FORM 10-QSB

Securities and Exchange Commission Washington, D.C.  20549

(Mark One)

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

For the quarterly period ended:  September 30, 1997

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

For the transition period from	to	.

Commission File No. 0-22372.

GRAND TOYS INTERNATIONAL, INC.
(Exact name of Issuer as specified in its charter)

Nevada                                  87-0454155  
(State or other jurisdiction of        (I.R.S. Employer 
incorporation or organization          identification No.)

1710 Route Transcanadienne, Dorval, Quebec, Canada H9P 1H7
(Address of principal executive offices)

(514) 685-2180
(Issuer's telephone number)

(Former name, former address and former fiscal year, 
if changed since last report)

Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities 
Exchange Act during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days. 

Yes  {X}      No  { }

Indicate the number of shares outstanding of each of the
issuer's classes of common equity, as of October 23, 1997: 1,577,597.

<PAGE>

Part I. - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
GRAND TOYS INTERNATIONAL, INC.
Consolidated Balance Sheets
<CAPTION>
                 				                    September 30,		         December 31,
		  		                                           1997                   1996
                                          (Unaudited)
<S>                                               <C>                    <C>
Assets

Current assets:
  Accounts receivable      
  (net of allowance for doubtful accounts;     
  1997 - $82,755; 1996 - $74,228)     	     $10,191,254            $5,229,177
  Due from affiliated company                     9,482               325,356
  Inventory			                                6,833,375  	          2,554,384
  Prepaid expenses			                           594,196               525,850
  Total current assets	                      17,628,307             8,634,767

Equipment and leasehold 
improvements, net (note 3)	                     459,407     	         389,281

Total assets	                              	$18,087,714            $9,024,048 
</TABLE>

3
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Consolidated Balance Sheets

<TABLE>
<CAPTION> 
                                              September 30,        December 31,
                                                       1997                1996
                                                 Unaudited)
<S>                                                     <C>                 <C>
Liabilities and Stockholders' Equity

Current liabilities:
Bank indebtedness (note 4)                  	    7,882,998           1,633,068
Trade accounts payable		                         3,363,279           2,207,896
Other accounts payable and 
accrued liabilities			                             932,100             509,903
Royalties payable		    	                           329,557             354,066
Income taxes payable		                           1,266,115             979,455
Total current liabilities	                     	14,074,049           5,684,388

Loan payable to a director (note 5)          	           -             427,129

Minority interest                  			                 100                 100

Stockholders' equity:
Capital stock (note 6)		                             1,578               7,888
Additional paid-in capital	                    	10,599,559        	 10,593,249
Deficit			                                     	(6,192,674)         (7,248,104)
Cumulative currency translation 
adjustment			                                     (394,897)           (440,602)
                                                 4,013,566           2,912,431

Commitments and contingencies 
(notes 9 and 10)

Total liabilities and 
stockholders' equity                 		        $18,087,714          $9,024,048 
</TABLE>

See accompanying notes to consolidated financial statements.

4
<PAGE>

<TABLE>
GRAND TOYS INTERNATIONAL, INC.
Consolidated  Statements of Earnings
(Unaudited)
<CAPTION>
                                 For the three months        For the nine months 
                                  ended September 30,        ended September 30,
   	                              1997 		        1996          1997         1996
<S>	      	               		       <C>    		      <C>           <C>          <C>
Net sales          	       $11,562,834     $8,391,261   $21,704,326  $18,144,695

Cost of goods sold          	7,267,669      4,639,577    13,305,405   10,515,448  

Gross profit                 4,295,165      3,751,684     8,398,921    7,629,247

Operating expenses:
Selling, general and     
administrative               2,469,715     2,362,030      5,651,483    5,278,013
Interest 	      	              130,160       184,404        273,759      363,865
Bad debt expense                38,120       161,159        109,590      219,916
Depreciation                    36,693        40,349         95,844      103,921
                             2,674,688     2,747,578      6,130,676    5,965,714

Earnings before income taxes 1,620,477     1,004,106      2,268,245    1,663,532

Income taxes                   847,767       521,291      1,212,815      828,513

Net earnings                  $772,710      $482,815     $1,055,430     $835,019

PER COMMON SHARE (NOTE 1):         
Basic                            $0.49         $0.32          $0.67        $0.55
Diluted                           0.31          0.19           0.47         0.32
</TABLE>

See accompanying notes to consolidated financial statements.

