OMB APPROVAL

OMB Number: 3235-0416

Expires: January 31, 2007

Estimated average burden

hours per response    135.00





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB



[X]

QUARTERLY  REPORT  UNDER  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the Quarterly period ended February 28, 2005



[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT



For the transition period from ___________  to  _____________





ELGRANDE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)





|Nevada                                         | 000-25335                 | 88-0409024                       
|---------------------------------------------- | ------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation) | (Commission File  Number) | (IRS Employer Identification No.)



|1450 Kootenay Street, Vancouver, B.C. Canada |  | V5K 4R1   
|-------------------------------------------- |  | ----------
|(Address of principal executive offices)     |  | (Zip Code)



(604) 689-0808

(Issuer's telephone number)



Check whether the registrant  (1) has filed all  documents and reports required to be filed by Sections 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 filings for the past 90 days.   YES  (X)     NO   ( )



The number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:



Class

April 12, 2005

Common stock, $ 0.001 par value

17,301,621



Transitional Small Business Disclosure format (check one):  Yes [ ]  No [X]





SEC 2334 (3-03)

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form \

displays a currently valid OMB control number.



1





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



TABLE OF CONTENTS





Page



PART  I.

FINANCIAL INFORMATION

3



ITEM  I -

Unaudited Consolidated Financial Statements





Consolidated Balance Sheets as of



February 28, 2005 (Unaudited) and May 31, 2004

3





Consolidated Statements of Operations



for the Nine Months ended February 28, 2005 and 2004 (Unaudited)

4





Consolidated Statements of Cash Flows



for the Nine Months ended February 28, 2005



and 2004 (Unaudited)

5





Condensed Notes to Consolidated Interim Financial Statements

6



ITEM  2

Management's Discussion and Analysis of Financial Condition and

Results of Operations

10



ITEM 3

Controls and Procedures

14



PART II.

OTHER INFORMATION

15



Signatures

16



Certifications





























2





---



ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



PART I.  FINANCIAL INFORMATION



ITEM 1 - FINANCIAL STATEMENTS



|ELGRANDE INTERNATIONAL, INC.                
|--------------------------------------------
|CONSOLIDATED BALANCE SHEETS                 
|                                            
|                                            
|                                            
|ASSETS                                      
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            



See accompanying condensed notes.



3





---





|ELGRANDE INTERNATIONAL, INC.                                
|------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|R E V E N U E S                                             
|COST OF REVENUES                                            
|GROSS PROFIT (LOSS)                                         
|                                                            
|E X P E N S E S                                             
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|LOSS FROM OPERATIONS                                        
|                                                            
|OTHER INCOME (EXPENSE)                                      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|OTHER COMPREHENSIVE INCOME                                  
|                                                            
|                                                            
|COMPREHENSIVE LOSS                                          
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            
|                                                            



See accompanying condensed notes.



4





---





|ELGRANDE INTERNATIONAL, INC.                
|--------------------------------------------
|CONSOLIDATED STATEMENT OF CASH FLOWS        
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Cash flows from operating activities:       
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Cash flows from investing activities:       
|                                            
|                                            
|                                            
|                                            
|Cash flows from financing activities:       
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Net increase (decrease) in cash             
|                                            
|                                            
|                                            
|Cash, beginning of period                   
|                                            
|Cash, end of period                         
|                                            
|SUPPLEMENTAL DISCLOSURES:                   
|                                            
|                                            
|                                            
|                                            
|NON-CASH INVESTING AND FINANCING ACTIVITIES:
|                                            
|                                            
|                                            



See accompanying condensed notes.





5





---





ELGRANDE.COM, INC.

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2005



The financial statements have been prepared in accordance with generally accepted accounting principles for the interim financial information with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of only normal accruals) considered necessary for a fair presentation have been included.



For further information refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended May 31, 2004.



The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has suffered material recurring losses from operations since inception. At February 28, 2005 the Company has a working capital deficit of approximately $1,383,573, an accumulated deficit of $10,325,444 and negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.



Continuation of the Company is dependent on achieving sufficiently profitable operations and obtaining additional financing. Management has and is continuing to raise additional capital from various sources. The Company has developed a wholesale division which sources unique home décor items from Europe for distribution in North America. There can be no assurances that the Company will be successful in raising additional capital. The financial statements do not include any adjustment relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Revenue and Cost Recognition

The Company recognized revenue for product sales when the products are shipped and title passes to customers. Cost of sales consists of the purchase price of products sold, inbound and outbound shipping charges and packaging supplies.



