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, 2006



[ ]     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, 2006

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

Common stock, $ 0.001 par value                           35,012,469



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









---



ELGRANDE.COM, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2006



TABLE OF CONTENTS





Page



PART I. FINANCIAL INFORMATION



ITEM 1 -  Unaudited Consolidated Financial Statements



Consolidated Balance Sheets as of

February 28, 2006 (Unaudited) and May 31, 2005                  1



Consolidated Statements of Operations

for the Three Months and Nine Months ended February 28,

2006 and 2005 (Unaudited)                                       2



Consolidated Statements of Cash Flows

for the Nine Months ended February 28, 2006

and 2005 (Unaudited)                                            3



Condensed Notes to Consolidated Interim Financial Statements    4



ITEM 2 -  Management's Discussion and Analysis of

Financial Condition and Results of Operations                   7



ITEM 3 -  Controls and Procedures                                         12



PART II.  OTHER INFORMATION



ITEM 2 -  Changes in Securities, Use of Proceeds and Issuer

Purchases of Equity Securities                                  13



ITEM 6 -  Exhibits                                                        13



Signatures                                                                14



Certifications (filed as exhibits)







-ii-



---



ELGRANDE.COM, INC.

FORM 10-QSB

For the Quarterly period ended February 28, 2006



PART I. FINANCIAL INFORMATION



Item 1 - Financial Statements



|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|------------------------------------------------------------------------------------- | ------------------------------ | ---------------------------------------------------- | -------------------------------------------------- | ------------ | ----------- | ------- | ------------ | ---------
|ELGRANDE.COM INC.                                                                    
|CONSOLIDATED BALANCE SHEETS                                                          
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      |                                |                                                      |                                                    |              | February 28 |         |              |          
|                                                                                      |                                |                                                      |                                                    |              | 2006        |         |              | May 31,  
|A S S E T S                                                                           |                                | (Unaudited)                                          |                                                    |              | 2005       
|                                                                                      | CURRENT ASSETS                 |                                                      |                                                    |              |             |        
|                                                                                      |                                | Cash                                                 | $                                                  | 86,793       |             | $       | 7,918       
|                                                                                      |                                | Accounts receivable                                  |                                                    | 106,177      |             |         | 163,671     
|                                                                                      |                                | Prepaid expenses                                     |                                                    | 2,205        |             |         | -           
|                                                                                      |                                | Inventory                                            |                                                    | 290,861      |             |         | 256,898     
|                                                                                      |                                | Employee expense advances                            |                                                    | 3,854        |             |         | 2,884       
|                                                                                      |                                | GST tax refundable                                   |                                                    | 10,294       |             |         | 6,999       
|                                                                                      |                                |                                                      | TOTAL CURRENT ASSETS                               |              | 500,184     |         |              | 438,370  
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      | PROPERTY AND EQUIPMENT, NET    |                                                      | -                                                  |              |             | 1,950  
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      | OTHER ASSETS                   |                                                      |                                                    |              |             |        
|                                                                                      |                                | Software, net                                        |                                                    | 40,336       |             |         | 46,596      
|                                                                                      |                                | Deposits                                             |                                                    | 32,105       |             |         | 33,062      
|                                                                                      |                                |                                                      | TOTAL OTHER ASSETS                                 |              | 72,441      |         |              | 79,658   
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      |                                | TOTAL ASSETS                                         | $                                                  | 572,625      |             | $       | 519,978     
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|L I A B I L I T I E S   &   S T O C K H O L D E R S '   E Q U I T Y ( D E F I C I T ) |                                |                                                      |                                                    |             
|                                                                                      | CURRENT LIABILITIES            |                                                      |                                                    |              |             |        
|                                                                                      |                                | Accounts payable                                     | $                                                  | 249,382      |             | $       | 282,740     
|                                                                                      |                                | Accrued liabilities                                  |                                                    | 337,801      |             |         | 240,759     
|                                                                                      |                                | Accrued interest                                     |                                                    | 70,451       |             |         | 35,143      
|                                                                                      |                                | Debentures, net of discount                          |                                                    | 45,486       |             |         | 35,000      
|                                                                                      |                                | Derivative liability                                 |                                                    | 251,191      |             |         | -           
|                                                                                      |                                | Loans payable                                        |                                                    | 893,278      |             |         | 766,590     
|                                                                                      |                                | Debentures and loans payable, related parties        |                                                    | 211,361      |             |         | 249,839     
|                                                                                      |                                |                                                      | TOTAL CURRENT LIABILITIES                          |              | 2,058,950   |         |              | 1,610,071
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      | COMMITMENTS AND CONTINGENCIES  |                                                      | 129,252                                            |              |             | 126,710
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      | STOCKHOLDERS' EQUITY (DEFICIT) |                                                      |                                                    |              |             |        
|                                                                                      |                                | Common stock, 200,000,000 shares authorized,         |                                                    |              |             |         |             
|                                                                                      |                                |                                                      | $0.001 par value; 35,012,469 and 23,439,667 shares |              |             |         |              |          
|                                                                                      |                                |                                                      | issued and outstanding, respectively               |              | 35,012      |         |              | 23,439   
|                                                                                      |                                | Additional paid-in capital                           |                                                    | 9,551,722    |             |         | 9,270,157   
|                                                                                      |                                | Accumulated deficit                                  |                                                    | (11,211,806) |             |         | (10,513,395)
|                                                                                      |                                | Accumulated other comprehensive income (loss)        |                                                    | 9,495        |             |         | 2,996       
|                                                                                      |                                | TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                 |                                                    | (1,615,577)  |             |         | (1,216,803) 
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          
|                                                                                      |                                | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $                                                  | 572,625      |             | $       | 519,978     
|                                                                                      |                                |                                                      |                                                    |              |             |         |              |          



