UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
      1934

                For the quarterly period ended December 31, 2000

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
      1934

            For the transition period from ___________to ____________

                         Commission File Number: 0-23215

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

              Delaware                                            11-3391313
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                             125 East Bethpage Road
                               Plainview, NY 11803
          (Address, including zip code, of principal executive offices)

                                 (516) 391-9898
              (Registrant's telephone number, including area code)

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

(1) Yes |X|     No |_|

(2) Yes |X|     No |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

      Common stock, par value $.01, 12,131,441 as of February 9, 2001.
<PAGE>

                   TOYMAX INTERNATIONAL, INC. AND SUBSIDIARIES

                                    FORM 10-Q

                                DECEMBER 31, 2000

                                      INDEX

                                                                            Page
                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements:

        Condensed Consolidated Balance Sheets as of
        December 31, 2000 (Unaudited) and March 31, 2000                      3

        Condensed Consolidated Statements of Operations for the
        Three and Nine Months Ended December 31, 2000 and 1999 (Unaudited)    4

        Condensed Consolidated Statements of Cash Flows for the
        Three and Nine Months Ended December 31, 2000 and 1999 (Unaudited)    5

        Notes to Unaudited Condensed Consolidated Financial Statements        6

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations                                                 11

Item 3. Quantitative and Qualitative Disclosures about Market Risk            18

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings                                                     19

Item 2. Changes in Securities and Use of Proceeds                             19

Item 3. Defaults by the Company upon Its Senior Securities                    19

Item 4. Submission of Matters to a Vote of Security Holders                   19

Item 5. Other Information                                                     19

Item 6. Exhibits and Reports on Form 8-K                                      20

        Signatures                                                            21
<PAGE>

                           TOYMAX INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    March 31,          December 31,
                                                                                                      2000                 2000
====================================================================================================================================
Assets                                                                                                                 (Unaudited)
<S>                                                                                               <C>                  <C>
Current:
   Cash                                                                                           $  4,543,823         $  5,144,433
   Due from Factor                                                                                  15,147,198           28,621,077
   Accounts receivable, less allowance for possible
      losses of $280,000 and $317,000                                                               12,303,499            4,073,677
   Due from affiliates                                                                                 387,777              603,553
   Inventories                                                                                      11,811,119           10,908,706
   Prepaid expenses and other current assets                                                         4,405,611            4,754,278
   Income tax refunds receivable                                                                     2,877,890            2,948,158
   Deferred income taxes                                                                             2,407,945            2,407,945
------------------------------------------------------------------------------------------------------------------------------------
                    Total current assets                                                            53,884,862           59,461,827
------------------------------------------------------------------------------------------------------------------------------------

Property and equipment, net                                                                          5,872,905            6,038,965
Investment in and advances to joint venture                                                          2,314,720            1,853,804
Deferred income taxes                                                                                1,176,512            1,176,512
Goodwill, net of amortization of $1,061,754 and $2,305,147                                          18,879,535           20,229,425
Other assets, primarily prepaid advertising                                                          6,944,663            5,973,117
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  $ 89,073,197         $ 94,733,650
====================================================================================================================================

Liabilities and Stockholders' Equity
Current:
   Bank credit facility                                                                           $ 14,029,044         $ 14,734,022
   Accounts payable                                                                                 17,774,774            8,369,295
   Accrued expenses                                                                                  6,570,002           10,784,842
   Accrued rebates and allowances                                                                    5,061,656            5,169,998
   Due to affiliates                                                                                 2,388,540            6,914,681
   Current portion of long-term obligations                                                            637,319               30,692
   Income taxes payable                                                                              1,260,651            1,300,768
------------------------------------------------------------------------------------------------------------------------------------
                    Total current liabilities                                                       47,721,986           47,304,298
------------------------------------------------------------------------------------------------------------------------------------

Long-term obligations                                                                                   49,951               16,316
------------------------------------------------------------------------------------------------------------------------------------
                    Total liabilities                                                               47,771,937           47,320,614
------------------------------------------------------------------------------------------------------------------------------------

Minority interest                                                                                           --              363,867
------------------------------------------------------------------------------------------------------------------------------------

Commitments and contingencies

Stockholders' Equity
   Preferred stock, par value $.01 per share; 5,000,000 shares authorized;
         none outstanding                                                                                   --                   --
   Common stock, par value $.01 per share; 50,000,000 shares authorized;
         10,633,108 and 12,166,441 shares issued                                                       106,331              121,664
   Additional paid-in capital                                                                       23,120,275           27,144,942
   Retained earnings                                                                                18,267,695           19,975,604
   Treasury stock, 35,000 shares at cost                                                              (177,889)            (177,889)
   Accumulated other comprehensive income                                                              (15,152)             (15,152)
------------------------------------------------------------------------------------------------------------------------------------
                     Total stockholders' equity                                                     41,301,260           47,049,169
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  $ 89,073,197         $ 94,733,650
====================================================================================================================================
</TABLE>