5
<PAGE>

<TABLE>
GRAND TOYS INTERNATIONAL, INC.
Consolidated Statements of Stockholders' Equity
(Unaudited)
<CAPTION>
                                                        Cumulative
                              Additional   Retained     Currency
                     Common   Paid-In      Earnings     Translation
                     Stock    Capital      (Deficit)    Adjustment   Total

<S>                  <C>      <C>          <C>          <C>          <C> 
January 1, 1997      $7,888   $10,593,249  $(7,248,104) $(440,602)   $2,912,431

Reverse Stock Split  (6,310)        6,310            -          -             -
(note 1(g))

Net earnings for
the period                -             -    1,055,430          -     1,055,430 

Foreign currency
translation               -             -            -     45,705        45,705

September 30, 1997   $1,578    $10,599,559  $(6,192,674) $(394,897)   $4,013,566
</TABLE>

See accompanying notes to consolidated financial statements.

6
<PAGE>

<TABLE>
GRAND TOYS INTERNATIONAL, INC.
Consolidated  Statements of Cash Flows
(Unaudited)
<CAPTION>
                           	                        For the nine months 
                                                    Ended September 30,
					                                               1997    		       1996
<S>                                                 <C>              <C>
Cash flows from operating activities:
  Net earnings                                $1,055,430         $835,019
  Items not affecting cash:
    Depreciation                                  95,844          103,921
    Gain on disposal of equipment 	                   	-          (25,407)
  Changes in operating working capital           
  items, (note 8)                             (6,878,523)      (4,667,073)
  Net cash used for operating       
  activities                                  (5,727,249)      (3,753,540)

Cash flows from financing activities:
  Increase in bank indebtedness                6,253,980        4,071,408
  Decrease in loan payable to a director        (422,070)        (255,798)
  Repayment of long-term debt                          -          (34,074)
  Issuance of capital stock,
  net of issue costs                                   -          (29,142)
  Other                                           61,309           11,680
  Net cash provided by financing     
  activities                                   5,893,220        3,764,074

Cash flows from investing activities:
  Additions to equipment                        (165,970)         (35,941)
  Proceeds on sale of equipment                        -           25,407
  Net cash used for investing activities        (165,970)         (10,534)

Net change in cash, being cash at end of
period                                          $      -         $      -  

Supplementary disclosure of cash flow information

Cash paid during the period for:

  Interest                                        $279,759         $363,865

  Income taxes                                     833,296          303,296
</TABLE>

See accompanying notes to consolidated financial statements.

7
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Notes to Consolidated  Financial Statements 

Grand Toys International, Inc., a publicly held company, is organized under
the laws of the State of Nevada.  Its principal business activity, through
its Canadian subsidiaries, is the distribution of toys and related items.

1. SIGNIFICANT ACCOUNTING POLICIES:

(a) Financial statement presentation:

The accompanying consolidated financial statements are not audited for the 
mentioned period but include all adjustments (consisting of only normal 
recurring accruals) which management considers necessary for the fair 
representation of results at September 30, 1997.

Moreover, these financial statements do not purport to contain complete 
disclosures in conformity with generally accepted accounting principles and 
should be read in conjunction with the Company's audited financial statements
at and for the fiscal year ended December 31, 1996 contained in the Company's 
Annual Report on Form 10-KSB.  

The results for the three and nine months ended September 30, 1997 are not 
necessarily indicative of the results for the entire fiscal year ending 
December 31, 1997.

(b) Principles of consolidation:

These consolidated financial statements, presented in U.S. dollars and in 
accordance with accounting principles generally accepted in the United 
States, include the accounts of Grand Toys International, Inc. (the "Company"), 
and its subsidiaries with the exception of Grand Group Inc. (see note 2).  All 
significant intercompany balances and transactions have been eliminated.

(c) Inventory:

Inventory is valued at the lower of cost and net realizable value.  Cost is 
determined by the first-in, first-out method.