Accounts Receivable

The Company carries its accounts receivable at cost. The Company has not carried accounts receivable in the past and is in the process of developing a policy for recognizing doubtful accounts.  The Company's policy is to accrue interest on trade receivables 30 days after Invoice date.  A receivable is considered past due if the Company does not receive payment within 30 days.



Inventories

Inventory at February 28, 2005 consists of a variety of home-décor products.  Inventories are recorded using the specific identification method and valued at the lower of cost or market value. Inventory consisting of manufactured products are recorded using the first in first out method and valued at the lower of cost or market value.





6





---





ELGRANDE.COM, INC.

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2005



Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153.  This statement addresses the measurement of exchanges of nonmonetary assets.  The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.  The guidance in that opinion, however, included certain exceptions to that principle.  This statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.  This statement is effective for financial statements for fiscal years beginning after June 15, 2005.  Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.



In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, which amends FASB statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions.  This statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions.  The accounting for those operations and costs is subject to the guidance in SOP 04-2.  This statement is effective for financial statements for fiscal years beginning after June 15, 2005.  Management believes the adoption of this statement will have no impact on the financial statements of the Company.



In December 2004, the Financial Accounting Standards Board issued a revision to Statement of Financial Accounting Standards No. 123R, Accounting for Stock Based Compensation.  This statement supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance.  This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments.  This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  This statement does not change the accounting guidance for share based payment transactions with parties other than employees provided in Statement of Financial Accounting Standards No. 123.  This statement does not address the accounting for employee share ownership plans, which are subject to AICPA Statement of Position 93-6, Employers Accounting for Employee Stock Ownership Plans. Management believes the adoption of this statement will have no impact on the financial statements of the Company. The Company previously adopted Statement of Financial Accounting Standard No. 123.







7





---





ELGRANDE.COM, INC.

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2005



In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 151, Inventory Costs an amendment of ARB No. 43, Chapter 4. This statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that . . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . . This statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of so abnormal. In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this statement will have any immediate material impact on the Company.



In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (hereinafter SFAS No. 150). Statement of Financial Accounting Standards No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those instruments were classified as equity. Statement of Financial Accounting Standards No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. Management does not believe the adoption of this statement will have any immediate material impact on the Company.



NOTE 2 - COMMON STOCK AND WARRANTS



During the three months ended February 28, 2005, the Company issued 150,414 shares of common stock for services and debt valued at $12,978.  All stock was issued at its fair market value at the date of grant.



In August 2003 the Company effected a 10 for 1 reverse split of the company's capital stock. As result of the reverse split, the Company's authorized common stock decreased from 200,000,000 to 20,000,000 shares. Capital restructuring was a necessary step in order to enable the Company to raise additional funding to support and grow the business.



In December 2004, the Company amended its articles to increase its authorized share capital from 20,000,000 shares to 500,000,000 shares.



NOTE 3 - STOCK OPTIONS



During the fiscal year ended May 31, 2003 the Company's board of directors approved the Elgrande.com, Inc. 2003 Stock Options Plan. The Company may issue up to 5,000,000 common stock options with a share price of $0.10.



During the three months ended November 30, 2004, the Company did not issue any stock options from this plan.



8





---





ELGRANDE.COM, INC.

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FEBRUARY 28, 2005



The following is a summary of stock option activity:



|                                                         | Number of Weighted Average Shares | Exercise Price
|-------------------------------------------------------- | --------------------------------- | --------------
|Outstanding at June 1, 2002                              | 3,655,000                         | $ 0.61        
|Outstanding at May 31, 2003                              | 3,655,000                         | $ 0.61        
|Options exercisable at May 31, 2003                      | 3,640,000                         | $ 0.61        
|Outstanding June 1, 2003                                 | 3,640,000                         | $ 0.61        
|Expired                                                  | (1,119,000)                       | $(0.11)       
|Options outstanding at May 31, 2004                      | 2,521,000                         | $ 0.83        
|Options outstanding and exercisable at November 30, 2004 | 2,521,000                         | $ 0.83        



NOTE 4 - NOTES AND DEBENTURES PAYABLE



Short-term Notes

During the three months ended February 28, 2005, the Company's officers loaned the Company $47,234 to fund continuing operations.  During the three months ended February 28, 2005, the Company also received an 8% short-term loan of $250,000 from an individual.



