MAD CATZ REPORTS HIGHER EARNINGS IN FISCAL 2005 SECOND QUARTER

Strong Gross Margin and Reduced Operating Expenses Continue in the Second Quarter

SAN DIEGO. Nov. 4, 2004. Mad Catz Interactive, Inc., the world's leading third party video game accessory provider, today announced financial results for the fiscal second quarter and the six-month period ended September 30, 2004.

Net sales for the second quarter ended September 30, 2004 were $20.7 million, a decrease of 2.9% from net sales of $21.3 million during the fiscal 2004 second quarter. Gross profit for the quarter was $5.2 million as compared to $5.3 million, in the same period of the prior year. Gross profit margin for the fiscal 2005 second quarter was 25.3%, compared to 25.1% in the fiscal 2004 second quarter. Selling and administrative expenses for the second quarter of fiscal 2005 were $4.0 million, a decrease of 8.5% from $4.3 million in the same period of the prior year. Selling expenses in the fiscal 2005 second quarter decreased 5.0% to $2.3 million, or 11.3% of net sales, from $2.4 million, or 11.5% of net sales in the prior year second quarter. For the quarter ended September 30, 2004, administrative expenses were $1.6 million, a 13.0% decrease from $1.9 million in the same period of the prior year. The reduction in administrative expenses reflects the consolidation of the Company's Toronto corporate office with its San Diego headquarters in the fiscal 2004 fourth quarter, as well as the benefits of cost saving measures initiated in the fiscal 2004 fourth quarter and during the first two quarters of fiscal 2005. Income before taxes for the quarter ended September 30, 2004 was $0.5 million, compared to income before taxes of $0.4 million in the prior year second quarter. For the quarter ended September 30, 2004, the Company reported net income of $0.3 million, or $0.01 per basic and diluted share, compared to net income of $0.2 million, or $0.00 per basic and diluted share in the same period of the prior year. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter ended September 30, 2004 was $1.2 million, compared to EBITDA of $1.0 million in the quarter ended September 30, 2003. A reconciliation of EBITDA to the Company's net income on a GAAP basis is included in the financial tables accompanying this release.

Net sales for the six months ended September 30, 2004 were $37.4 million, a 4.4% decrease from $39.1 million in the same period of the prior year. Gross profit for the six-month period increased 11.4% to $9.5 million from $8.6 million in the first six months of fiscal 2004. Selling and administrative expenses for the first half of fiscal 2005 were $7.7 million, a decrease of 12.4% from $8.8 million in the first half of fiscal 2004. Selling expenses decreased to $4.4 million or 11.8% of net sales for the six months ended September 30, 2004 from $5.2 million or 13.2% of net sales in the same period of the prior year. Administrative expenses were $3.3 million or 8.9% of net sales for the first half of fiscal 2005, compared to $3.7 million or 9.4% of net sales in the first half of fiscal 2004. Income before taxes for the first six months of fiscal 2005 was $0.1 million versus a loss before taxes of $1.8 million in the first six months of fiscal 2004. The Company reported a net loss for the first half of fiscal 2005 of $0.1 million or $0.00 per basic and diluted share, compared to a net loss of $1.1 million or $0.02 per basic and diluted share for the first half of fiscal 2004. For the six months ended September 30, 2004, EBITDA was $1.5 million compared to a negative EBITDA of $0.5 million in the same period of the prior year.

Fiscal 2005 Second Quarter Highlights:

United States sales were up 5.8% to $16.8 million from $15.9 million.

European sales were up 83.6% to $2.1 million from $1.2 million.

Gross profit margin was strong at 25.3%.

Continued cost containment efforts resulted in lower year-over-year operating expenses.

Net income increased 49.6% to $0.3 million.

GameShark and Xploder game enhancement software sales accounted for 12.3% of gross sales for the quarter.

The Company's $35.0 million asset based credit facility with Congress Financial was renewed through September 25, 2005.

Announced lineup of accessories for the new Nintendo DS (now shipping) and Apple Computer's iPod ® and iPod Mini® digital music players (shipping early 2005).

New product introductions:

Mad Catz LiveCon Controllers for Xbox Live.

GameShark2 Game Codes with Media Player for PlayStation 2.

Starter Kits featuring GameShark Lite for PS2, Xbox and GameCube.

Disc Repair Kit for game discs, DVD's and CD's.

Commenting on the results, Darren Richardson, President and CEO of Mad Catz Interactive, Inc., stated, "Mad Catz reported strong operating results for the second quarter with consistent gross margins and a reduced operating expense base contributing to an increase in operating profits for the quarter. While total net sales declined from the prior year, we increased worldwide continuing product sales by approximately 10% for the quarter when excluding non-recurring international OEM sales during last year's second quarter. Ultimately, our goal of delivering greater profits to the bottom line are being realized as net income grew year-over-year for the third consecutive quarter.

"We remain positive about the outlook for the upcoming holiday season, despite ongoing concerns regarding the availability of some console hardware. We believe the launch of several highly anticipated software titles, recent console price cuts in Europe, and the launch of the Nintendo DS in November all bode well for the industry and Mad Catz. In addition, Mad Catz has recently announced a number of new initiatives aimed at adding new revenue streams to leverage the capabilities of the existing business.

"Further contributing to our optimism, Mad Catz has recently introduced a number of products, such as our iPod line, aimed at adding new revenue streams and leveraging our current distribution networks and strong retail relationships. Additionally, we are publishing the first dance game for the Nintendo GameCube, which should leverage our industry expertise as the largest supplier of dance pads. The announcements of these ancillary products demonstrate tangible progress in our initiative to explore adjacent product categories to capitalize on our brands, product design leadership, low-cost manufacturing and distribution capabilities. Our exciting portfolio of newly announced products and the market-leading companies we are working with underscore our strategic initiatives to assert our leadership position in the accessory space with ancillary product opportunities complementary to video gaming.

"Our improved operating results reflect our commitment to profitably managing the business during the back half of the current platform cycle. Working capital management has contributed to lower interest expense and to operating well within our available bank facility. We have built inventory earlier this year to capitalize on potential sales opportunities and to guard against external supply chain issues related to manufacturing in China including possible electrical power and labor shortages as well as the current slow down at the shipping ports in Southern California. As such, we believe we are well positioned to support customer demand during the upcoming holiday season.

"We are pleased to report improved profitability to our shareholders and believe the Company's current operating performance combined with the recent and upcoming product offerings will continue to result in progress by Mad Catz in achieving our long-term business plan initiatives. This holiday season will be exciting as a new set of opportunities are set into motion, expanding the future growth potential of the Company."

The Company will host a conference call and simultaneous webcast today November 4, 2004, at 11:00 a.m. ET. 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 # 21212017) or, for International callers, at 402/977-9140.