<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2001 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
----------------------
       000-26667

                          CRAFTMADE INTERNATIONAL, INC.
                          -----------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                              75-2057054
          --------                                              ----------
(State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                          Identification No.)


650 South Royal Lane, Suite 100, Coppell, Texas                 75019
-----------------------------------------------                 -----
(Address of principal executive offices)                        (Zip Code)


Registrant's telephone number, including area code (972) 393-3800
                                                   --------------


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     x.     No      .
----------     ---------

5,955,058 shares of Common Stock were outstanding as of January 31, 2002.


                                       1
<PAGE>
                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES

                    Index to Quarterly Report on Form 10-Q/A

Part I.     Financial Information

            Introductory Note - Restatement

            The Company has changed the way it accounts for its two 50%-owned
            investees - Design Trends and Prime/Home Impressions - to account
            for these investees using the equity method of accounting rather
            than consolidation. Assets, liabilities, revenues and expense of
            these two investees are no longer included in the Company's balance
            sheets or statements of income. Instead, the balance sheets include
            the Company's investment in the investees and the income statements
            reflect, as a single line item, its equity share in the earnings of
            these investees. Net income, primary and diluted earnings per share
            and stockholders' equity did not change for any period restated.

            For purposes of this Form 10-Q/A, the Company has amended and
            restated in its entirety Part I of the Company's Form 10-Q for the
            quarterly period ended December 31, 2001. This Form 10-Q/A does not
            reflect events occurring after the filing of the original Form 10-Q,
            or modify or update those disclosures in any way, except as required
            to reflect the effects of this restatement.

            Item 1.     Financial Statements (unaudited)

                        Condensed Consolidated Statements of Income for the
                        three and six months ended December 31, 2001 and 2000
                        (Restated).

                        Condensed Consolidated Balance Sheets as of December 31,
                        2001 and June 30, 2001 (Restated).

                        Condensed Consolidated Statements of Cash Flows for the
                        six months ended December 31, 2001 and 2000 (Restated).

                        Notes to Condensed Consolidated Financial Statements
                        (Restated).

            Item 2.     Management's Discussion and Analysis of Financial
                        Condition and Results of Operations (Restated).


                                       2
<PAGE>
            Item 3.     Quantitative and Qualitative Disclosures About Market
                        Risk (Restated).


                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                        FOR THE THREE MONTHS ENDED                   FOR THE SIX MONTHS ENDED
                                                     --------------------------------            --------------------------------
                                                      December              December              December              December
                                                      31, 2001              31, 2000              31, 2001              31, 2000
                                                      Restated              Restated              Restated              Restated
                                                     ----------            ----------            ----------            ----------
                                                                         (In thousands except per share data)
<S>                                                  <C>                   <C>                   <C>                   <C>
Net Sales                                            $   15,952            $   14,956            $   38,219            $   35,828
Cost of goods sold                                       10,810                 9,895                26,432                24,613
                                                     ----------            ----------            ----------            ----------

Gross profit                                              5,142                 5,061                11,787                11,215
                                                     ----------            ----------            ----------            ----------

Selling, general and
      administrative expenses                             3,740                 3,372                 7,499                 6,909
Interest expense, net                                       234                   444                   547                   970
Depreciation and amortization                               134                   222                   267                   445
                                                     ----------            ----------            ----------            ----------

           Total Expenses                                 4,108                 4,038                 8,313                 8,324
                                                     ----------            ----------            ----------            ----------

Income before equity in earnings of 50%
      owned investees and income taxes                    1,034                 1,023                 3,474                 2,891

Equity in earnings of 50% owned investees
      before income taxes                                   711                   322                 1,317                   699
                                                     ----------            ----------            ----------            ----------

Income before income taxes                                1,745                 1,345                 4,791                 3,590

Provision for income taxes                                  625                   544                 1,714                 1,365
                                                     ----------            ----------            ----------            ----------


Net income                                           $    1,120            $      801            $    3,077            $    2,225
                                                     ==========            ==========            ==========            ==========

Basic earnings per common share                      $     0.19            $     0.14            $     0.52            $     0.37
                                                     ==========            ==========            ==========            ==========

Diluted earnings per common share                    $     0.19            $     0.14            $     0.51            $     0.37
                                                     ==========            ==========            ==========            ==========


Cash dividends declared
  per common share                                   $     0.07            $     0.07            $     0.14            $     0.11
                                                     ==========            ==========            ==========            ==========
</TABLE>


                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS


                                       3
<PAGE>
                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS


<TABLE>
<CAPTION>
                                               December 31,               June 30,
                                                   2001                     2001
                                                 Restated                 Restated
                                               ------------             ------------
                                               (Unaudited)

