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, 2007  []      TRANSITION  REPORT  UNDER  SECTION 13 OR 15(d) OF THE EXCHANGE ACT For  the  transition  period  from  ___________  to  _____________  Commission  file  number  000-25335  ELGRANDE INTERNATIONAL, INC. (Exact  name  of  registrant  as  specified  in  its  charter)  Nevada                                       88-0409024 (State  or  other  jurisdiction  of            (IRS Employer Identification No.) incorporation  or  organization)  1450 Kootenay Street, Vancouver, B.C. V5K 4R1 Canada (Address of principal executive offices)  (604) 689-0808 (Issuer's telephone number)   Indicate by check mark 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  [  ]   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  [ ] 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                                      February 28, 2007 -------------------------------                     ----------------------- Common stock, $ 0.001 par value                           116,712,469  Transitional Small Business Disclosure format (check one):  Yes [ ]  No [X]   - 1 -   ELGRANDE INTERNATIONAL, INC. FORM 10-QSB For the Quarterly period ended February 28, 2007  TABLE OF CONTENTS   Page  PART  I.  FINANCIAL  INFORMATION                                          3  ITEM  1 - Unaudited  Consolidated  Financial Statements  Consolidated Balance Sheets as of February 28, 2007 (Unaudited) and May 31, 2006                  3  Consolidated  Statements  of  Operations for  the  Three Months and Six Months ended  February 28, 2007 and  2006  (Unaudited)                                     4  Consolidated  Statements  of  Cash  Flows for  the  Three  Months  and Nine Months ended February 28, 2007 and  2006 (Unaudited)                                           5  Condensed Notes to Consolidated Interim Financial Statements    6  ITEM  2   Management's  Discussion  and  Analysis  of Financial  Condition  and  Results  of  Operations              11 ITEM  3   Controls and Procedures                                         15  PART II.  OTHER  INFORMATION                                              15  Signatures                                                                17   -2-


PART  I.  FINANCIAL  INFORMATION Item 1 - Financial Statements   ELGRANDE INTERNATIONAL, INC.CONSOLIDATED BALANCE SHEETMay 31February 2820062007restatedunaudited(audited)ASSETSCURRENT ASSETSCash$-$32,586Accounts receivable80,16154,334Prepaid expenses5,2212,296Prepaid Inventory41,186Inventory299,737213,314Employee expense advances2,6112,624GST tax refundable3,2763,806TOTAL CURRENT ASSETS391,005350,146PROPERTY & EQUIPMENT, NET2,248OTHER ASSETSHardware and Software, net99,718100,396Deposits46,11132,987Goodwill MCM201,767-TOTAL OTHER ASSETS347,596133,383TOTAL ASSETS$740,850$483,529LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESBank overdraft156Accounts payable436,809275,797Accrued liabilities303,197304,618Debentures224,89392,500Debentures and loans payable, related parties511,668433,775TOTAL CURRENT LIABILITIES1,476,7241,106,690LONG-TERM LIABILITIESAccounts payable128,905130,478Loans payable1,007,429923,921Total Long-Term Liabilities1,136,3341,054,399COMMITMENTS & CONTINGENCIES--STOCKHOLDERS' EQUITYCommon stock, 500,000,000 shares authorized,$0.001 par value, 106,134,691 and 39,512,479 sharesissued and outstanding respectively116,71239,512Additional paid in capital10,309,76410,040,964Retained earnings (accumulated deficit)(12,274,486)(11,747,517)Accumulated other comp income (loss)(24,198)(10,520)TOTAL STOCKHOLDERS' EQUITY(1,872,208)(1,677,561)TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$740,850$483,529  See accompanying condensed notes to the financial statements.  3     ELGRANDE INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSThree Months EndedNine Months EndedFebruary 28,February 28,2007200620072006unauditedunauditedunauditedunauditedREVENUES [Note 1]Smart-Home products and services$135,123$-$135,123$-COST OF REVENUESSmart-Home products and services67,794-67,794-GROSS PROFIT (LOSS)67,328-67,328-EXPENSESConsulting fees6,61353,20019,840Selling expenseCompensationSalaries13,1603,20037,1609,600DepreciationOffice & Admin14,9486,71731,26620,150TOTAL OPERATING EXPENSES28,10716,530121,62549,590GAIN (LOSS) FROM OPERATIONS39,221(16,530)(54,297)(49,590)OTHER INCOME (EXPENSE)Non-Operating Income(3,468)--Amortization of Debenture Discounts(39,893)(46,250)(132,393)(46,250)Interest income173511386Accrued Interest expense(15,014)(15,303)(51,856)(32,433)TOTAL OTHER INCOME (EXPENSE)(58,358)(61,518)(184,136)(78,597)GAIN (LOSS) FROM CONTINUING OPERATIONS(19,137)(78,048)$(238,433)(128,187)GAIN (LOSS) from DISCONTINUED OPERATIONS(43,804)(414,261)(288,563)(779,287)NET (LOSS) INCOME(62,941)(492,309)(526,969)(907,474)OTHER COMPREHENSIVE INCOMEForeign currency translation