(d) Equipment and leasehold improvements:

Equipment and leasehold improvements are stated at cost less accumulated 
depreciation.  Depreciation methods and annual rates adopted by the Company 
are as follows:

<TABLE>
<CAPTION>
Asset    				                 Method			                Rate
<S>                           <C>                      <C>
Computer equipment		          Declining balance 	      30%
Machinery and equipment		     Declining balance		      20%
Furniture and fixtures		      Declining balance		      20%
Trucks and automobiles		      Declining balance		      30%
Telephone equipment		         Declining balance		      30%
Leasehold improvements		      Straight-line    		      Term of lease
                                                       plus one
                                                       renewal term
</TABLE>

8
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

1. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

(e) Revenue:

Sales are recorded net of merchandise returns.

(f) Foreign currency translation:

(i) Grand Toys Ltd., an indirectly wholly-owned Canadian subsidiary (Grand 
Canada) is classified as a self-sustaining foreign operation, with assets and 
liabilities translated into U.S. dollars at the exchange rates prevailing at 
the balance sheet date and sales, expenses and cash flows translated at the 
average exchange rate for the year.  The resulting  currency  translation 
adjustments are accumulated and reported as a separate component of 
stockholders' equity.

(ii) Other monetary assets and liabilities denominated in foreign currencies
are translated at the exchange rates prevailing at the balance sheet date. 
Revenues and expenses denominated in foreign  currencies are translated at
the rates of exchange prevailing at the transaction dates.  All exchange 
gains and losses are included in income.

(g) Earnings per share:

(i) Effective August 4, 1997, the stock of the Company underwent a one-for-five
reverse stock split.  For purposes of earnings per share calculations, the 
compartive number of shares have been restated to reflect the split.

(ii) Earnings per share is determined by dividing the weighted average number 
of common shares outstanding during the period into net earnings.  Common 
share equivalents in the form of options and warrants are excluded from the 
calculation if they have an anti-dilutive effect on per share figures (note
7).

The weighted-average number of shares is as follows:

<TABLE>

<CAPTION>
September 30,      December 31,
1997               1996
<C>                <C>
1,568,423          1,358,900
</TABLE>

(h) Stock option plan:

The Company accounts for its stock option plan (the "Option Plan") in 
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees.  As such, compensation 
expense is recorded on the date of grant only if the current market price of 
the underlying stock exceeded the exercise price.  FASB Statement No. 123, 
which became effective in 1996, allows entities to continue to apply the 
provisions of APB Opinion No.25 and requires pro forma net earnings and pro 
forma earnings per share disclosures for employee stock option grants made in
1995 and future years as if the fair-value-based method defined in FASB 
Statement No. 123 had been applied.  
 
9
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

2. FORMER INVESTMENT IN NON-CONSOLIDATED SUBSIDIARY:

Grand Group Inc., ("Grand Group") an indirect wholly-owned U.S. subsidiary 
incorporated in August 1993, started active operations in March 1994 and ceased 
operations in September 1995.  In November 1995, an involuntary petition into 
bankruptcy was filed against Grand Group Inc.  As a result, Grand Group is 
being liquidated in a Chapter 7 proceeding under the United States Bankruptcy 
Code and a trustee has been appointed to oversee the liquidation.  As control
since November 1995 does not rest with Grand Toys International, Inc., the 
financial statements of Grand Group are no longer consolidated in these 
financial statements.

<TABLE>
3. EQUIPMENT AND LEASEHOLD IMPROVEMENTS:

<CAPTION>
                      		             September 30                    December 31
                                             1997                           1996
                                      Accumulated                    Accumulated
		                             Cost	 depreciation           Cost    depreciation
<S>		                           <C>		         <C>		           <C>		          <C>
Computer equipment	        $860,997      $566,320        $692,007      $516,083
Machinery and equipment	    369,907       329,369         373,589       325,419
Furniture and fixtures		    504,099       459,181         509,106       448,102
Trucks and automobiles 	     88,425        84,467          89,305        84,149
Telephone equipment	         42,295        36,168          42,716        35,436
Leasehold improvements	     355,305       286,116         358,020       266,273
       	                 $2,221,028    $1,761,621      $2,064,743    $1,675,462

NET BOOK VALUE                    $459,407                      $389,281
</TABLE>

4. BANK INDEBTEDNESS:

On March 28, 1996, Grand Canada entered into a three year banking agreement 
with a lending institution.  The Company has a secured line of credit of 
$9,524,000 (Canadian $13,000,000) and can draw down working capital advances
and letters of credit in amounts determined by percentages of its accounts 
receivable and inventory.  The working capital advances bear interest at prime 
plus 1 1/4%, and are secured by all of Grand Canada's assets and are guaranteed 
by Grand Toys International, Inc.  As at September 30, 1997, the unused portion 
of the credit facility is approximately $391,000.