See accompanying condensed notes to the financial statements.



-1-



---



|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|------------------------------------------------------------ | ------------------------------------------- | -------------------------------- | --------- | --------- | ------------ | --------- | --------- | ------------ | --------- | ------------ | --------- | ------------
|ELGRANDE.COM INC.                                           
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             |                                             |                                  |           |           | Three Months |           |           | Three Months |           | Nine Months  |           | Nine Months 
|                                                             |                                             |                                  |           |           | Ended        |           |           | Ended        |           | Ended        |           | Ended       
|                                                             |                                             |                                  |           |           | February 28, |           |           | February 28, |           | February 28, |           | February 28,
|                                                             |                                             |                                  |           |           | 2006         |           |           | 2005         |           | 2006         |           | 2005        
|                                                             |                                             |                                  |           |           | (unaudited)  |           |           | (unaudited)  |           | (unaudited)  |           | (unaudited) 
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|R E V E N U E S                                              |                                             |                                  |           |           |              |           |           |              |           |             
|                                                             | Product sales                               |                                  | $         | 55,790    |              | $         | 175,725   | $            | 384,398   | $            | 811,206  
|                                                             |                                             |                                  |           |           | 55,790       |           |           | 175,725      |           | 384,398      |           | 811,206     
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|COST OF REVENUES                                             |                                             |                                  | 17,638    |           |              | 129,008   |           | 249,321      |           | 467,779     
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|GROSS PROFIT (LOSS)                                          |                                             |                                  | 38,152    |           |              | 46,717    |           | 135,077      |           | 343,427     
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|E X P E N S E S                                              |                                             |                                  |           |           |              |           |           |              |           |             
|                                                             | Consulting fees                             |                                  |           | 130,266   |              |           | 38,844    |              | 209,674   |              | 130,865  
|                                                             | Selling expense                             |                                  |           | 38,781    |              |           | 71,854    |              | 98,351    |              | 225,658  
|                                                             | Compensation                                |                                  |           | 117,600   |              |           | -         |              | 117,600   |              | -        
|                                                             | Salaries                                    |                                  |           | 104,032   |              |           | 75,196    |              | 273,426   |              | 367,207  
|                                                             | Depreciation and amortization               |                                  |           | 360       |              |           | 3,466     |              | 5,114     |              | 36,870   
|                                                             | Office and administration                   |                                  |           | 77,904    |              |           | 208,733   |              | 259,789   |              | 339,622  
|                                                             |                                             | TOTAL OPERATING EXPENSES         |           | 468,943   |              |           | 398,093   |              | 963,954   |              | 1,100,222
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|LOSS FROM OPERATIONS                                         |                                             |                                  | (430,791) |           |              | (351,376) |           | (828,877)    |           | (756,795)   
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|OTHER INCOME (EXPENSE)                                       |                                             |                                  |           |           |              |           |           |              |           |             
|                                                             | Debt forgiveness                            |                                  |           | -         |              |           | -         |              | -         |              | 40,896   
|                                                             | Amortization of debt discount               |                                  |           | (10,846)  |              |           | -         |              | (10,846)  |              | -        
|                                                             | Gain (loss)  on derivative instruments      |                                  | 173,659   |           |              | -         |           | 173,659      |           | -           
|                                                             | Interest income                             |                                  |           | 35        |              |           | -         |              | 86        |              | -        
|                                                             | Interest expense                            |                                  |           | (15,303)  |              |           | (21,901)  |              | (32,433)  |              | (32,150) 
|                                                             |                                             | TOTAL OTHER INCOME (EXPENSE)     |           | 147,545   |              |           | (21,901)  |              | 130,466   |              | 8,746    
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             | NET LOSS                                    |                                  |           | (283,246) |              |           | (373,277) |              | (698,411) |              | (748,049)
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|OTHER COMPREHENSIVE INCOME                                   |                                             |                                  |           |           |              |           |           |              |          
|                                                             | Foreign currency translation gain (loss)    |                                  | 4,532     |           |              | 5,755     |           | 6,499        |           | 17,264      
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|COMPREHENSIVE LOSS                                           |                                             | $                                | (278,714) |           | $            | (367,522) | $         | (691,912)    | $         | (730,785)   
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             | BASIC AND DILUTED NET LOSS PER
COMMON SHARE | $                                | (0.01)    |           | $            | (0.02)    | $         | (0.02)       | $         | (0.04)      
|                                                             |                                             |                                  |           |           |              |           |           |              |           |              |           |             
|                                                             | WEIGHTED AVERAGE NUMBER OF                  |                                  |           |           |              |           |           |              |           |             
|                                                             |                                             | COMMON STOCK SHARES OUTSTANDING, |           |           |              |           |           |              |           |              |          
|                                                             |                                             | BASIC AND DILUTED                |           |           | 34,465,812   |           |           | 17,519,179   |           | 30,301,822   |           | 17,088,245  