                                                          (In thousands)
<S>                                            <C>                      <C>
Current assets:
 Cash                                          $      1,949             $        723
 Accounts receivable - net of
        allowance of $150,000                         9,087                   13,308
 Receivables from 50% owned
        investees                                     3,736                    8,271
 Inventory                                           11,774                   12,650
 Deferred income taxes                                  758                      758
 Prepaid expenses and other
        current assets                                1,331                    1,158
                                               ------------             ------------

  Total current assets                               28,635                   36,868


Property and equipment, net
 Land                                                 1,535                    1,535
 Building                                             7,784                    7,784
 Office furniture and equipment                       3,499                    2,998
 Leasehold improvements                                 253                      253
                                               ------------             ------------
                                                     13,071                   12,570

Less:  accumulated depreciation                      (3,156)                  (2,900)
                                               ------------             ------------

  Total property and equipment, net                   9,915                    9,670

Goodwill, net of accumulated
 amortization of $1,204,000                           4,735                    4,735
Investment in 50% owned investees                     1,911                    1,049
Other assets                                             12                       39
                                               ------------             ------------

  Total other assets                                  6,658                    5,823
                                               ------------             ------------


Total assets                                   $     45,208             $     52,361
                                               ============             ============
</TABLE>


                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS


                                       4
<PAGE>
                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                  December 31,               June 30,
                                                                                      2001                     2001
                                                                                    Restated                 Restated
                                                                                  ------------             ------------
                                                                                  (Unaudited)

                                                                                             (In thousands)
<S>                                                                               <C>                      <C>
Current liabilities:
         Note payable - current                                                   $        605             $        512
         Revolving line of credit                                                       12,000                   18,800
         Accounts payable                                                                2,752                    4,123
         Commissions payable                                                               186                      301
         Income taxes payable                                                               --                      719
         Accrued liabilities                                                             2,058                    1,806
                                                                                  ------------             ------------
          Total current liabilities                                                     17,601                   26,261

Other non-current liabilities:
         Deferred income taxes                                                             241                      241
         Note payable - long term                                                        6,959                    8,105
                                                                                  ------------             ------------

         Total liabilities                                                              24,801                   34,607
                                                                                  ------------             ------------
Stockholders' equity:
         Series A cumulative, convertible
                            callable preferred stock, $1.00
                            par value, 2,000,000 shares
                            authorized; 32,000 shares issued                                32                       32
         Common stock, $.01 par value,
                            15,000,000 shares authorized,9,384,535 and
                            9,326,535 shares issued, respectively                           94                       93
Additional paid-in capital                                                              13,074                   12,683
Unearned deferred compensation                                                             (92)                    (108)
Retained earnings                                                                       28,131                   25,886
                                                                                  ------------             ------------
                                                                                        41,239                   38,586
         Less:  treasury stock, 3,429,477
                            common shares at cost, and 32,000
                            preferred shares at cost                                   (20,832)                 (20,832)
                                                                                  ------------             ------------
                             Total stockholders' equity                                 20,407                   17,754
                                                                                  ------------             ------------

Total liabilities and stockholders' equity                                        $     45,208             $     52,361
                                                                                  ============             ============
</TABLE>


                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS


                                       5
<PAGE>
                 CRAFTMADE INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           FOR THE SIX MONTHS ENDED
                                                                     -------------------------------------
                                                                       December                 December
                                                                       31, 2001                 31, 2000
                                                                       Restated                 Restated
                                                                     ------------             ------------
                                                                     (In thousands except per share data)
<S>                                                                  <C>                      <C>
Net cash provided by operating
activities:                                                                10,030             $      5,324
                                                                     ------------             ------------

Cash flows from investing activities:
                      Net additions to equipment                             (512)                    (360)
                                                                     ------------             ------------
Net cash used for investing activities                                       (512)                    (360)
                                                                     ------------             ------------

Cash flows from financing activities:
                      Net proceeds from lines of credit                    (6,800)                  (1,600)
                      Principal payments for note payable                  (1,052)                    (231)
                      Stock repurchase                                         --                   (2,559)
                      Stock options exercised                                 392                       --
                      Cash dividends                                         (832)                    (631)
                                                                     ------------             ------------
Net cash used for financing activities                                     (8,292)                  (5,021)
                                                                     ------------             ------------
Net increase in cash                                                        1,226                      (57)
Cash at beginning of period                                                   723                    1,065
                                                                     ------------             ------------
Cash at end of period                                                $      1,949             $      1,008
                                                                     ============             ============
</TABLE>


                       SEE ACCOMPANYING NOTES TO CONDENSED
                        CONSOLIDATED FINANCIAL STATEMENTS


                                       6
<PAGE>
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        OF CRAFTMADE INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                                DECEMBER 31, 2001
                                   (Unaudited)

Note 1 - BASIS OF PREPARATION AND PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and include all adjustments which are, in the opinion of management, necessary
for a fair presentation. The condensed consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries; 50% owned
investees are accounted for under the equity method. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading;
however, it is suggested that these financial statements be read in conjunction
with the financial statements and the notes thereto which are incorporated by
reference in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 2001, as amended. The financial data for the interim periods may not
necessarily be indicative of results to be expected for the year.

