended March 31,
	2015		2014		2013
Net sales:
EMEA	$	46,247	$	53,132	$	61,960
Americas		27,897		28,470		51,316
APAC		12,079		8,027		9,388
	$	86,223	$	89,629	$	122,664

Revenue is attributed to geographic regions based on the location of the customer.

The Company’s property and equipment, net, are attributed to the following geographic regions (in thousands):

	2015		2014
Property and equipment, net:
Americas	$	1,088	$	417
EMEA		96		92
APAC		2,192		2,228
	$	3,376	$	2,737

Our sales by platform were as follows:

	Years Ended March 31,
	2015			2014
PC and Mac		46	%		45	%
Universal		22	%		29	%
Next gen consoles (a)		21	%		3	%
Smart devices		7	%		2	%
Legacy consoles (b)		4	%		19	%
All others		—	%		2	%
		100	%		100	%

(a) Includes products developed for Xbox One, PlayStation 4 and Wii U.

(b) Includes products developed for Xbox 360, PlayStation 3 and Wii.

Our sales by product category were as follows:

	Years Ended March 31,
	2015			2014
Audio		42	%		47	%
Specialty controllers		25	%		16	%
Mice and Keyboards		23	%		29	%
Controllers		6	%		1	%
Accessories		3	%		5	%
Games and other		1	%		2	%
		100	%		100	%

Our sales by brand were as follows:

	Years Ended March 31,
	2014			2014
Tritton		39	%		42	%
Mad Catz		34	%		41	%
Saitek		19	%		12	%
All others		8	%		5	%
		100	%		100	%