See accompanying condensed notes to the financial statements.





-2-



---



|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|-------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | ----------------------------------------------------- | --------- | --------- | --------- | ----------- | --------- | --------- | ----------- | 
|ELGRANDE.COM INC.                           
|CONSOLIDATED STATEMENT OF CASH FLOWS        
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|                                             |                                                |                                           |                                                       |           |           |           | Nine Months |           |           | Nine Months | 
|                                             |                                                |                                           |                                                       |           |           |           | Ended       |           |           | Ended       | 
|                                             |                                                |                                           |                                                       |           |           |           | February 28 |           |           | February 28 | 
|                                             |                                                |                                           |                                                       |           |           |           | 2006        |           |           | 2005        | 
|                                             |                                                |                                           |                                                       |           |           |           | (unaudited) |           |           | (unaudited) | 
|Cash flows from operating activities:        |                                                |                                           |                                                       |           |           |           |            
|                                             | Net loss                                       |                                           |                                                       | $         | (698,411) |           | $           | (748,049) |          
|                                             | Adjustments to reconcile net loss              |                                           |                                                       |           |           |           |             |          
|                                             |                                                | to net cash used by operating activities: |                                                       |           |           |           |             |          
|                                             |                                                |                                           | Amortization of debt discount                         |           |           | 10,846    |             |           | -         |            
|                                             |                                                |                                           | Debt forgiveness                                      |           |           | -         |             |           | 40,896    |            
|                                             |                                                |                                           | Services paid by issuance of common stock and options |           | 85,709    |           |             | 22,718    |          
|                                             |                                                |                                           | Accrued interest paid by issuance of common stock     |           |           | 86,520    |             |           | -         |            
|                                             |                                                |                                           | Gain on derivative instruments                        |           |           | (173,659) |             |           | -         |            
|                                             |                                                |                                           | Stock issued for compensation                         |           | 117,600   |           |             | -         |          
|                                             |                                                |                                           | Depreciation and amortization                         |           |           | 5,114     |             |           | 36,869    |            
|                                             |                                                | Decrease (increase) in:                   |                                                       |           |           |           |             |           |          
|                                             |                                                |                                           | Accounts receivable                                   |           |           | 57,494    |             |           | (17,089)  |            
|                                             |                                                |                                           | Prepaid expenses                                      |           |           | (2,205)   |             |           | -         |            
|                                             |                                                |                                           | Inventory                                             |           |           | (33,963)  |             |           | (44,578)  |            
|                                             |                                                |                                           | GST tax refundable                                    |           |           | (3,295)   |             |           | -         |            
|                                             |                                                |                                           | Accrued liabilities                                   |           |           | 97,042    |             |           | (309,030) |            
|                                             |                                                |                                           | Accounts payable and accrued expenses                 |           | (33,358)  |           |             | 43,389    |          
|                                             |                                                |                                           | Employee advance receivable                           |           |           | (970)     |             |           | (5,552)   |            
|                                             |                                                |                                           | Other assets                                          |           |           | 957       |             |           | 35,949    |            