Certain amounts for the three and six months ended December 31, 2001 have been
reclassified to conform with the current quarter and six months' presentation.

Note 2 - Restatement

The Company has changed the way it accounts for its two 50%-owned investees -
Design Trends, LLC ("Design Trends") and Prime/Home Impressions, LLC ("PHI") -
to account for these investees using the equity method of accounting rather than
consolidation. Assets, liabilities, revenues and expense of these two investees
are no longer included in the Company's balance sheets or statements of income.
Instead, the balance sheets include the Company's investment in the investees,
and the income statements reflect, as a single line item, its equity share in
the earnings of these investees. Net income, primary and diluted earnings per
share and stockholders' equity did not change for any period restated.

The following table sets forth balances as originally reported and as restated
(in thousands, except per share amounts):


                                       7
<PAGE>
<TABLE>
<CAPTION>
                                 December 31,                                    June 30,
                                 2001                                            2001
                                 ------------------------------------            ------------------------------------
                                 As                                              As
                                 Previously              As                      Previously              As
                                 Reported                Restated                Reported                Restated
                                 ------------            ------------            ------------            ------------
<S>                              <C>                     <C>                     <C>                     <C>
Accounts receivable -
  net                            $     12,265            $      9,087            $     19,215            $     13,308
Receivables from 50%
  owned investees                          --            $      3,736                      --            $      8,271
Inventory                        $     16,435            $     11,774            $     19,454            $     12,650
Total current assets             $     33,348            $     28,635            $     42,214            $     36,868
Investment in 50%
  owned investees                          --            $      1,911                      --            $      1,049
Total assets                     $     51,653            $     45,208            $     59,129            $     52,361
Revolving lines of
  credit                         $     13,530            $     12,000            $     20,600            $     18,800
Total current
  liabilities                    $     22,135            $     17,601            $     31,981            $     26,261
Total liabilities                $     31,246            $     24,801            $     41,375            $     34,607
Minority interest                $      1,911                      --            $      1,049                      --
Stockholders' equity             $     20,407            $     20,407            $     17,754            $     17,754
</TABLE>

<TABLE>
<CAPTION>
                                 Three Months Ended                              Three Months Ended
                                 December 31, 2001                               December 31, 2000
                                 ------------------------------------            ------------------------------------
                                 As                                              As
                                 Previously              As                      Previously              As
                                 Reported                Restated                Reported                Restated
                                 ------------            ------------            ------------            ------------
<S>                              <C>                     <C>                     <C>                     <C>
Net sales                        $     23,045            $     15,952            $     19,009            $     14,956
Gross profit                     $      7,396            $      5,142            $      6,228            $      5,061
Equity in earnings of
 50% owned investees                       --            $        711                      --            $        322
Net income                       $      1,120            $      1,120            $        801            $        801
Primary earning per
 share                           $       0.19            $       0.19            $       0.14            $       0.14
Diluted earnings per
 share                           $       0.19            $       0.19            $       0.14            $       0.14
</TABLE>

<TABLE>
<CAPTION>
                                 Six Months Ended                                Six Months Ended
                                 December 31, 2001                               December 31, 2000
                                 ------------------------------------            ------------------------------------
                                 As                                              As
                                 Previously              As                      Previously              As
                                 Reported                Restated                Reported                Restated
                                 ------------            ------------            ------------            ------------
<S>                              <C>                     <C>                     <C>                     <C>
Net sales                        $     54,804            $     38,219            $     43,016            $     35,828
Gross profit                     $     16,147            $     11,787            $     13,514            $     11,215
Equity in earnings of
 50% owned investees
 before income taxes                       --            $      1,317                      --            $        699
Net income                       $      3,077            $      3,077            $      2,225            $      2,225
Primary earning per
 share                           $       0.52            $       0.52            $       0.37            $       0.37
Diluted earnings per
 share                           $       0.51            $       0.51            $       0.37            $       0.37
</TABLE>


                                       8
<PAGE>
Note 3 - INVESTMENT IN 50% OWNED INVESTEES

Combined summarized financial information for Design Trends and PHI is as
follows for the three and six months ended (in thousands):

<TABLE>
<CAPTION>
                                                Three Months Ended
                                                December 31
                                                --------------------------------
                                                2001                  2000
                                                ----------            ----------
<S>                                             <C>                   <C>
Net sales                                       $    7,093            $    4,053
Gross profit                                    $    2,254            $    1,167
Income before income taxes                      $    1,354            $      624
</TABLE>

<TABLE>
<CAPTION>
                                                Six Months Ended
                                                December 31
                                                --------------------------------
                                                2001                  2000
                                                ----------            ----------
<S>                                             <C>                   <C>
Net sales                                       $   16,585            $    7,188
Gross profit                                    $    4,360            $    2,299
Income before income taxes                      $    2,476            $    1,369
</TABLE>


The Company's 50% owned investees operate in the form of partnerships and,
consequently, do not file federal income tax returns. Instead, the Company's
share of their income is reported in the Company's federal tax return.