<PAGE>

                           TOYMAX INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         Three Months Ended                Nine Months Ended
                                                                             December 31,                     December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                                                        1999             2000             1999            2000
====================================================================================================================================
<S>                                                                <C>              <C>              <C>              <C>
Net sales                                                          $  50,086,501    $  38,914,007    $ 112,994,910    $ 113,418,745
------------------------------------------------------------------------------------------------------------------------------------

Costs and expenses
    Cost of goods sold                                                31,483,099       23,040,316       70,253,289       71,610,318
    Selling and administrative                                        22,114,481       17,578,041       40,959,507       37,297,469
------------------------------------------------------------------------------------------------------------------------------------
                                                                      53,597,580       40,618,357      111,212,796      108,907,787
------------------------------------------------------------------------------------------------------------------------------------
     Operating income (loss)                                          (3,511,079)      (1,704,350)       1,782,114        4,510,958
------------------------------------------------------------------------------------------------------------------------------------
Other income (expenses):
    Other income, net                                                    712,006          211,596          810,979          357,839
    Interest income                                                      151,125           78,055          408,838          164,704
    Interest expense                                                    (656,155)        (399,092)        (826,504)      (1,139,428)
    Equity in income (loss) of joint venture                             401,396          (31,337)         401,396         (347,006)
    Finance charges                                                     (273,430)        (244,752)        (654,989)        (637,502)
------------------------------------------------------------------------------------------------------------------------------------
                                                                         334,942         (385,530)         139,720       (1,601,393)
------------------------------------------------------------------------------------------------------------------------------------

Income (loss) before income taxes and minority interest               (3,176,137)      (2,089,880)       1,921,834        2,909,565
Provision (benefit) for income taxes                                  (1,003,585)        (395,247)         295,974        1,297,789
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before minority interest                                (2,172,552)      (1,694,633)       1,625,860        1,611,776
Minority interest                                                             --           96,133               --           96,133
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                  $  (2,172,552)   $  (1,598,500)   $   1,625,860    $   1,707,909
------------------------------------------------------------------------------------------------------------------------------------

Earnings per share:
     Basic                                                         $       (0.20)   $       (0.14)   $        0.15    $        0.16
     Diluted                                                       $       (0.20)   $       (0.14)   $        0.15    $        0.16
====================================================================================================================================

Shares used in computing earnings per share:
     Basic                                                            10,598,108       11,814,050       10,596,203       11,003,422
     Diluted                                                          10,598,108       11,814,050       10,716,670       11,003,422
====================================================================================================================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.
<PAGE>

                           TOYMAX INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                           Nine Months Ended
                                                                                                              December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        1999                2000
====================================================================================================================================
<S>                                                                                                <C>                 <C>
Cash flows from operating activities:
Net income                                                                                         $  1,625,860        $  1,707,909
------------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
   Depreciation and amortization                                                                      2,976,879           3,688,694
   Minority interest                                                                                         --             (96,133)
   Bad debts                                                                                            167,420              (3,151)
   Equity in (income) loss of joint venture                                                            (401,395)            347,006
   Non-cash compensation - issuance of warrants                                                          61,201                  --
   Non-cash revenue - barter credits                                                                   (377,521)                 --
   Changes in operating assets and  liabilities:
        Due from Factor and accounts receivable                                                     (35,472,286)         (5,240,906)
        Due from affiliates                                                                             (58,366)           (215,776)
        Inventories                                                                                  (5,483,859)            902,413
        Prepaid expenses and other                                                                   (1,465,160)            393,800
        Income tax refunds receivable                                                                  (506,948)            (70,268)
        Accounts payable and accruals                                                                18,838,072          (5,182,297)
        Due to affiliates                                                                             5,388,861           4,526,141
        Income taxes payable                                                                            389,833              40,117
------------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by (used in) operating activities                                         (14,317,409)            797,549
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Acquisition of property and equipment                                                             (2,759,063)         (2,269,733)
   Proceeds from disposals of property and equipment                                                     10,103                  --
   Business acquisitions, investments and advances                                                  (19,316,842)         (2,591,922)
------------------------------------------------------------------------------------------------------------------------------------
        Net cash used in investing activities                                                       (22,065,802)         (4,861,655)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Increase (decrease) in bank credit facility                                                       27,451,035             704,978
   Increase (decrease) in  long-term obligations                                                       (644,633)           (640,262)
   Proceeds from private placement of common stock                                                           --           4,600,000
   Purchase of treasury stock                                                                          (177,889)                 --
------------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by financing activities                                                    26,628,513           4,664,716
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                                 (9,754,698)            600,610
Cash and cash equivalents, beginning of period                                                       18,469,027           4,543,823
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                                           $  8,714,329        $  5,144,433
====================================================================================================================================
Supplemental cash flow information:
     Interest paid                                                                                 $    632,265        $  1,132,786
     Income taxes paid                                                                             $    230,335        $  1,680,760
====================================================================================================================================
</TABLE>