|                                             |                                                |                                           | Accrued interest                                      |           |           | 35,308    |             |           | (12,410)  |            
|                                             | Net cash used in operating activities          |                                           |                                                       | (449,271) |           |           | (956,887)   |          
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|Cash flows from investing activities:        |                                                |                                           |                                                       |           |           |           |            
|                                             | Deposits                                       |                                           |                                                       | -         |           |           | (3,160)     |          
|                                             | Purchase of property and equipment             |                                           |                                                       | -         |           |           | (34,650)    |          
|                                             | Net cash used in investing activities          |                                           |                                                       | -         |           |           | (37,810)    |          
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|Cash flows from financing activities:        |                                                |                                           |                                                       |           |           |           |            
|                                             | Proceeds from loans                            |                                           |                                                       | 526,401   |           |           | 742,028     |          
|                                             | Proceeds from loans, related party             |                                           |                                                       | 96,671    |           |           | 195,408     |          
|                                             | Repayment of loans, related party              |                                           |                                                       | (94,926)  |           |           | (20,727)    |          
|                                             | Net cash provided by financing activities      |                                           | 528,146                                               |           |           | 916,709   |            
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|Net increase (decrease)  in cash             |                                                |                                           | 78,875                                                |           |           | (77,988)  |            
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|                                             | Foreign currency translation gain (loss)       |                                           |                                                       | -         |           |           | 12,822      |          
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|Cash, beginning of period                    |                                                |                                           | 7,918                                                 |           |           | 96,874    |            
|Cash, end of period                          |                                                | $                                         | 86,793                                                |           | $         | 31,708    |            
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|SUPPLEMENTAL DISCLOSURES:                    |                                                |                                           |                                                       |           |           |           |            
|                                             | Cash paid for interest and income taxes:       |                                           |                                                       |           |           |           |            
|                                             |                                                | Interest                                  |                                                       | $         | -         |           | $           | 7,283     |          
|                                             |                                                | Income taxes                              |                                                       | $         | -         |           | $           | -         |          
|                                             |                                                |                                           |                                                       |           |           |           |             |           |           |             | 
|NON-CASH INVESTING AND FINANCING ACTIVITIES: |                                                |                                           |                                                       |           |           |          
|                                             | Services paid by issuance of stock and options | $                                         | 85,709                                                |           | $         | 22,718    |            
|.                                            | Stock issued for accrued compensation          |                                           | $                                                     | 117,600   |           | $         | -           |          
|                                             | Stock issued for interest                      |                                           | $                                                     | 96,600    |           | $         | -           |          



See accompanying condensed notes to the financial statements.



-3-



---

ELGRANDE INTERNATIONAL, INC.

(Formerly Known as Elgrande.com, Inc.)

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

February 28, 2006





NOTE 1  BASIS OF PRESENTATION



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 audited financial statements for the period ended May 31, 2005. 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, 2006, the Company has a working capital deficit of approximately $1,558,700, an accumulated deficit of approximately $11,211,800 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 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Revenue and Cost Recognition

The Company recognizes revenue for product sales when 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 net realizable value.  The Company 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, 2006 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 is recorded using the first in first out method and valued at the lower of cost or market value.



-4-



---

ELGRANDE INTERNATIONAL, INC.

(Formerly Known as Elgrande.com, Inc.)