NOTE 5 - INVESTMENT IN EUROPEAN SUBSIDIARY



In the quarter ended August 31, 2002, the Company invested $100,000 in its wholly owned European subsidiary, Elgrande Europe AG, stock of which has a par value of one euro. The subsidiary was created to provide an operating presence in Europe.



At February 28, 2005, there were no sales activity recorded in the European Company. Elgrande Europe AG has been consolidated in these financial statements.



NOTE 6  INVESTMENT IN BISCAYNE BAY TRADING CORPORATION



In the quarter ended November 30, 2003, the Company acquired Biscayne Bay Trading Corporation for 35,000 shares of restricted common stock. Approximately 850,000 shares are held in escrow for future borrowings for debenture agreements.



NOTE 7FORGIVENESS OF DEBT



During the nine months ended February 28, 2005, the Company recorded income of $40,896 from the Companys vendors forgiving old accounts payable.  In accordance with Financial Accounting Standards Board No. 145, this gain is included in other income in the Companys statement of operations.





9





---



ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



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



Cautionary Statement Regarding Forward-Looking Statements



This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: "believe", "expect", "estimate", "anticipate", "intend", "project" and similar expressions or words which, by their nature, refer to future events.



In some cases, you can also identify forward-looking statements by terminology such as "may", "will", "should", "plans", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements  are only predictions and involve known and unknown  risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.



Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.



THE COMPANY



Elgrande International specializes in sourcing, importing, marketing and distributing unique European-designed quality products in the medium to high-end tabletop market. Our products are exclusively produced for the North American home décor, giftware and artware sectors. In November 2002 we launched our wholesale division, European Sources Direct (ESD). Since then, we have established wholesale sales representation across the key U.S. and Canadian regional giftware and home décor wholesale centers. We have secured certain exclusive corporate and wholesale distribution rights for products within the USA, Canada and Mexico. Our North American sales and distribution infrastructure currently services approximately 650 customers with over 1,100 retail locations that include independent retailers and national key accounts.



RESULTS OF OPERATIONS



Comparison of the nine months ended February 28, 2005 and February 29, 2004.



For the nine months ended February 28, 2005, we had revenues of $811,206 versus $685,558 for the same period ended last year. During these same two nine month periods cost of revenues was $467,779 in 2005 versus $483,107 for the prior year. Gross profit for the nine months ended February 28, 2005 was $343,427 or 43% compared to $202,451 or 30% for the same period ending last year.



10





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



For the quarter ended February 28, 2005, we had revenues of $175,725 and cost of revenues of $129,008 versus revenues of $244,316 and cost of revenues of $185,319 for the same period ending last year. Cost of revenues represents the cost of inventory sold and the corresponding freight-in charges of importing products. Gross profit for the quarter ended February 28, 2005 was $46,717 or 27% of revenue compared to $58,997 or 25% of revenue for the same period ending last year.



Pending sales at the close of the quarter ended February 28, 2005 were $220,144 compared to $123,589 for the quarter ended February 29, 2004. This increase reflects orders written at the spring 2005 trade shows, and our expanded range of existing product lines and the introduction of a new product line.



Revenue accounts for sales of products that have been delivered to customers. Pending sales are orders that have been received but not yet fulfilled for reasons that include: pending arrival of inventory orders, back orders or customer credit issues. The financial statements do not reflect pending sales as per GAAP.



Management is endeavoring to improve our operations. By improving inventory management, shipping logistics and product handling, we believe that we can increase efficiency and further lower costs of revenues to improve gross profit margins.



CHANGES IN FINANCIAL CONDITION



A summary of expenses for the nine months ended February 28, 2005 compared to the period ended February 29, 2004 is as follows:





2005

2004



--------------

--------------

Consulting

$130,865

$132,144

Selling expense

212,348

297,032

Legal and other

86,834

51,663

Salaries

350,066

378 ,
361

Depreciation and amortization

36,870

75,780

Office and administration

269,929

211,825

Travel and entertainment

13,310

69,154



--------------

-------------



$1,100,222

$1,215,959



========

========



Significant changes in our financial condition that warrant discussion include:



Selling expense

Selling expenses were 40% lower in the period ended February 28, 2005 than in the same period ended 2004 due to our having established our lines and provided sufficient inventory to agency show rooms in the prior period.  We also attended fewer trade shows, limiting ourselves to key shows with guaranteed retailer attendance.  In addition, certain of our expenses were reclassified from Selling Expenses to Office and Administration in the quarter ended February 28, 2005 to properly reflect only sales generating expenses.  Refer to note Office and Administration.