gain/loss21,4024,53213,6786,499COMPREHENSIVE LOSS$(41,539)$(487,777)$(513,291)$(900,975)BASIC AND DILUTED NET GAIN (LOSS) PER COMMON SHARE$0.000(0.01)(0.008)(0.03)WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARES OUTSTANDING, BASIC AND DILUTED106,134,69134,465,81265,506,63030,301,822  See accompanying condensed notes to the financial statements  4     ELGRANDE INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWNine month ended February 2820072006CASH FLOWS FROM OPERATING ACTIVITIES:unauditedUnauditedNet loss$(526,929)$(907,474)Adjustments to reconcile net lossto net cash used by operating activities:Amortization of debt discount132,39346,250Services paid by issuance of common stock152,00085,709Compensation paid by issuance of common stock-117,600Stock issued for interest expense-86,520Depreciation11,6175,114Accrued Interest26,16370,712Decrease (increase), net of acquisition, in:Accounts receivable29,80357,494Prepaid expenses154(2,205)Prepaid inventory41,186Inventory82,493(33,963)Other assets957Accrued liabilities9,46897,042Accounts payable(68,644)(33,358)Commitments and contingenciesIncrease (decrease), net of acquisition, in:Bank Overdraft156GST tax refundable(2,158)(3,295)Employee advance receivable13(970)Net cash used in operating activities(115,014)(413,867)CASH FLOWS FROM INVESTING ACTIVITIES:Deposits21,711Net cash used in investing activities21,711CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from loans, related party77,89396,671Repayment of loans, related party(22,216)(94,926)Proceeds from loans16,029490,997Net cash provided by financing activities71,706492,742Net increase (decrease)  in cash(18,908)78,875Foreign currency translation gain (loss)(13,678)Cash, beginning of period32,5867,918Cash, end of period$(0)$86,793SUPPLEMENTAL DISCLOSURES:Cash paid for interest6,511NON-CASH INVESTING AND FINANCING ACTIVITIES:Accrued liabilities paid with stock$180,000$400,000Common stock issued for debt and interest$14,000$19,421  See accompanying condensed notes to the financial statements  5   ELGRANDE INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 28, 2007 (Unaudited)  NOTE 1  BASIS OF PRESENTATION  Elgrande International, Inc. (Elgrande or Company), through its wholly owned subsidiary MCM Integrated Technologies, Ltd. [name change to Intelligent Living Corp. (ILC) in process] (www.intelligent-living.us) specializes in designing, supplying, installing, upgrading and servicing home automation and commercial presentation center solutions including: structured wiring, security systems, internet access, lighting and HVAC control, and distributed audio/video systems. The Company offers both wired and wireless technology for single and multi unit new construction and existing buildings, using both traditional component and Windows Media Center/Vista based systems. ILC has been supplying custom IT solutions since 1994 and home automation solutions since 2003. The Company has offices and demonstration suites in Phoenix and Vancouver and is active with single family homes and multi-unit town homes and condominium projects in southwest BC and the greater Phoenix area.  On December 8, 2006 Elgrande acquired all of the outstanding capital stock of ILC for $261,390, which included $180,000 in shares of Elgrande and $81,390 in the form of a note payable. With this acquisition, Elgrande became a leading home automation provider in southwestern BC and the greater Phoenix area.  Prior to the acquisition noted above the Company was engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In July 2006, as a result of a breach of the Companys exclusivity agreement with its principal supplier by its principal supplier and other production related issues the board of directors began an evaluation of alternative business models and opportunities. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations related to the home décor import and distribution business. This process continued through the current quarter and is expected to be substantially completed by the close of the current fiscal year.  Results of operations reported for the current quarter relate to the activities of ILC. Results of operations reported for prior quarters relate to the Companys activities in the home décor sector. The disposal of assets and reduction of liabilities associated with the home décor business are reported as results from discontinued activities.  The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the restated audited financial statements for the period ended May 31, 2006. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.  The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period.  Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.  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, 2007, the Company has a working capital deficit of approximately $1,872,200, an accumulated deficit of approximately $12,274,500 and negative cash flows from consolidated operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.   