See accompanying notes to condensed consolidated financial statements.
<PAGE>

Toymax International, Inc. and Subsidiaries o
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS o
December 31, 1999 and 2000

NOTE 1- BASIS OF FINANCIAL STATEMENT PRESENTATION

      The accompanying unaudited condensed consolidated financial statements of
Toymax International, Inc. ("Toymax" or the "Company") include the accounts of
the Company and its subsidiaries after elimination of all material intercompany
accounts and transactions, and have been prepared in accordance with the
instructions to Form 10-Q. Accordingly, the unaudited consolidated financial
statements do not include all of the financial information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The balance sheet at March 31, 2000 has been derived from the audited
balance sheet at that date. It is suggested that these condensed consolidated
financial statements, which are presented in U.S. Dollars, be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Form 10-K for the fiscal year ended March 31, 2000.
The Company follows the same accounting policies in preparation of interim
reports. The results of operations and financial position for interim periods
are not necessarily indicative of those to be expected for the full year ended
March 31, 2001, due, in part, to seasonal fluctuations which are normal for the
Company's business.

NOTE 2 - EARNINGS PER SHARE

      Basic earnings per share is computed by dividing income available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects, in periods in which they
have a dilutive effect, the effect of common shares issuable upon exercise of
stock options and warrants.

      Options and warrants to purchase an aggregate of 2,275,750 shares of
common stock were outstanding at December 31, 2000. Such options and warrants
are not included in the computation of diluted earnings per share because the
effect would be anti-dilutive.

NOTE 3 - COMPREHENSIVE INCOME

      Comprehensive income refers to revenue, expenses, gains and losses that
under generally accepted accounting principles are excluded from net income, as
these amounts are recorded directly as an adjustment to shareholders' equity.
The Company's comprehensive income is comprised of foreign currency translation
adjustments. The comprehensive income for the three and nine months ended
December 31, 1999 and December 31, 2000 is the same as the reported net income.

NOTE 4 - RECENT ACCOUNTING STANDARDS

      In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements." In
June 2000, the SEC delayed the required implementation date to the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 will not have a material effect on the Company's results of operations
and financial position.
<PAGE>

Toymax International, Inc. and Subsidiaries o
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS o
December 31, 1999 and 2000

NOTE 5 - SEGMENT AND GEOGRAPHIC DATA

      The Company operates two reportable segments: Toymax Brands (primarily
consists of Toymax Inc., Toymax (H.K.) Limited and the Company's equity
investment in Yaboom Limited ("Yaboom")) and Toymax Enterprises (which consists
of Go Fly A Kite, Inc. ("GFK"), Candy Planet, a division of Toymax Inc.,
Monogram International, Inc. ("Monogram"), and Funnoodle, Inc. ("Funnoodle")).

      The following tables present summarized information about the Company's
operations by reportable segments (net of consolidating eliminations) as of and
for the three and nine months ended December 31, 1999 and 2000:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Toymax              Toymax
Three Months Ended December 31, 1999                                             Brands            Enterprises        Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                 <C>                 <C>
Revenues-Net sales                                                            $  35,429,069       $  14,657,432       $  50,086,501
Income (loss) before income tax expense                                          (5,249,957)          2,073,820          (3,176,137)
Identifiable assets                                                              83,955,255          37,608,715         121,563,970
Interest income                                                                     153,862              (2,737)            151,125
Interest expense                                                                    579,281              76,874             656,155
Depreciation and amortization                                                       471,743             814,995           1,286,738
Capital expenditures                                                                356,983             481,410             838,393
====================================================================================================================================

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Toymax              Toymax
Three Months Ended December 31, 2000                                             Brands            Enterprises        Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                 <C>                 <C>
Revenues-Net sales                                                            $  32,012,966       $   6,901,041       $  38,914,007
Income (loss) before income tax expense and minority
   interest                                                                         314,502          (2,404,382)         (2,089,880)
Identifiable assets                                                              71,829,174          22,904,476          94,733,650
Interest income                                                                      76,523               1,532              78,055
Interest expense                                                                    338,213              60,879             399,092
Depreciation and amortization                                                       529,866             746,619           1,276,485
Capital expenditures                                                                704,045             155,020             859,065
====================================================================================================================================