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

February 28, 2006





Recent Accounting Pronouncements

In May 2005, the Financial Accounting Standards Board, issued Statement of Financial Accounting Standards (SFAS, No. 154), Accounting Changes and Error Corrections, which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements -- An Amendment of APB Opinion No. 28. SFAS No. 154 provides guidance on accounting for and reporting changes in accounting principle and error corrections.  SFAS No. 154 requires that changes in accounting principle be applied retrospectively to prior period financial statements and is effective for fiscal years beginning after December 15, 2005.  The Company does not expect SFAS No. 154 to have a material impact on our consolidated financial position, results of operations, or cash flows.



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.  Management believes the adoption of this statement had no immediate 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(R).  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.



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. Management believe the adoption of this statement had any immediate material impact on the Company.





-5-



---

ELGRANDE INTERNATIONAL, INC.

(Formerly Known as Elgrande.com, Inc.)

CONDENSED NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

February 28, 2006





NOTE 3 - COMMON STOCK



During the nine months ended February 28, 2006, the Company issued 1,310,911 shares of common stock for interest debt of $86,520; 2,799,990 shares of common stock for compensation of $117,600; 240,000 shares of common stock for interest expense and accrued interest of $10,080; and 7,461,901 shares of common stock for services of $85,709.



NOTE 4 - STOCK OPTIONS



During the three months ended August 31, 2005, the Companys board of directors approved the Elgrande International, Inc. 2005 Stock Option Plan. The Company may issue up to 6,000,000 common stock options with a maximum per share price of $0.03.



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 maximum per share price of $0.05.



During the year ended May 31, 2005 and during nine months ended February 28, 2006, the Company did not issue any stock options under either plan.



The following is a summary of stock option activity:



|                                                         |                                   |  |               
|-------------------------------------------------------- | --------------------------------- |  | --------------
|                                                         | Number of Weighted Average Shares |  | Exercise Price
|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        
|Expired                                                  | -                                 |  | -             
|Options outstanding at May 31, 2005                      | 2,521,000                         |  | $0.83         
|Expired                                                  | -                                 |  | -             
|Options outstanding and exercisable at February 28, 2006 | 2,521,000                         |  | $ 0.83        



NOTE 5 - NOTES AND DEBENTURES PAYABLE



Short-term Notes

During the nine months ended February 28, 2006, the Company's officers loaned the Company approximately $98,000 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 Company recorded a derivative liability of $514,300 at the date of execution.  At February 28, 2006, the Company revalued the derivative liability of $251,191 and recorded a net gain of $173,659.  The discount on debt of $130,150 is being amortized over the 3 year life of the loan using the straight-line method.  At February 28, 2006, the Company recognized $10,846 in amortization expense.



-6-



---



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.



RESULTS OF OPERATIONS



Comparison of the nine months ended February 28, 2006 and February 28, 2005.



During the first quarter of Fiscal year ending May 2003 the Company completed the phase out of its on-line operations and commenced the start-up of its home décor product import and wholesale distribution operations. In November 2002 the Company launched its wholesale division, European Sources Direct (ESD). Since then, we have established wholesale sales representation in key North American regional giftware and home décor wholesale centers, established supplier relationships and developed a growing customer base. The majority of our customer base is in North America and is made up of independent retailers, key account retailers, event and party planners, restaurants and companies servicing the hospitality sector. All of our products are currently produced in Europe and are shipped to us principally by surface freight. Air freight is prohibitively expensive and is only used in exceptional circumstances.



We are currently manufacturing, importing and distributing the Ginger Kelly line of mouth blown glassware and we are importing and distributing products manufactured by Plates GmbH of Germany and Almas DAreosa Cerâmicas, S.A. of Portugal. We have warehousing and offices in Vancouver, BC Canada and currently operate with a staff of 9 comprising a mix of full time, part time and contract personnel as follows: President, controller, accounts receivable, reception/accounts payable, data entry, sales coordinator, customer service, warehouse operations, data-base design and management.



For the quarter ended February 28, 2006, we had revenues of $55,790 versus $175,725 for the same period ending last year. For the nine months ended February 28, 2006, we had revenues of $384,398 versus $811,206 for the same period ending last year.