5. LOAN PAYABLE TO A DIRECTOR:

The loan payable to a director bore interest at 12% and had no specified terms
of repayment. The final balance of the loan was repaid in the first quarter of 
1997.

10
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

6. CAPITAL STOCK:

(a) Authorized capital:

50,000,000, $0.001 par value voting common stock;
50,000,000, $0.001 par value preferred shares, issuable in series with such 
designation, rights and preferences as may be determined from time to time by
the Board of Directors.

<TABLE>
(b) Issued and outstanding:
<CATION>
			                          September 30,      December 31,
				                                  1997              1996
<S>                                   <C>               <C>
1,577,597 common shares             $1,578            $7,888
(1996 - 7,887,986)(note 1 (g))
</TABLE>

7. STOCK OPTIONS AND WARRANTS:

The Company's Option Plan provides for the issuance of up to 300,000
options to acquire the common stock of the Company.  Stock options granted 
under the Option Plan may be Incentive Stock Options under the requirements 
of the Internal Revenue Code, or may be Non-qualified Stock Options which do 
not meet such requirements.  Options may be granted under the Option Plan to,
in the case of Incentive Stock Options, all employees (including officers) of
the Company, or, in the case of Non-statutory Stock Options, all employees 
(including officers) or non-employee directors of the Company.

Options have also been granted outside the Option Plan to directors, key
executives, outside consultants and a supplier.  As well, warrants have been 
issued to the underwriter pursuant to the public offering.

Under each plan, the exercise price of each option equals the market price of
the Company's stock on the date of grant and an option's maximum term is ten 
years.

Details of options and warrants, all of which are exercisable at the period
end, are as follows:

11
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

<TABLE>
7. STOCK OPTIONS AND WARRANTS, CONTINUED:
<CAPTION>
                                       		       				                  Weighted-
                                                                        average
                                 Other                                 exercise
                    Option		     Stock					        	                  price per
	                     Plan	    Options       Warrants       Total         Share
<S>	    	              <C>         <C>            <C>         <C>           <C>
Outstanding, 
December 31, 1996   64,500     996,011        280,000    1,340,511        18.72
 (see note 1(g))

Granted                  -   1,113,000              -    1,113,000         4.39

Forfeited                -    (450,000)             -     (450,000)       18.67

Expired                  -           -       (230,000)  	 (230,000)       40.00

Outstanding, 
September 30, 1997  64,500   1,659,011         50,000     1,773,511        6.98 
</TABLE>


<TABLE>
8. CHANGES IN OPERATING WORKING CAPITAL ITEMS:

<CAPTION>
                                                   For the nine months ended
                                                               September 30,
                                                          1997          1996
<S>                                                        <C>           <C>
Increase in accounts receivable                    $(4,993,882)  $(2,852,494)
Decrease in due from affiliated company                312,054             -
Increase in inventory                               (4,295,920)   (3,300,482)
Increase in prepaid expenses                           (72,811)     (403,007)
Increase in trade accounts payable                   1,470,786       863,110
Increase in other accounts payable
 and accrued liabilities                               426,417       411,448
Decrease (increase) in royalties payable               (20,958)       97,087
Increase in income taxes                               295,791       517,266
                                                   $(6,878,523)  $(4,667,073)
</TABLE>

12
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Notes to Consolidated Financial Statements

9. COMMITMENTS:

The Company has entered into long-term leases with minimum annual rental 
payments approximately as follows:

<TABLE>
<S>          <C> 
1997			      170,000
1998			      423,000
1999			      216,000
2000         213,000
2001         141,000
Thereafter	 	530,000

     			  $1,693,000
</TABLE>

Rent expense for the periods ended September 30, 1997 and 1996 amounted to 
approximately $148,344 and $129,777 respectively.

10. CONTINGENCIES:

(a) A lawsuit for alleged breach of contract was filed in 1994 against Grand 
Canada by a sales representative.  In the opinion of management, the case 
should be settled, however, at this point in time it is difficult to 
ascertain or estimate the value of the settlement, if any.
 