11





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



Legal and other

Professional expenses were 68% higher in the period ended February 28, 2005 than in the same period ended last year.  We incurred greater legal and accounting expenses due to increasing reporting requirements.  Also, in December 2004 we held our first annual general meeting which required us to engage in additional legal services.



Depreciation and amortization

Our property and equipment were fully amortized at the start of this fiscal year and accordingly, our depreciation expense had been greatly reduced.



Office and Administration

Prior to the quarter ended February 28, 2005, all non-sales related marketing expenses (catalogs, printing, design, sales agency promotions), public and investor relations expenses were booked through selling expenses.  We have since re-classed these non-sales generating expenses to office and administration. Accordingly, although our office and administration expenses have increased by 28% in the nine months ended February 28, 2005, the increase reflects the addition of marketing and investor relations expenses which total approximately $124,000 or 46% of total office and administration expenses. Selling expenses similarly reflect the reclassification described above.



Travel and Entertainment

In the period ended February 28, 2005, we cut our travel and entertainment costs by about 400% by being selective in the trade shows we attended. We also limited our representation at these trade shows, further cutting back travel costs.



Management is currently investigating other ways to improve its business administration.  This may involve additional investments in information technology to create efficiencies.



LIQUIDITY AND CAPITAL RESOURCES



TRENDS LIKELY TO HAVE A MATERIAL IMPACT ON SHORT & LONG TERM LIQUIDITY AND THE SUCCESS OF THE WHOLESALE LINE



In the previous fiscal year, we established relationships with a network of 16 wholesale marketing agencies and representatives covering the North American market.  In the last fiscal quarter, we added two marketing agencies in Canada.  With exclusive distribution rights with our principal supplier and having established North American sales representation we believe that revenues will continue to grow.  This we believe would position us to be cash flow positive, self-sustaining and ultimately, profitable.



UNCERTAINTIES LIKELY TO HAVE A MATERIAL IMPACT ON SHORT & LONG TERM LIQUIDITY



Uncertainties and/or fluctuations in the marketplace have an impact on Liquidity that cannot be quantified at this time.





12





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



INTERNAL AND EXTERNAL SOURCES OF CAPITAL



We have limited assets to sell in order to create short or long term liquidity.  Therefore we are dependant on a combination of external sources for funding and the developing trend to positive net cash flow to maintain liquidity.



We have no material commitments requiring capital expenditures.  There are no contracts with third parties that require funds.



We anticipate the need to develop sufficient inventory to meet sales demand.  Short term, we will have to rely on external sources for funding to support immediate inventory requirements.  Long-term, inventory build-up is planned to coincide with our ability to generate positive cash flow.  Until such time as we have positive cash flow on a monthly basis, the dependence on external capital will remain.



There are no guarantees that we will be able to raise external capital in sufficient amounts or on terms acceptable to us.  Our ability to demonstrate a consistent trend of positive cash flow and profitable quarters will have a beneficial effect on liquidity.



TRENDS, EVENTS OR UNCERTAINTIES THAT HAVE HAD OR THAT ARE REASONABLY EXPECTED TO HAVE A MATERIAL IMPACT ON NET SALES OR REVENUES OR INCOME FROM CONTINUING OPERATIONS



OPERATING ACTIVITIES



As revenue grows, so does the potential for trends, events and uncertainties to influence future cash flow and revenue.



Our wholesale activity is centered on procuring, importing, marketing and selling international products within the North American wholesale market.  The current principal country of supply is Germany, with which we have negotiated exclusivity of product supply and currency rate.  This will secure us a level of uniqueness of products in the marketplace and a reduction of exposure to foreign currency fluctuations between the Euro and US dollars.



Until such time we are able to diversify our source of supply and range of product, interruptions in supply from manufacturers may have a negative impact on operations, as would any major reduction in consumer demand.



Our principal product line is subject to two buying seasons.  A Spring/Summer season, which has buying  in the period late January through late April of each year, and a Fall/Winter season which has buying in the period late June through late October.  There are order lulls in the periods between the two buying seasons, specifically November through January and May through June.  The seasonality of the industry therefore has a material effect on the financial condition or results of operations.





13





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



We generated negative cash flow from operating activities for the period from inception (April 8, 1998) through February 28, 2005.  We realized negative cash flow of $956,887 from operating activities for the nine months ending February 28, 2005 compared to negative cash flow of $717,855 from operating activities for the nine months ending February 28, 2004.