6   ELGRANDE INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 28, 2007 (Unaudited)  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. 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 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Revenue and Cost Recognition The Company recognizes revenue for product sales and services when products are shipped and title passes to customers and or when services are provided. Cost of sales consists of the purchase price of products sold, inbound and outbound shipping charges, and packaging supplies. Services are provided at billing rates that reflect a mark-up over the cost of labor and supporting infrastructure. Services are billed as progress payments linked to pre-agreed work schedules, on fixed price schedules or as hourly charges.  Accounts Receivable The Company carries its accounts receivable at net realizable value.  The Company is in the process of developing a policy for recognizing doubtful accounts.  A receivable is considered past due if the Company does not receive payment within 30 days.  Inventories Inventory at February 28, 2007 consists of a variety of home-décor products, computer and audio/video hardware and software.  Inventories are recorded using the specific identification method and valued at the lower of cost or market value. Inventory consisting of manufactured products is recorded using the first in first out method and valued at the lower of cost or market value.  Foreign currency translation MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entitys functional currency are translated into the entitys functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized in the statement of income for the period.  On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.  Goodwill Goodwill is calculated as the excess of the fair value of consideration paid over the fair value of tangible and intangible assets acquired and liabilities assumed. Goodwill will be tested for impairment annually according to FAS 142. An impairment test would also be performed in any period in which events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment would be recognized at that time, to the extent that the carrying amount exceeds the undiscounted future net cash flows expected from its use.   7   ELGRANDE INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 28, 2007 (Unaudited)  Impairment of long-lived assets We assess the impairment of goodwill and indefinite life intangibles on an annual basis. The potential impairment of finite life intangibles is assessed whenever events or a change in circumstances indicate the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include the following:  · significant underperformance relative to historical or expected projected future operating results; · significant changes in the manner of our use of the acquired assets or the strategy for our overall business; · significant negative industry or economic trends; · significant decline in our stock price for a sustained period of time; and · our market capitalization relative to net book value.  When we determine that the carrying value of goodwill and indefinite life intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any potential impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model.  Segment Reporting SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, establishes standards for the reporting by business enterprises of information about operating segments, products and services, geographic areas and major customers. The method for determining what information to report is based on the way that management organizes the operating segments within Elgrande for making operational decisions and assessments of financial performance. Elgrandes chief executive officer (CEO) is considered to be the chief operating decision-maker. The CEO reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. Elgrande has determined that it operates in a single operating segment, specifically, marketing home automation products, technology and services. NOTE 3 - COMMON STOCK  During the nine months ended February 28, 2007, the Company issued 33,200,000 shares of common stock for services of $152,000; 30,000,000 shares for the purchase of all of the outstanding shares of MCM Integrated Technologies Ltd.  valued at $180,000, and 14,000,000 shares for conversion of debentures.  