Mad Catz Interactive, Inc. (AMEX/TSX: MCZ), a leading worldwide third party video game accessory provider, today announced financial results for the fourth quarter and fiscal year ended March 31, 2006. Net sales for the fiscal year ended March 31, 2006 were $100.8 million, a 10.1% decrease from $112.1 million in fiscal 2005. Gross profit for the fiscal year decreased 51.4% to $13.4 million from $27.7 million in the prior fiscal year. Gross profit margin for fiscal 2006 was 13.3% compared to 24.7% in fiscal 2005, partially reflecting a fiscal third quarter $2.0 million payment for the early termination of a long-term purchase commitment. Net loss for the year ended March 31, 2006 was $6.7 million or $(0.12) per share compared to net income of $4.6 million or $0.09 per basic share ($0.08 per diluted share) for the year ended March 31, 2005. EBITDA, a non-GAAP measure (defined as earnings before interest, taxes, depreciation and amortization), was negative $7.5 million in fiscal 2006 compared to EBITDA of $10.4 million in fiscal 2005. A reconciliation of EBITDA to the Company's net income (loss) on a U.S. GAAP basis is included in the financial tables accompanying this release.

Net sales for the fourth quarter ended March 31, 2006 were $17.2 million, a decrease of 21.0% from $21.8 million in the fourth quarter of fiscal 2005. Gross profit for the quarter decreased to $0.4 million, compared to $5.2 million in the same quarter of the prior year. Gross profit margin for the fiscal 2006 fourth quarter was 2.2% compared to 24.0% in the same quarter of the prior year. Net loss for the quarter ended March 31, 2006 was $3.3 million, or $(0.06) per share compared to net income of $0.9 million, or $0.02 per basic and diluted share, in the fourth quarter of the prior fiscal year. EBITDA for the quarter ended March 31, 2006 was negative $4.5 million compared to EBITDA of $2.2 million for the quarter ended March 31, 2005.

Fiscal 2006 Fourth Quarter Highlights:

-- Non-U.S. sales growth

-- Canadian sales rose 70% to $2.0 million from $1.2 million

-- European sales rose 16% to $3.6 million from $3.1 million

-- Seventh consecutive quarter of sales increases representing further market penetration

-- Launched In2Games' Real World Golf in the North American market for the PlayStation(R)2 and Xbox(R)

-- Backed by television advertising campaign

-- Positive response from retail and consumers

-- Sales of the title continue in the European market

-- Further developed extensive line of products for Microsoft Xbox 360

-- Reduced North American headcount by 20%

Commenting on the results, Darren Richardson, Mad Catz' President and CEO, stated, "Fiscal 2006 was a difficult year for Mad Catz and the interactive gaming industry as the console transition significantly reduced consumer spending on video game hardware, software and accessories. Our strategies to offset the expected impact of the transition, including expanding our European operations, adding new revenue streams and a range of licensed and branded accessories, publishing additional software titles and developing products for new consoles that did not require first party licenses partially succeeded in the challenging environment. In fiscal 2006, sales in Europe rose 76% to $19.4 million reflecting additional product placements throughout the year and the addition of several new customers.

"Consistent with industry trends, during the fourth quarter, Mad Catz experienced a decline in overall product sales for current generation platforms though we generated impressive sales levels and contributions to the total net sales mix from our Xbox 360 offerings. Fourth quarter gross margins were very disappointing at 2.2% as the sales mix was impacted by aggressive pricing by competitors, inventory reserves established on specific slow moving products, price protection provided to retailers in response to the challenging domestic industry environment and higher royalty payments based upon specific, existing technology agreements. With fiscal 2006 year-end inventory levels at $18.4 million, a 32% decline from the end of fiscal 2005, Mad Catz has addressed the majority of the products and categories that were the subject of the price protection and slow moving inventory reserves.

"During the fourth quarter Mad Catz also recorded significantly higher year-over-year operating expenses fueled by higher sales and marketing expense related to substantial increases in co- op advertising. Operating expenses also reflect the launch and promotion of Real World Golf and one-time costs related to the Company's staffing reduction. General and administrative expenses also reflect one-time costs and increased legal and professional fees related to litigation and SOX compliance."

Mr. Richardson concluded, "Overall we are pleased with Mad Catz' ability to continue to develop innovative software and accessories that further diversify our product base and international footprint. During fiscal 2006, we launched an extensive line of licensed sports accessories, such as faceplates and controllers representing MLB, NFL and NBA teams and introduced stylish and innovatively designed skins, faceplates and controllers based on licensed entertainment brands.

"The May 2006 E3 industry summit saw the introduction of new platforms and technology applications that are expected to catalyze a resumption of growth in the industry. With a focus by console manufacturers on the potential of the controller to play an important role in the interactivity of the next generation of gaming platforms and our long-term position as a leading third party supplier of control pads, wheels and other accessories, we are looking forward to the latter half of fiscal 2007 and the launch of new consoles from Sony and Nintendo.

"Finally, in a separate release today, we announced the addition of two new members to the Company's Board of Directors. We are delighted to welcome Robert Molyneux and William Woodward, to the Company as these accomplished individuals bring a diverse range of relevant experience to the Mad Catz board. Robert is a successful financial and investment executive while Bill, co-founder of MacroMedia, Inc., Pulse Entertainment and Launch Media, is an acknowledged successful investor, entrepreneur and innovator. We look forward to the benefit of their counsel and contributions."

The Company will host a conference call and simultaneous webcast today June 8, 2006, at 11:00 a.m. EDT. Following its completion, a replay of the call can be accessed for 30 days on the Internet from the Company's Web site (www.madcatz.com, select "Investors") or for 2 days via telephone at 800/633-8284 (reservation # 21248226) or, for International callers, at 402/977-9140.

About Mad Catz

Mad Catz is a worldwide leader of innovative peripherals in the interactive entertainment industry. Mad Catz designs and markets a full range of accessories for video game systems and publishes video game software, including the industry leading GameShark brand of video game enhancements. Mad Catz has distribution through most leading retailers offering interactive entertainment products. Mad Catz has its operating headquarters in San Diego, California and offices in Canada, Europe and Asia. For additional information go to www.madcatz.com> .