Note 4 - EARNINGS PER SHARE

The following is a reconciliation of the numerator and denominator used in the
basic and diluted EPS calculations:

<TABLE>
<CAPTION>
                             FOR THE THREE MONTHS ENDED                       FOR THE SIX MONTHS ENDED
                        ------------------------------------            ------------------------------------
                          December                December                December                December
                          31, 2001                31, 2000                31, 2001                31, 2000
                        ------------            ------------            ------------            ------------
                                                (In thousands except per share data)
<S>                     <C>                     <C>                     <C>                     <C>
Basic and
Diluted EPS

Numerator:
Net Income              $      1,120            $        801            $      3,077            $      2,225
                        ------------            ------------            ------------            ------------

Denominator:
Common
Shares
Outstanding                    5,931                   5,903                   5,917                   5,980

Basic EPS               $       0.19            $       0.14            $       0.52            $       0.37
                        ============            ============            ============            ============


Denominator:
Common
Shares
Outstanding                    5,931                   5,903                   5,917                   5,980
Options                           58                      13                      65                       6
                        ------------            ------------            ------------            ------------
Total Shares                   5,989                   5,916                   5,982                   5,986
                        ============            ============            ============            ============

Diluted EPS             $       0.19            $       0.14            $       0.51            $       0.37
                        ============            ============            ============            ============
</TABLE>


Note 5 - DERIVATIVE FINANCIAL INSTRUMENT

The Company records all derivative instruments on the balance sheet at fair
value. Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, depending
on the type of hedge transaction. For fair-value hedge transactions in which the
Company is hedging changes in an asset's, liability's, or firm commitment's fair
value, changes in the fair value of the derivative instrument will generally be
offset in the income statement by changes in the hedged item's fair value. For
cash-


                                       9
<PAGE>
flow hedge transactions in which the Company is hedging the variability of cash
flows related to a variable-rate asset, liability, or a forecasted transaction,
changes in the fair value of the derivative instrument will be reported in other
comprehensive income. The gains and losses on the derivative instrument that are
reported in other comprehensive income will be reclassified as earnings in the
periods in which earnings are impacted by the variability of the cash flows of
the hedged item. The ineffective portion of all hedges will be recognized in
current-period earnings.

During the first quarter of fiscal 2000, the Company entered into an interest
rate swap agreement, with a maturity of December 29, 2003, to manage its
exposure to interest rate movements by effectively converting its long-term
facility debt from fixed to variable rates. The swap was designated as a fair
value hedge. In November 2001, the Company and its counterparty agreed to
terminate the swap agreement prior to its scheduled maturity. In return for the
early termination of the interest rate swap, the Company received $61,500 in
cash. Accordingly, the fair value of the swap agreement was offset and the
adjustment to the fair value of the related debt will be amortized over the
remaining term of the long-term debt facility. Total amortization for the second
quarter of fiscal 2002 totaled approximately $1,300. The unamortized balance of
the adjustment to the fair value of the related debt totaled $60,200 at December
31, 2001.

Note 6 - SEGMENT INFORMATION

The Company has two reportable segments, Craftmade and Trade Source
International, Inc. ("TSI"). The Company is organized on a combination of
product type and customer base. The Craftmade segment primarily derives its
revenue from home furnishings including ceiling fans, light kits, bathstrip
lighting and lamps offered primarily through lighting showrooms, certain major
retail chains and catalog houses. The TSI segment derives its revenue from
outdoor lighting, portable lamps, indoor lighting and fan accessories marketed
solely to mass merchandisers.

The accounting policies of the segments are the same as those described in Note
2 - Summary of Significant Accounting Policies to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 2001, as amended. The Company
evaluates the performance of its segments and allocated resources to them based
on their operating profit and loss and cash flows.