NOTE 4 - STOCK OPTIONS  Since 1998 the Company has registered 6 stock option plans entitled the Elgrande.com Inc. 1998 Stock Option Plan, Elgrande.com Inc. 1999 Stock Option Plan, Elgrande.com Inc. 2000 Stock Option Plan, the Elgrande.com Inc. 2003 Stock Option Plan , the Elgrande International, Inc. 2005 Stock Option Plan, the Elgrande International, Inc. 2006 Stock Option Plan and the Elgrande International, Inc. 2007 Stock Option Plan, hereinafter the Plans. Their purpose is to advance the business and development of the Company and its shareholders by enabling employees, officers, directors and independent contractors or consultants of the Company the opportunity to acquire a proprietary interest in the Company from the grant of options to such persons under the Plans' terms. The Plans provide that the Companys board of directors may exercise its discretion in awarding options under the Plans. The Board determines the per share option price for the stock subject to each option.  All options authorized by each plan must be granted within ten years from the effective date of the Plan.  During the years ended May 31, 2004, 2005, and 2006 the Company did not issue any new common stock options. Additionally, no options were exercised, and all options previously granted expired.   8   ELGRANDE INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 28, 2007 (Unaudited)  NOTE 5 - NOTES AND DEBENTURES PAYABLE  Short-term Notes During the nine months ended February 28, 2007, the Companys officers loaned the Company $77,893 to fund continuing operations.  On December 7, 2005, the Company executed a securities purchase agreement with certain accredited investors. Under the agreement, the Company agreed to sell its convertible debentures due three years from the final closing date.  The principal amount of up to $600,000 bearing interest at the rate of 6% per annum and is convertible into shares of the Companys common stock at a conversion price for each share of common stock equal to 75% of the lowest closing bid price per share of the common stock for the fifteen trading days immediately preceding the date of conversion.  For the quarter ended February 28, 2006, the company completed the sale of an aggregate of $555,000 in Debentures under the Purchase Agreement which resulted in net proceeds of $424,850. The difference between the Debenture face value and the proceeds received was for fees in the amount of $130,150. These fees have been recorded as a debt discount and are being amortized over a 3 year period straight line.  The Company also recorded a beneficial conversion feature on the debentures as a discount on the debt in the amount of $424,850. This discount is being amortized over the 36 month term of the debenture.  NOTE 6  ACQUISITION OF MCM INTEGRATED TECHNOLOGIES, LTD  As discussed in Note 1, on December 8, 2006 the Company acquired 100% of the outstanding shares of MCM Integrated Technologies, Ltd. [name change to Intelligent Living Corp. [ILC] in process]. The acquisition was accounted for as a purchase, and, accordingly, the results of operations of ILC have been included in the consolidated financial statements commencing on the date of acquisition. In connection with the acquisition, the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition were as follows:  DescriptionDec 8, 2006Assets:Cash and Deposits$50,962Trade receivables55,630Inventory168,916Property and equipment2,275Other Assets16,365Goodwill201,767Total assets acquired495,915Liabilities:Accounts payable and accrued expenses59,800Revolving credit lines174,725Total liabilities234,525Net assets acquired$261,390Represented by:Common Stock issued at closing$180,000Note payable81,390$261,390   9   ELGRANDE INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS February 28, 2007 (Unaudited)  NOTE 7  DISCONTINUED OPERATIONS  At February 28, 2007, assets and liabilities from discontinued operations consisted of:  DescriptionFebruary 28, 2007Inventory$132,799Accounts receivable remaining from discontinued operations42,138Allowance for doubtful accounts remaining from discontinued operations(32,732)Total assets related to discontinued operations142,205Accounts Payable Trade Long Term93,608Total liabilities related to discontinued operations$93,608  At February 28, the Company believes that the probability of disposing of residual inventory at or above cost and collecting these receivables net of the reserve for doubtful accounts is high. The Company is planning to conclude the disposal of inventory and collection of receivables by the close of the current fiscal year and in any event not later than the close of the first quarter of the coming fiscal year. The noted accounts payable are substantially in dispute and the Company believes they will not be paid in full. However the Company has fully reserved these payables at their full value. As the inventory is disposed, receivables collected, and payables reduced the Company will record a gain (loss) in the period of activity.  