INVESTING ACTIVITIES



Investing activities for the period from inception through February 28, 2005 consisted primarily of the purchase of inventory and soft costs associated with the development of our wholesale activities.



FINANCING ACTIVITIES



Since inception, we financed operations through proceeds from the issuance of equity and debt securities and loans from shareholders and others.  To date, we raised approximately $7 million from the sale of common stock and have borrowed approximately $2.5 million from investors and shareholders.  Funds from these sources have been used as working capital to fund our wholesale activity.



During the quarter ending August 31, 2003, we underwent capital restructuring.  Since then we have been engaged in a turnaround process that entailed shifting the business focus to importing and wholesale distribution in the giftware and home decor sector. This transition has been extremely successful as evidenced by our increasing sales and revenue.  Our Board and management have been focused on carefully examining ways and means of continuing to move ahead. This process included speaking with key suppliers, large customers and potential funding sources.  By August 2003, it had become clear that capital restructuring  was  a necessary  step  to  allow  the  expansion  of  its product base, to sign large customers, to improve its due diligence profile with  key account customers and suppliers, and to conclude negotiations for the funding  necessary  to  support and grow the business. Upon reviewing these facts and on the advice of counsel, the Board decided that it was in our long-term best interest and the best interests of our shareholders to effectuate a change in our capital structure, and thereby provide us with a more stable base to build upon. In August 2003 we effected a 10 for 1 reverse split of our common stock.



Our financing activities for the nine months ended February 28, 2005 provided a net total of $916,709.  Cash at the end of the period was $31,708.





14





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005



ITEM 3. CONTROLS AND PROCEDURES.



QUARTERLY EVALUATION OF THE COMPANY'S DISCLOSURE CONTROLS AND INTERNAL CONTROLS.



As of the close of the period covered by this Quarterly Report on Form 10-QSB, the Company evaluated the effectiveness of the design and operation of its "disclosure controls and procedures" (Disclosure Controls), and its "internal controls and procedures for financial reporting" (Internal Controls).  This evaluation (the Controls Evaluation) was done under the supervision and with the participation of management, including our Chief Executive Officer (CEO). Rules adopted by the SEC require that in this section of the Quarterly Report we present the conclusions of the CEO about the effectiveness of our Disclosure Controls and Internal Controls based on and as of the date of the Controls Evaluation. Based upon that evaluation,  the Chief Executive Officer and Principal Financial and  Accounting  Officer  concluded that the Company's  disclosure  controls and procedures  are  effective  in  timely  alerting  them to  material  information relating to the Company required to be included in this Quarterly  Report on Form 10-QSB.  There have been no changes in the  Company's  internal  controls  or in other  factors  which could significantly  affect  internal  controls  subsequent  to the date  the  Company carried out its evaluation.



CEO CERTIFICATIONS.



Appearing immediately following the Signatures section of this Quarterly Report there are two separate forms of "Certifications" of the CEO.
  The first form of Certification is required in accord with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certification).  This section of the Quarterly Report which you are currently reading is the information concerning the Controls Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.



DISCLOSURE CONTROLS AND INTERNAL CONTROLS.



Disclosure Controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (Exchange Act), such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified.





15





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005





PART II.
  OTHER INFORMATION
..



ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



(a)  The following provides information of all sales of our securities in the quarter ended February 28, 2005 which were not registered under the Securities Act of 1933 (the "Act"):



|Date     | Title and Amount              | Purchasers | Principal
Underwriter | Total Offering
Price/Underwriting
Discounts
|-------- | ----------------------------- | ---------- | --------------------- | -------------------------------------------
|Jan 2005 | 27,935 shares of common stock | Employee   | NA                    | Services valued at $1,955/NA               



(b)  Not applicable.

(c)  Not applicable.



Item  6.  Exhibits.



No.

Description

--------------------

------------------------------------------------------------------------------------------------

31

Certification of Michael Holloran Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002, filed herewith



32

Certification of Michael F. Holloran Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002, filed herewith





16





---





ELGRANDE INTERNATIONAL, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2005









SIGNATURES





Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.







ELGRANDE INTERNATIONAL, INC.





By: /s/ Michael F. Holloran

-------------------------------------

Michael F. Holloran

President and Chief Executive Officer (Principal

Executive and Financial Officer)



Dated:  April 13, 2005











































17