The following table presents information about the reportable segments (in
thousands):

<TABLE>
<CAPTION>
                                             Craftmade                TSI                   Total
                                             ----------            ----------             ----------
<S>                                          <C>                   <C>                    <C>
For the three months ended
December 31, 2001 Restated:

Net sales from external customers            $   11,549            $    4,403             $   15,952
Operating profit                                  1,656                  (388)                 1,268

For the three months ended
December 31, 2000 Restated:

Net sales from external customers            $   11,113            $    3,843             $   14,956
Operating profit                                  1,487                   (20)                 1,467

For the six months ended
December 31, 2001 Restated:

Net sales from external customers            $   24,976            $   13,243             $   38,219
Operating profit                                  3,709                   312                  4,021
                .
For the six months ended
December 31, 2000 Restated:

Net sales from external customers            $   23,964            $   11,864             $   35,828
Operating profit                                  3,346                   515                  3,861
</TABLE>


Note 7 - GOODWILL AND OTHER INTANGIBLE ASSETS

Effective July 1, 2001, the Company adopted Statement on Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). SFAS 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach. Amortization of goodwill and intangible assets with
indefinite lives, including such assets recorded in past business combinations,
ceased upon adoption. Thus, no amortization was recognized in the accompanying
consolidated statements of income for the three and six months ended December
31, 2001 compared to $105,000 and $210,000 for the same periods of the prior
year, respectively. On an annual basis, and when there is reason to suspect that
their values have been diminished or impaired, these assets must be tested for
impairment, and a write-down may be necessary. SFAS 142 allows up to six months
from the date of adoption to complete the initial goodwill impairment test. The
Company does not believe its goodwill is impaired at December 31, 2001.


                                       10
<PAGE>
ITEM 2      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS (RESTATED).

Cautionary Statement

With the exception of historical information, the matters discussed in this
document contain forward-looking statements. There are certain important factors
which could cause results to differ materially from those anticipated by these
forward-looking statements. Some of the important factors which would cause
actual results to differ materially from those in the forward-looking statements
include, among other things, the success of Design Trends' portable lamp
program, the relationship of Design Trends with its primary mass merchandiser
customer, changes in anticipated levels of sales, whether due to future national
or regional economic and competitive conditions, changes in relationships with
customers, TSI's dependence on select mass merchandisers, customer acceptance of
existing and new products, pricing pressures due to excess capacity, cost
increases, changes in tax or interest rates, unfavorable economic and political
developments in Asia, the location of the Company's primary vendors, declining
conditions in the home construction industry, inability to realize deferred tax
assets, and other uncertainties, all of which are difficult to predict and many
of which are beyond the control of the Company.

Results of Operations

Three Months Ended December 31, 2001 Compared to Three Months Ended December 31,
2000.

Net Sales. Net sales for the Company increased $996,000, or 6.7%, to $15,952,000
for the three month period ended December 31, 2001 from $14,956,000 for the same
three month period last year. Net sales from the Craftmade division increased
$436,000, or 3.9%, to $11,549,000 for the three months ended December 31, 2001
from $11,113,000 for the same three month period last year. The increase in
sales of the Craftmade division was partially due to an increase in Craftmade's
sales of outdoor lighting which generated incremental revenue of $250,000
compared to the prior year period. In addition, Craftmade's ceiling fan sales
increased 2.5% compared to the same period of the previous year. Net sales of
the TSI division increased $560,000 or 14.6%, to $4,403,000 for the three months
ended December 31, 2001 from $3,843,000 for the same three month period last
year. The increase was primarily attributable to an increase in direct shipment
sales to a mass retail customer.

Gross Profit. Gross profit of the Company as a percentage of sales decreased to
32.2% of net sales for the three months ended December 31, 2001, compared to
33.8% for the same period of 2000. The gross margin of the Craftmade division
increased to 39.7% of sales from 37.9% of sales in the year ago period. The
improvement in the gross


                                       11
<PAGE>
margin of the Craftmade division was due primarily to a series of price
concessions the Company negotiated with its ceiling fan vendor, which have, in
part, been passed on to customers. The improvement in the exchange rate of the
U.S. dollar relative to the Taiwanese dollar also had a favorable impact on the
gross margin of the showroom division. This improvement was partially offset by
an inventory write down of certain bathstrip and outdoor lighting products in
the amount of $200,000, or $0.02 per share, net of taxes. The gross margin of
the TSI division declined to 12.8% of sales for the three months ended December
31, 2001 compared to 22.0% of sales in the year ago period. The decline in the
gross margin was primarily related to an inventory write down of certain outdoor
lighting products of $300,000 or $0.03 per share net of taxes.

Selling, General and Administrative Expenses. Total selling, general and
administrative ("SG&A") expenses of the Company increased $368,000 to $3,740,000
or 23.4% of net sales for the three months ended December 31, 2001 from
$3,372,000 or 22.5% of net sales for the same three month period last year.
Total SG&A expenses of the Craftmade division increased $182,000 to $2,814,000
or 24.4% of sales compared to $2,632,000 or 23.7% of sales for the same period
in the previous period. The increase in SG&A expenses of the Craftmade division
was primarily related to increased payroll costs associated with the
implementation of the Company's logistics and accounting systems upgrade. Total
SG&A expenses of the TSI division increased $186,000 to $926,000 or 21.0% of
sales compared to $740,000 or 19.3% of sales for the same period in the previous
year. The increase in TSI's SG&A expenses as a percentage of sales resulted from
an increase in payroll related SG&A expenses.