The loss from discontinued operations, recorded for the three months ended February 28, 2007, relates to the disposal of inventory and wind down of wholesale activity. During this three month period the company laid off its remaining staff related to the wholesale operation, concluded its lease of office and warehouse space required for the home décor business and eliminated operational overheads related to the maintenance of warehouse and office facilities. The Company sold inventory with a book value of $15,444 for $25,769 and incurred expenses of $54,129 for a net loss of $43,804.   10   ELGRANDE INTERNATIONAL, INC. FORM 10-QSB For the Quarterly period ended February 28, 2007  Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF CONTINUING AND FUTURE PLAN OF OPERATIONS  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.  OVERVIEW  Elgrande International, Inc. (Elgrande or Company), through its wholly owned subsidiary MCM Integrated Technologies, Ltd. [name change to Intelligent Living Corp. (ILC) in process] (www.intelligent-living.us) specializes in designing, supplying, installing, upgrading and servicing home automation and commercial presentation center solutions including: structured wiring, security systems, internet access, lighting and HVAC control, and distributed audio/video systems. The Company offers both wired and wireless technology for single and multi unit new construction and existing buildings, using both traditional component and Windows Media Center/Vista based systems. ILC has been supplying custom IT solutions since 1994 and home automation solutions since 2003. The Company has offices and demonstration suites in Phoenix and Vancouver and is active with single family homes and multi-unit town homes and condominium projects in southwest BC and the greater Phoenix area.  On December 8, 2006 Elgrande acquired all of the outstanding capital stock of ILC for $261,390, which included $180,000 in shares of Elgrande and $81,390 in the form of a note payable. With this acquisition, Elgrande became a leading home automation provider in southwestern BC and the greater Phoenix area.  Prior to the acquisition noted above the Company was engaged in the import and distribution of home décor products for the North American market. This activity was pursued through its wholly owned subsidiary Cardinal Points Trading Corp. In July 2006, as a result of a breach of the Companys exclusivity agreement with its principal supplier by its principal supplier and other production related issues the board of directors began an evaluation of alternative business models and opportunities. In December 2006 the Company discontinued its activity in the home décor sector and began a process to dispose of assets and obligations related to the home décor import and distribution business. This process continued through the current quarter and is expected to be substantially completed by the close of the current fiscal year.  Results of ongoing operations reported for the current quarter relate to the activities of ILC. Results of ongoing operations reported for prior quarters relate to the Companys activities in the home décor sector. The disposal of assets and reduction of liabilities associated with the home décor business are reported as results from discontinued activities.  11    Foreign currency translation MCM Integrated Technologies, Ltd. and Cardinal Points Trading, Corp. use the Canadian Dollar as their functional currency. Transactions denominated in currencies other than the entitys functional currency are translated into the entitys functional currency at the exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized in the statement of income for the period.  On consolidation, the results of operations and cash flows whose functional currency is other than the US dollar are translated into US dollars at the average exchange rate for the period and their assets and liabilities are translated into US dollars at the exchange rate ruling on the balance sheet date. Currency translation differences are recognized within other comprehensive income as a separate component of shareholders equity. In the event that such an operation is sold, the cumulative currency translation differences that are attributable to the operation are reclassified to income.  Transactions with related parties During Q3 2007, the Company purchased MCM Integrated Technologies, Ltd. a company owned by a Director of Elgrande International, Inc. for an aggregate amount of less than $0.3 million. Prior to the acquisition, the board commissioned an independent fairness opinion on the transaction and the transaction was authorized by the board of directors, with the director involved in the transaction abstaining from voting on the approval resolution. It is believed that these transactions represent fair value for the assets and liabilities purchased.  RESULTS OF OPERATIONS  for the three months ended February 28, 2007 and February 28, 2006  For the 3 months ended February 28, 2007, revenues from continuing operations increased to $135,123  compared to zero in the same period ending last year. These revenues are a result of the sale of smart home products and services offered through the Companys subsidiary ILC.   