The Company has been named in two lawsuits by a supplier of and a lessor
to  Grand Group for recovery of amounts totalling approximately $300,000
although the Company is not party to either contract.  In the opinion of 
management, the actions are in their early stages and it is difficult to 
ascertain the likelihood of an unfavorable outcome to the Company.
 
(b) Grand Canada is also contingently liable for outstanding letters of 
credit of approximately $1,250,000.

11. FINANCIAL INSTRUMENTS:

(a) Risk Management Activities:

The Company enters into forward foreign exchange contracts to minimize its
foreign currency exposure on purchases.  The contracts oblige the Company
to buy US Dollars in the future at predetermined exchange rates.  The Company's
policy is to enter into forward foreign exchange contracts on a portion of its
purchases anticipated in the next selling season.

(b) Fair Value:

The fair value of the Company's accounts receivable, bank indebtedness, trade
and other payables approximate their carrying value due to the immediate or
short-term maturity of these financial instruments.

13
<PAGE>

GRAND TOYS INTERNATIONAL, INC.

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

Grand Toys International, Inc., (the "Company"), through its Canadian 
subsidiary, Grand Toys Ltd. ("Grand Canada"), has been engaged in the toy 
business in Canada for over 35 years and currently distributes a wide 
variety of toys throughout Canada.  Through Grand Concepts, a recently 
organized subsidiary, the Company distributes, in Canada, various
accessories, including backpacks and luggage.

<TABLE>
RESULTS OF OPERATION

<CAPTION>
             	                	For the three months        For the nine months 
                           		   ended September 30,        ended September 30,         
                         	      1997         1996          1997        1996
<S>		                   	       <C>          <C>           <C>         <C>
Net sales                       100.00%      100.00%       100.00%     100.00%
Cost of goods sold		             62.85        55.29         61.30       57.95
Gross profit	                    37.15        44.71         38.70       42.05

Operating expenses: 
 Selling, general and
 administrative                 	21.36        28.15         26.05       29.09
 Interest	                        1.13         2.19          1.26        2.01
 Bad debt expense		                .33         1.92           .50        1.21
 Depreciation	                     .32          .48           .44         .57
Total operating expenses         23.14        32.74         28.25       32.88

Earnings before income taxes     14.01        11.97         10.45        9.17

Net earnings                      6.68%        5.75%         4.86%       4.60%
</TABLE>

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1997 TO THE THREE MONTHS 
ENDED SEPTEMBER 30, 1996

NET EARNINGS.  Net earnings were $772,710 for the third quarter of 1997 
compared to net earnings of $482,815 for the same period last year.  The 
increase of $289,895 in net earnings was due to an increase in sales (38%), 
and an overall decrease, as a percentage of sales, of 9.61%, in operating 
expenses.

NET SALES.  Net sales increased by $3,171,573 or by 38% over net sales of the 
third quarter of 1996. The higher sales volume was attributed to increased sales
in the Toymax (1997), Tiger, Toybiz, Oddzon and Spectra product lines.  The 
addition of the Toymax line, in conjunction with the strength of the Company's
product line, resulted in increased sales as compared to the same period last 
year.

GROSS PROFIT.  Gross profit for the Company increased by $543,481 or by 14% of 
sales.  The decrease in gross profit percentage was due to the sales mix in 
the product line, to an increase in sales discounts and to higher product costs.

SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses increased by $107,685 over the third quarter of 1996.  This increase 
was mainly due to increases in bank charges, advertising, travel and 
entertainment, and warehousing expenses.  However, the significant decrease in 
selling, general and administrative expenses as a percentage of net sales was 
a result of successful cost containment.

14
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial Condition and Results of 
Operation

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997 TO THE NINE MONTHS ENDED 
SEPTEMBER 30, 1996.

NET EARNINGS.  Net earnings were $1,055,430 for the first nine months of 1997 
compared to net earnings of $835,019 for the same period in the prior year. 
The increase of $220,441 in net earnings was due to an increase in sales (20%),
and an overall decrease as a percentage of net sales of 4.65%, in operating 
expenses.

NET SALES.  Net sales for the first nine months of 1997 increased by $3,559,631
or by 20% over the first nine months of the prior year.  The higher sales volume
was attributed to increased sales in the Toymax (1997), Tiger, Toy Biz, Oddzon
and Spectra product lines. The addition of the Toymax line, in conjunction with
the strength of the Company's product line, resulted in increased sales as 
compared to the same period last year.

