FORM 10-Q

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:  **March 31, 2002**
[   ]	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 Registrant as Specified in its Charter)	

		
**Nevada	      	                    				**98-0163743
(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**
(Registrant's telephone number, including Area Code)

 

(Former name, former address and former fiscal year, 

if changed since last report)

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 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 May 14, 2002: 1,527,413.
** 

 
**GRAND TOYS INTERNATIONAL, INC.
 
Index to Quarterly Report on Form 10 - Q
Filed with the Securities and Exchange Commission**Period ended March 31, 2002
 **ITEMS IN FORM 10 - Q**PAGE**Part I - Financial Information

Item 1.  Consolidated Financial Statements:  
Consolidated Balance Sheets 

at March 31, 2002 and December 31, 2001
2-3
Consolidated Statements of Operations

For The Three Month Period ended March 31, 2002 and 2001
4
Consolidated Statements of Stockholders' Equity and Comprehensive                                                             

Income For the Three Month Period ended March 31, 2002 
 

5
Consolidated Statements of Cash Flows

For The Three Month Period ended March 31, 2002 and 2001 
    6
Notes to Consolidated Financial Statements
  7-17
Item 2.  Management's Discussion and Analysis of Financial Condition 

and Results of Operations

 

 18-23
Item 3. Quantitative and Qualitative Disclosures About Market Risks
23**Part II - Other Information   
Item 1.  Legal proceedings
23
Item 2.  Changes in Securities and Use of Proceeds
23
Item 3.  Defaults Upon Senior Securities
23
Item 4.  Submission of Matters to a Vote of Security Holders
24
Item 5.  Other Information
24
Item 6.  Exhibits and Reports on Form 8-K
24 
Signatures
25-26
 

 
**GRAND TOYS INTERNATIONAL, INC.
**Part I. - Financial Information
***Item 1. Financial Statements

Consolidated Balance Sheets
 
 

March 31, 2002
December 31, 2001

(Unaudited) **Assets     
Current assets:  
Short-term deposit (note 12(c))
	$        250,000
$         250,000
Accounts receivable (net of allowance for   
doubtful accounts of $20,526; 2001 - $12,556)
1,502,495
1,386,333
Current portion of loan receivable (note 2)
198,903
194,494
Due from employees and affiliated company
1,850
2,034
Income taxes recoverable
-
143,668
Inventory
1,929,629
1,838,770
Prepaid expenses
766,113
781,867
Total current assets
4,648,990
4,597,166   
Loan receivable, (note 2)
497,311
548,721   
Other assets (note 3)
64,950
236,436      
Equipment and leasehold improvements, net (note 4)
350,174
360,275         
Total assets
	$     5,561,425
$      5,742,598
 

 

 

 
** 

GRAND TOYS INTERNATIONAL, INC.

Consolidated Balance Sheets
 
 

March 31, 2002
 

December 31, 2001 
(Unaudited) **Liabilities and Stockholders' Equity     
Current liabilities:  
Bank indebtedness (note 5)
$       955,985
$     602,577
Trade accounts payable
1,840,833
1,974,030
Other accounts payable and accrued liabilities
313,677
307,974
Shortfall on share conversions (note 6)
-
581,310
Income taxes payable
5,667
-
Royalties payable
55,344
20,104
Total current liabilities
3,171,506
3,485,995   
Minority interest
100
100   
Stockholders' equity:  
Capital stock (note 7):  
Voting common stock, $0.001 par value:  
12,500,000 shares authorized,  
1,527,332 shares issued and outstanding  
(2001 - 1,285,119 shares)
1,527
1,285
Series B preferred stock, $0.001 par value:  
915,000 shares authorized,  
915,000 shares issued and outstanding  
(2001 - 915,000)
915
800 
2,442
2,085
Additional paid-in capital
22,200,961
21,496,788
Deficit
(18,824,372)
(18,253,908)
Accumulated other comprehensive income-  
cumulative currency translation adjustment
(989,212)
(988,462) 
2,389,819
2,256,503   
Commitments and contingencies (notes 11 and 12)     
Total liabilities and stockholders' equity
$      5,561,425
$    5,742,598* 

See accompanying notes to consolidated financial statements.
** 

grand toys international, inc.

Consolidated Statements of Operations, (Unaudited)

 

For the three months ended March 31,

2002	 2001
Net sales 
$2,561,685
$2,216,816    
Cost of goods sold 
1,579,830
1,514,601
Gross profit 
981,855
702,215    
Operating expenses:   
Selling, general and administrative 
1,473,467
1,210,713
Bad debt expense 
16,745
17,791
Depreciation and amortization 
23,313
31,833
Foreign exchange loss 
14,984
29,345
Interest expense 
24,818
-
Interest revenue 
(17,158)
(32,986)
 

  
1,536,169
1,256,696

Loss before income taxes  
(554,314)
(554,481)    
Income taxes (expense): 
(16,150)
(30,636)    
Net loss 
$(570,464)
$(585,117)    
Earnings per share (note 9):   
Basic 
(0.42)
(0.72)
Diluted 
(0.42)
(0.72)    
 
* 

See accompanying notes to consolidated financial statements.
** 

GRAND TOYS INTERNATIONAL, INC.

Consolidated Statements of Stockholders' Equity and Comprehensive Income (Unaudited)
 
 

Capital

Stock
Additional

Paid in

Capital 
 

Deficit
Accumulated other comprehensive income
 

Total      
January 1, 2002
$     	2,085
$	21,496,788
$(18,253,908)
$	(988,462)
	$      2,256,503      
Net loss for the period  
(570,464) 
(570,464)      
Foreign currency adjustment   
(750)
(750)      
Total comprehensive income    
(571,214)      
Share issuance in settlement of 

shortfall on share     
Conversions (note 6)
242
581,068  
581,310      
Private sale of preferred stock

(note 7 (c)) 
115
114,885
115,000      
Compensation expense 
8,220  
8,220
March 31, 2002
$	2,442
$  22,200,961
$  (18,824,372)
$   (989,212)
$  2,389,819      *See accompanying notes to consolidated financial statements.***GRAND TOYS INTERNATIONAL, INC.

Consolidated Statements of Cash Flows, (Unaudited)

         For the three months ended March 31,
  
2002
2001
Cash flows from operating activities:   
Net loss 
	(570,464)
	(585,117)
Adjustments for:   
Depreciation and amortization 
23,313
31,833
Compensation expense 
(6,183) 
Net change in operating working capital   
items (note 10) 
(120,845)
203,988
Net cash used for operating activities 
(674,179)
(349,296)    
Cash flows from financing activities:   
Increase in bank indebtedness 
353,871
-
Share issuance proceeds (note 7 (c)) 
115,000
331,000
Other 
306
(18,018)
Net cash provided by financing activities 
469,177
312,982    
Cash flows from investing activities:   
Loan receivable 
47,001
-
Increase in other assets 
171,481
-
Additions to equipment and leasehold improvements 
(13,480)
(5,508)
Net cash used for (provided by) investing activities 
205,002
(5,508)
 

Net decrease in cash 
 

-
 

(41,822)
Cash, beginning of period 
-
211,515
Cash, end of period 
$ -
	$    169,693***************************************