For the 3 months ended February 28, 2007, gross profit increased to $67,328 compared to zero in  the same period in the prior year. Gross margin (gross profit as a percent of revenue) was 50% and above the forecast value of 40%. The increase in gross profit reflects the Companys entry into the smart home sector through the acquisition of ILC.  Operating expenses for the 3 months ending February 28, 2007 were $28,107 versus $16,530 for the same period in the prior year.  The Company recorded an operating profit from continuing operations of $39,221 for the period ending February 28, 2007 compared to a loss on operations of $16,530 for the same period in the prior year.  Total other expenses for the three month period ending February 28, 2007 were $58,358 including accrued amortization expenses of $39,893 for debenture discounts and debenture value net of discounts and conversion, and accrued interest of $15,014 from long term debt. Total other expenses were $61,518 for the comparable period in the prior year.  During the 3 months ended February 28, 2007 the Company incurred expenses associated with its discontinued wholesale business. Expenses include the costs of liquidating inventory, reducing staff and closing office and warehouse space. Expenses were partially offset by a gain on the sale of discontinued inventory. The net loss from discontinued operations was $43,804 compared to a net loss of $414,261 for the comparible period in the prior year. As at the end of February 2007 the Company had approximately $133,000 of home décor inventory remaining for disposal.  The net loss was $62,941, a gain of $21,402 was realized due as a result of foreign currency translation and the resulting comprehensive loss the period ending February 28, 2007 was $41,539 compared to a comprehensive loss of $487,777 for the corresponding period in the prior year. The comprehensive loss decreased 91% compared to the corresponding period in the prior year.   12   LIQUIDITY AND CAPITAL RESOURCES  Liquidity As of February 28, 2007, our principal sources of liquidity included cash and cash equivalents, and operating cash flow from our operating subsidiaries, and loans from related parties.  At February 28, 2007, cash and cash equivalents totaled $46,111 compared to $65,573 at May 31, 2006.  Our business is in transition and our liquidity must be considered in light of the risks, expenses and difficulties frequently encountered by companies in this stage of development. The decisions to discontinue operations in the wholesale home décor sector and acquire the assets and ongoing business of ILC have directly impacted year to date sales and liquidity. Risk factors relevant to these events and decisions include, but are not limited to: the Companys ability to secure ongoing product supply, foreign exchange fluctuations, continued acceptance of the Companys products and services, changes in technology and consumer adoption of technology, the strength of the housing market and the strength of the consumer economy in general, and cannot be quantified at this time.  Internal and External Sources of Capital We have limited assets to sell in order to create short or long term liquidity. Therefore we are dependent on external sources for funding until such time as the Company completes its re-organization and develops positive net cash flow to maintain liquidity. 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. We have not been able to demonstrate a consistent trend of positive cash flow and profitable quarters, which would have a beneficial effect on liquidity.  Investing Activities Investing activities for the period from inception through February 28, 2007 consisted primarily of the purchase of inventory, property and equipment and soft costs associated with the development of our areas of business activities and supporting infrastructure.  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 $10.3 million from the sale of common stock and have borrowed approximately $2 million from investors and shareholders.  As at February 28, 2007, approximately $1,430,000 remains as debt.  Funds from these sources were used as working capital to fund the development of the Company.  On October 3, 2003, we entered into a merger agreement with Biscayne Bay Trading Corporation (Biscayne Bay), a Florida corporation.  Biscayne Bay was created to market and sell leading home décor and office furnishing products throughout the southeast United States.  The merger became effective October 30, 2003 after which Biscayne Bay ceased to exist.  We issued 35,000 shares of our common stock in exchange for the outstanding shares of Biscayne Bay which equated the aggregate fair market value of approximately $8,000 of Biscayne Bay at the time of merger.  