Interest Expense. Net interest expense of the Company decreased $210,000 to
$234,000 for the three months ended December 31, 2001 from $444,000 for the same
three-month period last year. This improvement was primarily the result of a
decrease in the outstanding balance of the Company's revolving lines of credit,
combined with lower interest rates in effect during the period.

Equity in Earnings of 50% Owned Investees Before Income Taxes. Income from
investees, representing the Company's 50% ownership of PHI and Design Trends,
increased $389,000 to $711,000 from $322,000 for the three months ended December
31, 2001 and 2000, respectively. The increase in income from these investees was
due to an increase in sales of Design Trends portable lamp program which
generated $3,512,000 in incremental revenue during the period.


                                       12
<PAGE>
Provision For Income Taxes. The provision for income taxes increased to $625,000
or 35.8% of net income before taxes for the three months ended December 31,
2001, from $544,000 or 40.4% for the same period of the prior year. The decrease
in the effective rate relates to a decrease in non-deductible expenses,
primarily amortization of goodwill, as a percentage of pretax income.

Six Months Ended December 31, 2001 Compared to Six Months Ended December 31,
2000

Net Sales. Net sales for the Company increased $2,391,000, or 6.7%, to
$38,219,000 for the six month period ended December 31, 2001 from $35,828,000
for the same six month period last year. Net sales of the Craftmade division
increased $1,012,000, or 4.2%, to $24,976,000 for the six months ended December
31, 2001 from $23,964,000 for the same six month period last year. The increase
in sales of the Craftmade division was partially due to an increase in sales of
outdoor lighting which generated incremental revenue of $546,000. In addition,
Craftmade's ceiling fan sales increased 2.9% compared to the same period of the
previous year. Net sales of the TSI division increased $1,379,000, or 11.6%, to
$13,243,000 for the six months ended December 31, 2001 from $11,864,000 for the
same six month period last year. The increase in sales of TSI was primarily
attributable to direct import sales of promotional items to a mass retail
customer.

Gross Profit. Gross profit of the Company as a percentage of sales decreased to
30.8% of net sales for the six months ended December 31, 2001 compared to 31.3%
for the same period of 2000. The gross margin of the Craftmade division
increased to 38.4% of sales from 37.2% of sales in the year ago period. The
improvement in the gross margin of the Craftmade division was due primarily to a
series of price concessions the Company negotiated with its ceiling fan vendor,
which have, in part, been passed on to customers. The improvement in the
exchange rate of the U.S. dollar relative to the Taiwanese dollar also had a
favorable impact on the gross margin of the showroom division. This improvement
was partially offset by an inventory write down of certain bathstrip and outdoor
lighting products in the amount of $200,000, or $0.02 per share, net of taxes.
The gross margin of the TSI division declined to 16.5% of sales for the six
months ended December 31, 2001 compared to 19.3% of sales in the year ago
period. The decline in the gross margin of TSI was related to an inventory write
down that occurred in the three month period ended December 31, 2001, as
previously discussed.

Selling, General and Administrative Expenses. Total SG&A expenses of the Company
increased $590,000 to $7,499,000 or 19.6% of net sales for the six months ended
December 31, 2001 from $6,909,000 or 19.3% of net sales for the same six month
period last year. Total SG&A expenses of the Craftmade division increased
$290,000 to


                                       13
<PAGE>
$5,672,000 or 22.7% of sales compared to $5,382,000 or 22.5% of sales for the
same period in the previous period. The increase in SG&A expense dollars of
Craftmade is primarily attributable to increases in commissions and certain
other costs directly correlated to the sales increase experienced by Craftmade.
Total SG&A expenses of the TSI division increased $300,000 to $1,827,000 or
13.8% of sales from $1,527,000 or 12.9% of sales for the same period in the
previous year. The increase in TSI's SG&A expenses as a percentage of sales was
primarily due to an increase in payroll related SG&A costs.

Interest Expense. Net interest expense of the Company decreased $423,000 to
$547,000 for the six months ended December 31, 2001 from $970,000 for the same
three month period last year. This improvement was primarily the result of a
decrease in the outstanding balance of the Company's revolving lines of credit,
combined with lower interest rates in effect during the period. Equity in
Earnings of 50% Owned Investees Before Income Taxes. Income from investees,
representing the Company's 50% ownership of PHI and Design Trends, increased
$618,000 to $1,317,000 from $699,000 for the six months ended December 31, 2001
and 2000, respectively. The increase in income from these investees was due to
an increase in sales of Design Trends portable lamp program which generated
$10,462,000 in incremental revenue during the period.