-7-



---

The decrease in revenues is primarily due to a prolonged container strike in the Port of Vancouver that substantially delayed the receipt of inventory and adversely affected our ability to fulfill orders to our customers. The strike lasted through the first quarter of the current fiscal year and prevented the receipt of surface transported container inventory until mid second quarter of the current fiscal year. The disruption of surface container flow into and out of the port of Vancouver resulted in significant cancellations of pending sales orders and a substantial downturn of first and second quarter orders and sales.



During the port strike the Company elected to air ship the minimum quantities of new inventory from Europe as required to fulfill critical orders. This resulted in exceptionally high freight in costs and substantially reduced operating margins associated with these orders.



The home décor and giftware wholesale sectors are driven by a bi-annual wholesale purchasing cycle which occurs during the summer and late winter seasons. The summer cycle focuses on products for the autumn and Christmas retail season and the winter cycle focuses on products for the spring and summer season. The local container strike effectively eliminated the Companys ability to fulfill orders booked for the autumn/winter/Christmas 2005 season. The Company has only recently completed the spring 2006 tradeshow activity and is just now fulfilling spring and summer orders. While the impact of the container strike has been substantial we expect to see a full recovery over the coming quarters.



For the quarter ended February 28, 2006, cost of revenues was $17,638 (32% of sales) versus $129,008 (73% of sales) for the same period last year. For the nine months ended February 28, 2006, cost of revenues was $249,321 (65 percent of sales) versus $467,779 (58% of sales) for the same period last year. The cost of revenue represents the cost of inventory sold and the corresponding freight-in charges of importing products. The decrease in cost of revenue as a percent of sales in the current quarter compared to the same quarter in the prior year reflects improved foreign exchange, reduced factory costs and higher wholesale prices. The increase in cost of revenue as a percent of sales in the 9 months ending February 28, 2006 compared to the same period in the prior year reflects the exceptionally high freight-in charges related to air shipments during the port strike.



For the nine months ended February 28, 2006, gross profit was $135,077 or 35.2% of revenue compared to $343,427 or 42.4% of revenue for the same period ending last year. The reduction in gross profit and gross profit as a percent of sales over the 9 months ended February 28, 2006 compared to the prior year reflect the reduced sales and higher freight costs associated with the port strike.



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



During the quarter ending February 28, 2006, the Company executed a securities purchase agreement with certain accredited investors. Under the agreement, the Company agreed to sell convertible debentures in an aggregate amount of up to $600,000. Related to the sale of these debentures the Company recorded a derivative liability of $514,300 at the date of execution.  At February 28, 2006, the Company revalued the derivative liability of $251,191 and recorded a net gain of $173,659.  The discount on debt of $130,150 is being amortized over the 3 year life of the loan using the straight-line method.  At February 28, 2006, the Company recognized $10,846 in amortization expense.





-8-



---

CHANGES IN FINANCIAL CONDITION



A summary of expenses for the nine months ended February 28, 2006 compared to the same period ended February 28, 2005 is as follows:



2006     2005

Consulting                       $  209,674           $   130,865

Selling expense                      98,351               225,658

Salaries                            273,426               367,207

Compensation                        117,600                  -

Depreciation and amortization         5,114                36,870

Office and administration     259,789     339,622

$  963,954     $1,100,222



There were some changes in our financial condition. Significant changes that warrant discussion include:



Selling Expenses



Our Advertising and Marketing expenses have not increased in the quarter ending February 28, 2006 primarily due to the fact that our product lines are now well established in the market place, remain trend forward and continue to receive wide editorial media coverage.  During this quarter we incurred expenses related to our participation in the spring 2006 New York International trade show.  The rate of commissions payable to sales representatives has continued to decline reflecting favorable negotiations with our sales agencies to improve our commission structure. Selling expenses decreased by 56% over the same period in the prior year.



Salaries



The 25.6% decrease in salary expense compared to the same period in the prior year reflects staff reductions and increased administrative efficiency. These changes were possible due to our investment in automation and adjustments to policies and procedures designed to increase our internal efficiency.



Office and Administration



Office and administration costs decreased 24% compared to the same period in the prior year. The decrease resulted from more favorable foreign exchange rates, reduction in consumable items as a result of automation and improved supplier pricing. As well, because we have a stable customer base with established credit history, our collections administration costs are negligible. Our travel and entertainment costs were reduced as a result of focusing our participation in trade shows, both in the number of shows attended and the level of staffing at each show, in proportion to expected sales.