As part of the merger agreement with Biscayne Bay the rights and obligations of Biscayne Bay under a debenture agreement were assigned to us, so that we would receive any subsequent funding under the debenture agreement.  Under this Agreement, we have received $697,000 in convertible debenture financing.  The Company executed a securities purchase agreement dated as of December 7, 2005 (the "Purchase Agreement") with certain accredited investors under which we agreed to sell to these investors our convertible Debentures due three years from the final Closing Date under the Purchase Agreement in the aggregate principal amount of up to $600,000 bearing interest at the rate of 6% per annum and convertible into restricted shares of our Common Stock at a conversion price for each share of Common Stock equal to 75% of the lowest closing bid price per share (as reported by Bloomberg, LP) of our Common Stock for the fifteen trading days immediately preceding the date of conversion. At the close of the offering the company the company completed the sale of an aggregate of $555,000 in Debentures under the Purchase Agreement which resulted in net proceeds of $424,850.   13   The Company secured additional debenture financing from an accredited investor in the amount of $50,000 under terms similar to the December 7, 2005 purchase agreement. Year to date loans and repayments to related parties netted to $46,569. The net total of financing activities for the quarter ended February 28, 2007 was $56,415.  FUTURE PLAN OF OPERATIONS   On December 8, 2006 the Company acquired all of the outstanding capital stock of, and entered into an Agreement and Plan of Reorganization with MCM Integrated Technologies, Ltd. [name change to Intelligent Living Corp. (ILC) in process].  At the time of the acquisition ILC had ongoing projects, prospects and outstanding proposals for work in the greater Phoenix area, the Okanagan area of south central British Columbia and the greater Vancouver area.  As of December 8, 2006, the Company has reorganized and focused primarily in the areas of smart home technology. The Board of Directors has plans for aggressively expanding its smart home operations through the activities of ILC and through further acquisitions.  On December 8, 2006 the Company discontinued its activity in the home décor sector and began a process to liquidate its residual inventory of home décor products and to fully wind down its home décor business. This process continued through the current quarter and is expected to be substantially completed by the close of the current fiscal year.  Cash flow from ongoing ILC business combined with collection of home décor related accounts receivable and sale of residual home décor inventory are estimated to be sufficient to sustain the current level of operations through to the end of May 2007.  OFF BALANCE-SHEET ARRANGEMENTS  During the year ended May 31, 2006, and the six months ended February 28, 2007, the Company did not engage in any off-balance sheet arrangements as defined in Item 303(c) of the SEC's Regulation S-B.  SUBSEQUENT EVENTS  Late filing of Q3 FY 2007 Unaudited Financial Statements The Company was unable to file its unaudited financial statements for Q3 FY 2007 by 23-April-07; the extended deadline specified under NASD Rule 6530. The delay was the result of complexities involved in the restatement of the previous unaudited Q3 FY 2006, audited Q4 FY 2006, unaudited Q1 FY 2007 and unaudited Q2 FY 2007 financial statements and consolidation of the Q3 FY 2007 acquisition of MCM Integrated Technologies. As a consequence of failing to meet the extended filing deadline, the NASD appended a fifth character E to the Companys trading symbol EGDI. The required financial statements were filed on 16 May-07.   14   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  the Companys management 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.   PART II. OTHER INFORMATION.  ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities  (c) Sales of Unregistered Securities  DateTitle and Shares of Common StockPurchasersPrincipal
UnderwriterTotal Offering
Price/Underwriting
DiscountsDecember 1, 200610,000,000Murat ErbaturNAPurchase of Assets
$150,000/NADecember 1, 200620,000,000Murat ErbaturNAEscrowed $20,000/NAJanuary 16, 20073,000,000Private InvestorsNAConvertible Debentures valued at $16,200February 13, 200711,000,000Private InvestorsNAConvertible Debentures valued at $34,650  The above issuances of Common Stock were exempt from registration under the Securities Act of 1933, as amended, under section 4(1) thereof, as transactions not involving any public offering.   15    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   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:  May 15, 2007       17