Provision for Income Taxes. The provision for income taxes increased to
$1,714,000 or 35.8% of net income before taxes for the six months ended December
31, 2001, from $1,365,000 or 38.0% for the same period of the prior year. The
decrease in the effective rate relates to a decrease in non-deductible expenses,
primarily amortization of goodwill, as a percentage of pretax income.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash increased $1,226,000 from $723,000 at June 30, 2001 to
$1,949,000 at December 31, 2001. The Company's operating activities provided
cash of $10,030,000 primarily attributable to the Company's net income from
operations, collections on customer accounts and reduced inventory levels.

The $512,000 of cash used for investing activities related primarily to
expenditures associated with the implementation of the Company's logistics and
accounting systems upgrade.

The $8,292,000 of cash used for financing activities was primarily the result of
(i) principal payments of $1,052,000 on the Company's note payable,(ii) cash
dividends of $832,000, and (iii) principal payments of $6,800,000 on the
Company's line of credit. These amounts were partially offset by proceeds of
$392,000 received from stock options exercised.


                                       14
<PAGE>
On November 6, 2001, the Company entered into a Credit Agreement with The Frost
National Bank ("Frost"), pursuant to which Frost agreed to provide the Company
with a $20,000,000 line of credit. The Credit Agreement with Frost replaced the
Company's existing $20,000,000 line of credit with J.P. Morgan Chase & Co.
("Chase") and Frost. The terms of the Company's new line of credit with Frost
are substantially identical to the Company's preceding line of credit. The
Company chose to obtain its line of credit solely from Frost, rather than a
syndicate of Frost and Chase, because the Company currently maintains its
banking accounts with Frost, and the use of Frost exclusively will permit the
Company to facilitate more rapid payments with respect to the line of credit,
which the Company believes will result in a reduction of interest expense.

At December 31, 2001, subject to continued compliance with certain covenants and
restrictions, the Company had $20,000,000 available on its line of credit, of
which $12,000,000 had been utilized, combined with cash flows from operations,
are adequate to fund the Company's and Design Trends' current operating needs,
make annual payments of approximately $1,200,000 under the note payable, fund
anticipated capital expenditures of approximately $2,000,000, as well as fund
its projected growth over the next twelve months.

At December 31, 2001, $7,504,000 remained outstanding under the twelve year note
payable for the Company's 378,000 square foot operating facility. The Company's
management believes that this facility will be sufficient for its purposes for
the foreseeable future.

With respect to the Company's 50%-owned investees, PHI had $3,000,000 available
on its line of credit at December 31, 2001, of which $1,530,000 had been
utilized. Design Trends utilizes the Company's line of credit described above.
In addition, in order to satisfy anticipated demand for the portable lamp
program, Design Trend maintains an inventory of approximately $3.1 million as
December 31, 2001. Currently, this program is primarily with one mass
merchandiser customer. Should the terms of the program with this particular mass
merchandiser be at a level less than originally anticipated, Design Trends would
be required to find other customers for this inventory. There can be no
assurances that the alternative sources would generate similar sales levels and
profit margins as anticipated with the current customer.

ITEM 3      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
            MARKET RISK (RESTATED).

The information set forth below constitutes a "forward looking statement." See
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Cautionary Statement.


                                       15
<PAGE>
As a result of the terms of the Company's note payable on its operating
facility, the Company is subject to market risk associated with adverse changes
in interest rates. In an effort to reduce this market risk, the Company entered
into an interest rate swap agreement (the "Swap Agreement") with Chase during
the first quarter of fiscal 2000, which was held by the Company for non-trading
purposes.

In November 2001, the Company transferred its line of credit from Chase to
Frost. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources." In connection with
this transfer, the Company and Chase agreed to terminate the Swap Agreement, and
Chase paid the Company $61,500 in connection with this termination.

At December 31, 2001, the Company had a $20,000,000 line of credit (the
"Craftmade Line of Credit") with Frost at an interest rate of prime less .5%, of
which $12,000,000 was outstanding. At December 31, 2001 the prime rate was equal
to 4.75%. The Craftmade Line of Credit is due on demand; however, if no demand
is made, it is scheduled to mature October 31, 2003.

In addition, at December 31, 2001, PHI had a $3,000,000 line of credit (the "PHI
Line of Credit") with Wachovia Bank, N.A. at an interest rate of the one-month
LIBOR plus 2%, of which $1,530,000 was outstanding. At December 31, 2001 the
one-month LIBOR rate was equal to 1.87%. The PHI Line of Credit is due on
demand; however, if no demand is made, it is scheduled to mature March 2, 2002.