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Toymax              Toymax
Nine Months Ended December 31, 1999                                              Brands            Enterprises        Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                 <C>                 <C>
Revenues-Net sales                                                            $  82,183,277       $  30,811,633       $ 112,994,910
Income (loss) before income tax expense                                            (490,009)          2,411,843           1,921,834
Identifiable assets                                                              83,955,255          37,608,715         121,563,970
Interest income                                                                     409,617                (779)            408,838
Interest expense                                                                    643,069             183,435             826,504
Depreciation and amortization                                                     1,257,751           1,719,128           2,976,879
Capital expenditures                                                              1,996,239             762,824           2,759,063
====================================================================================================================================
</TABLE>
<PAGE>

Toymax International, Inc. and Subsidiaries o
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS o
December 31, 1999 and 2000

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Toymax              Toymax
Nine Months Ended December 31, 2000                                              Brands            Enterprises        Consolidated
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                 <C>                 <C>
Revenues-Net sales                                                            $  80,548,773       $  32,869,972       $ 113,418,745
Income (loss) before income tax expense and minority
   interest                                                                       6,047,255          (3,137,690)          2,909,565
Identifiable assets                                                              71,829,174          22,904,476          94,733,650
Interest income                                                                     147,079              17,625             164,704
Interest expense                                                                    905,147             234,281           1,139,428
Depreciation and amortization                                                     1,515,300           2,173,394           3,688,964
Capital expenditures                                                              1,844,453             425,280           2,269,733
====================================================================================================================================
</TABLE>

NOTE 6 - INVENTORIES

      Inventories are stated at the lower of cost (first-in, first-out basis) or
market value. Inventories consist principally of purchased finished goods.

NOTE 7 - INCOME TAXES

      The Company provides for income taxes during interim periods based upon an
estimate of the effective annual tax rate.

      The Company has been notified by the Internal Revenue Service concerning a
pending examination covering tax years 1993, 1994, 1995 and 1996. As of the date
of this Form 10-Q, no issues have been raised by the Internal Revenue Service.
The Company cannot predict at this time what the outcome of the examination will
be or the impact on the Company's results of operations, if any.

NOTE 8 - BANK CREDIT FACILITIES

      In December 2000, the Company replaced the Toymax Inc. ("TMI") and Go Fly
A Kite, Inc. ("GFK") subsidiaries' existing $30.0 million credit facility and
the Funnoodle $5.0 million line of credit with a $40.0 million facility for all
of its U.S. based operating subsidiaries. Borrowings, which are subject to
availability according to a formula based on eligible accounts receivable and
inventory, bear interest at either the lender's U.S. prime rate or LIBOR plus
2.50%. The credit agreement, which expires in December 2003, is secured by the
accounts receivable and inventories of the Company's domestic subsidiaries, as
well as other properties, and is guaranteed by Toymax. The agreement contains
certain restrictions relating to limitations on debt, certain investments and
the payment of dividends. As of December 31, 2000, the outstanding balance under
the Agreement was $14.0 million and borrowing availability was approximately
$8.4 million. The Agreement is terminable by the Bank at any time at its sole
discretion, at which time the Company's obligations to the Bank would become due
and payable.

NOTE 9 - PRIVATE PLACEMENT OF SECURITIES

      In December 2000, the Company announced the private placement of $4.6
million for the purchase of common stock of Toymax and one of its subsidiaries
had been accepted. Pursuant to the offering, the Company offered units at
$300,000 per unit consisting of 100,000 shares of Toymax common stock and 3
million shares of a subsidiary that is developing wireless communication
products for children and young adults. Through December 31, 2000, 1,533,333
million shares of common stock of Toymax and approximately 46 million shares
common stock of the subsidiary had been issued. The Company retains controlling
interest in the subsidiary.
<PAGE>

Toymax International, Inc. and Subsidiaries o
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS o
December 31, 1999 and 2000

NOTE 10 - BUSINESS ACQUISITIONS AND JOINT VENTURES

      In May 1999, newly formed subsidiaries of Toymax acquired substantially
all of the assets and certain liabilities of Burkett Enterprises, Inc. f/k/a
Monogram International, Inc. and Monogram Products, (H.K.) Limited pursuant to
an asset purchase agreement dated April 19, 1999. Monogram is a leading
designer, manufacturer and marketer of gift, novelty and souvenir products sold
globally. The consideration for the acquisition was $6.0 million paid in cash at
the closing plus up to $9.0 million payable after the closing if certain
contingencies occur. In addition, Monogram's short-term indebtedness consisting
of two promissory notes, totaling $3.8 million as of the date of acquisition,
was assumed. The Company recorded approximately $6.0 million of goodwill for the
excess of the total purchase price over the fair value of the net assets
acquired. Transaction costs of approximately $0.9 million were incurred in
connection with the acquisition. The funds required at closing came out of the
working capital of the Company.