GROSS PROFIT.  Gross profit increased by $769,674 or 10% over the first nine 
months of 1996.  The increase was primarily attributable to the increase in net 
sales by the Company.  The decrease in gross profit percentage was due to the 
sales mix in the product line, to an increase in sales discounts, and to higher 
product costs.

SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and administrative 
expenses increased by $373,470 over the same period last year.  The increase is 
due to increases in bank charges, advertising, travel and entertainment and
warehousing expenses.  However, the decrease in selling, general and 
administrative expenses as a percentage of sales was the result of successful 
cost containment.


LIQUIDITY AND CAPITAL RESOURCES

The Company generally finances its operations through borrowings under Grand 
Canada's Credit Agreement with its bank and by cash flow from operations.

During 1995 the Company issued 1,680,000 shares of its Common Stock in private
transactions under Regulation S pursuant to which it received gross proceeds
of $885,685.

In March 1996 Grand Canada entered into a banking arrangement with a new 
lending institution.  Grand Canada has a secured line of credit of 
Canadian $13,000,000 or its US$ equivalent to enable it to meet its plan for 
growth in the future.  Grand Canada may draw down working  capital advances 
and letters of credit in amounts determined by percentages of its accounts 
receivable and inventory.  Working capital advances taken by Grand Canada 
bear interest at prime plus 1 1/4%.  The term of the loan agreement is three 
years.  The advances are guaranteed by the Company and secured by all of Grand 
Canada's assets.  

Accounts receivable at September 30, 1997 were $10,191,254 compared to 
$5,229,177 at December 31, 1996.  Inventory was $6,833,375 at September 30,
1997 compared to $2,554,384 at December 31, 1996.  Due to the seasonality of the
toy industry, inventory levels will fluctuate according to customer demand.

Grand Canada's level of accounts receivable is subject to significant seasonal 
variations due to the seasonality of sales.  As a result, Grand Canada's 
working capital requirements are greatest during its third and fourth quarters.

Working capital increased from $2,950,379 at December 31, 1996 to $3,554,258
at September 30, 1997.  Net cash used for operating activities was $5,727,249
in the nine months ended September 30, 1997 compared to net cash used for 
operations of $3,753,540 in the same period of 1996.  Cash used for additions to
equipment was $165,970 for the nine months ended September 30, 1997, compared 
to $35,941 in 1996.

15
<PAGE>

GRAND TOYS INTERNATIONAL, INC.
Management's Discussion and Analysis of Financial Condition and Results of 
Operation

LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

If the funds available under the Company's financing agreements, together with 
its current cash and cash equivalents are not sufficient to meet the Company's 
cash needs, the Company may from time to time seek to raise capital from 
additional sources, including extension of its current lending facilities, 
project-specific financing and additional public or private debt or equity 
financing.  Management believes that the Company has sufficient funding at the
present time to meet its next twelve month forecast.

16
<PAGE>

GRAND TOYS INTERNATIONAL, INC.

PART II. - OTHER INFORMATION

Item 5.  OTHER INFORMATION

A Special Meeting of Shareholders of the Company was held on July 28, 1997.  
At the Special Meeting, the shareholders approved the proposed amendment to 
the Company's Articles of Incorporation to effect a one-for-five reverse split
of the Company's Common Stock while keeping 50,000,000 authorized shares of 
Common Stock, par value $.001 per share.  6,830,278 votes were cast in favor 
of the proposal, 179,743 votes were cast against the proposal, and nil 
shares abstained on the proposal.  

The number of votes described above represent shares of Common Stock before the
one-for-five reverse stock split was effected.

17
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant 
has duly caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.


Dated:  October 23, 1997         GRAND TOYS INTERNATIONAL, INC.
                                 /s/ Stephen Altro
                                 Stephen Altro
                                 President 



In accordance with the requirements of the Exchange Act., 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/ Stephen Altro       President and Director         October 23, 1997
Stephen Altro           Director (Principal 
                        Executive Officer)


/s/ Ron Goldenberg      Vice President, Chief          October 23, 1997
Ron Goldenberg          Financial Officer, Secretary,
                        Treasurer and Director
                        (Principal Financial and
                        Accounting Officer)

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