Consulting Fees



Consulting fees increased by 60% compared to the same period in the prior year. This relates to the engagement of services related to sales and marketing, product development and financial planning.



Stock issued for accrued compensation



During the quarter ended February 28, 2006, the company recognized the issuance of stock for $117,600 in accrued compensation from prior quarters.



Management is continuing to investigate other ways and means to improve its business administration. This may involve additional investments in information technology to create efficiencies.



-9-



---



LIQUIDITY AND CAPITAL RESOURCES



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



Starting from the inception of the Companys wholesale operations, we have established relationships with wholesale marketing agencies and representatives covering the North American home décor market. We continually evaluate the performance of our sales network and actively make adjustments as needed in response to changing market conditions, customer needs and sales performance. Up until the port strike, this process of continuous sales improvement resulted in steady customer and sales growth. Over the coming quarters we expect a full recovery from the negative effects of the strike and a resumption of customer and sales growth.  The ongoing expansion of our existing product range and planned addition of new suppliers will assist both the growth of our customer base and sales per customer.



The vitality of the home décor market is correlated to the overall economy, employment, and more directly to changes in discretionary spending patterns, changes in interest rates, changes in new home construction, the home renovation market and the number of new households being established in North America. These are recognized indicators that can only be used as qualitative predictors of the strength of the home décor sector.



In addition, our specific market is affected by foreign exchange fluctuations, our suppliers ability to maintain timely production and competitive prices and our ability to pace and preferably stay ahead of contemporary design trends. We are also exposed to volatile pricing of inbound freight rates both for surface container traffic as well as air freight.



The overall impact of these trends on Liquidity 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 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. Currently, we are dependent on external sources for funding to support 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 sales, cash flow and revenue.





-10-



---

Our wholesale activity is centered on procuring, importing, marketing and selling international products within the North American home décor wholesale market. The current principal country of supply is Germany and the principle currency for pricing inventory purchases is the Euro. We have negotiated a currency accommodation with our principal supplier that provides some protection from currency fluctuations 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 manufacturing can have a negative impact on operations, as would any major reduction in consumer demand for a particular product. Because of our dependence on surface transportation for both the import of inventory and the delivery of product to customers we are exposed to the potential for labor disputes to disrupt our flow of product and to changes in the price for transportation as a result of oil and gas price changes.



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 and results of operations.



We generated negative cash flow from operating activities for the period from inception (April 8, 1998) through February 28, 2006.  We realized negative cash flow of $449,271 from operating activities for the nine months ending February 28, 2006 compared to negative cash flow of $956,887 from operating activities for the nine months ending February 28, 2005.



INVESTING ACTIVITIES



Investing activities for the period from inception through February 28, 2006 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 million from investors and shareholders. Funds from these sources have been used as working capital to fund our wholesale activity.



Our Board and management have been focused on carefully examining ways and means of continuing to move ahead. This process includes speaking with our suppliers, sales agents, customers and potential funding sources.



In the 9 months ended February 28, 2006, the company secured loans from investors and related parties and 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 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.



Our financing activities for the nine months ended February 28, 2006 provided a net total of $528,146. Cash at the end of the period was $86,793.





-11-



---

OFF BALANCE-SHEET ARRANGEMENTS



During the nine months ended February 28, 2006, the Company did not engage in any off-balance sheet arrangements as defined in Item 303(c) of the SEC's Regulation S-B.



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.





-12-



---

PART II. OTHER INFORMATION.



ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities



(c) Sales of Unregistered Securities



|                  |                                  |                            |                       |                                            
|----------------- | -------------------------------- | -------------------------- | --------------------- | -------------------------------------------
|Date              | Title and Shares of Common Stock | Purchasers                 | Principal
Underwriter | Total Offering
Price/Underwriting
Discounts
|December 12, 2005 | 1,000,000                        | Divine Capital
Markets LLC | NA                    | $10,000/NA                                 
|December 12, 2005 | 3,000,000                        | Financial Consultant       | NA                    | $30,000/NA                                 
|December 14, 2005 | 400,000                          | Alphatrade, Inc.           | NA                    | $4,000/NA                                  



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.







Item  6.  Exhibits.





No.            Description

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



31             Certification of Michael F. 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.









-13-



---



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 26, 2006











































-14-