Because of the short-term nature of each of the Craftmade Line of Credit and the
PHI Line of Credit, the Company is subject to market risk associated adverse
changes in interest rates. A sharp rise in interest rates could materially
adversely affect the financial condition and results of operations of the
Company. The Company has not entered into any instruments to minimize this
market risk of adverse changes in interest rates because the Company believes
the cost associated with such instruments would outweigh the benefits that would
be obtained from utilizing such instruments.

Under the Craftmade Line of Credit, for each one percentage point (1%)
incremental increase in the prime rate, the Company's annualized net interest
expense would increase by approximately $120,000. Consequently, an increase in
the prime rate of five percentage points (5%) would result in an estimated
annualized increase of interest expense for the Company of approximately
$600,000.

Under the PHI Line of Credit, for each one percentage point (1%) incremental
increase in LIBOR, the Company's annualized net interest expense would increase
by approximately $15,000. Consequently, an increase in LIBOR of five percentage
points (5%) would result in an estimated annualized increase of interest


                                       16
<PAGE>
expense for the Company of approximately $75,000.

The Company currently purchases a substantial amount of ceiling fans and other
products of its Craftmade division from Fanthing, a Taiwanese company. The
Company's verbal understanding with Fanthing provides that all transactions are
to be denominated in U.S. dollars; however, the understanding further provides
that, in the event that the value of the U.S. dollar appreciates or depreciates
against the Taiwanese dollar by one Taiwanese dollar or more, Fanthing's prices
will be accordingly adjusted by 2.5%. As of February 13, 2002, one U.S. dollar
equaled 35.04 Taiwanese dollars. A sharp appreciation of the Taiwanese dollar
relative to the U.S. dollar could materially adversely affect the financial
condition and results of operations of the Company. The Company has not entered
into any instruments to minimize this market risk of adverse changes in currency
rates because the Company believes the cost associated with such instruments
would outweigh the benefits that would be obtained from utilizing such
instruments. All other purchases of the Company from foreign vendors are
denominated in U.S. dollars and are not subject to adjustment provisions with
respect to foreign currency fluctuations. As a result, the Company does not
believe that it is subject to any material foreign currency exchange risk with
respect to such purchases.

During the fiscal quarter ended December 31, 2001, the Company purchased
approximately $4,679,000 of products from Fanthing. Under the Company's
understanding with Fanthing, each $1 incremental appreciation of the Taiwanese
dollar would result in an estimated annualized net increase in cost of good sold
of approximately $468,000, based on the Company's purchases during the fiscal
quarter ended December 31, 2001 (on an annualized basis). A $5 incremental
appreciation of the Taiwanese dollar would result in an estimated annualized
increase in cost of goods sold of approximately $2,340,000, based on the
Company's purchases during the fiscal quarter ended December 31, 2001 (on an
annualized basis). A $10 incremental appreciation of the Taiwanese dollar would
result in an increase of approximately $4,680,000 on an annualized basis, based
on the Company's purchases during the fiscal quarter ended December 31, 2001 (on
an annualized basis). These amounts are estimates of the financial impact of an
appreciation of the Taiwanese dollar relative to the U.S. dollar and are based
on annualizations of the Company's purchases from Fanthing for the fiscal
quarter ended December 31, 2001. Consequently, these amounts are not necessarily
indicative of the effect of such changes with respect to an entire year.


                                       17
<PAGE>
                                   SIGNATURES

      Pursuant to the requirements 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.

                                    CRAFTMADE INTERNATIONAL, INC.
                                            (Registrant)



Date September 26, 2002             /s/  James R. Ridings
    ---------------------------     ------------------------------
                                           JAMES R. RIDINGS
                                          President and Chief
                                           Executive Officer

Date September 26, 2002             /s/  Kathleen B. Oher
    -----------------------         ------------------------------
                                           KATHLEEN B. OHER
                                         Chief Financial Officer


                                       18
<PAGE>
                                 Certifications
                             Pursuant to Section 302
                        of the Sarbanes-Oxley Act of 2002

I, James R. Ridings, certify that:

1.    I have reviewed this quarterly report on Form 10-Q/A of Craftmade
      International, Inc.;

2.    Based on my knowledge, this quarterly 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 quarterly report; and

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly 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
      quarterly report.

Date:  September 26, 2002                          /s/ James R. Ridings
                 ---                            ---------------------------
                                                James R. Ridings
                                                President and
                                                Chief Executive Officer

I, Kathleen B. Oher, certify that:

1.    I have reviewed this quarterly report on Form 10-Q/A of Craftmade
      International, Inc.;

2.    Based on my knowledge, this quarterly 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 quarterly report; and

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly 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
      quarterly report.

Date:  September 26, 2002                          /s/ Kathleen B. Oher
                 ---                            -------------------------
                                                Kathleen B. Oher
                                                Chief Financial Officer


                                       19