      In November 1999, the Company acquired the Funnoodle product line from
Kidpower, Inc. ("Kidpower"), pursuant to an asset purchase agreement dated
October 25, 1999. The Funnoodle product line is a highly recognized consumer
brand of pool and backyard water recreational products which include the
original Funnoodle(R) water toys, floating pool mats, lawn sprinkler toys and
exercise mats. The consideration for the acquisition was $8.7 million paid in
cash at the closing, the assumption of certain commitments of Kidpower in an
amount of $500,000, plus up to $7.0 million payable to Kidpower after the
closing if certain contingencies occur. The Company recorded approximately $8.1
million of goodwill for the excess of the total purchase price over the fair
value of the net assets acquired. The funding for the acquisition was out of the
working capital of the Company. Based on the occurrence of certain contingencies
contained in the acquisition agreement, the Company recorded approximately $2.6
million as additional goodwill in the nine months ended December 31, 2000, of
which approximately $2.2 million was paid prior to December 31, 2000 and the
balance was paid in January 2001.

      In connection with the Funnoodle acquisition, the Company entered into a
management services agreement dated November 30, 1999 with Kidpower (the
"Kidpower Management Agreement"). Pursuant to the Kidpower Management Agreement,
Kidpower will manage the day-to-day operations with respect to the Funnoodle
product line. The term of the Kidpower Management Agreement is through November
15, 2002 and the management fee payable to Kidpower is seven percent (7%) of the
cost of all finished goods with respect to the Funnoodle product line.

      On a pro forma basis, reflecting the acquisition of Monogram and Funnoodle
as if they had taken place at the beginning of fiscal 1999 and after giving
effect to adjustments recording the acquisitions, unaudited pro-forma results
for the three and nine months ended December 31, 1999 and 2000 are as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                        Three Months Ended December 31,    Nine Months Ended December 31,
------------------------------------------------------------------------------------------------------------
                                             1999             2000             1999              2000
------------------------------------------------------------------------------------------------------------
<S>                                        <C>              <C>              <C>                <C>
Net sales                                  $50,086,501      $ 38,914,007     $126,068,051       $113,418,745
Net income (loss)                           (2,356,843)       (1,598,500)       2,331,398          1,707,909
------------------------------------------------------------------------------------------------------------

Earnings per share:
     Basic                                      $(0.22)          $(0.14)            $0.22              $0.16
     Diluted                                    $(0.22)          $(0.14)            $0.22              $0.16
------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

Toymax International, Inc. and Subsidiaries o
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS o
December 31, 1999 and 2000

      In October 1999, the Company and a private investor formed Yaboom, a joint
venture. The Company's investment in Yaboom includes $1.5 million for the equity
ownership and $1.1 million in non-interest bearing advances. Yaboom was formed
to develop, manufacture and market innovative high-tech consumer products, which
incorporate music and other intellectual property rights from popular recording
artists. Under the terms of the joint venture, the Company, through a
wholly-owned Hong Kong subsidiary, and the private investor each own fifty
percent of Yaboom. The Company recorded $1.5 million of goodwill in connection
with the investment, of which $187,597 has been amortized as of December 31,
2000. The Company has accounted for the joint venture using the equity method
and intends to permanently reinvest the earnings derived from the joint venture.

      In fiscal 2001, the Company formed a subsidiary to develop wireless
communication products for children and young adults. Pursuant to a private
placement in the third quarter of fiscal 2001, the Company sold a minority
interest in the subsidiary. Minority interest represents the minority
shareholders' proportionate share of the loss and equity of the subsidiary. The
results of operations of the subsidiary were not material for any of the periods
presented.

NOTE 11 - LITIGATION SETTLEMENT

      TMI and Link Group International have settled (the "Settlement") the
litigation captioned as more particularly described in Part I, Item 3, Legal
Proceedings, in the Registrant's Annual Report on Form 10-K for the year ended
March 31, 2000. Pursuant to the Settlement, TMI and Link Group International
have entered into a license agreement (the "License Agreement") with respect to
the Laser Challenge products. The License Agreement and the Settlement provide
for an initial payment from TMI of $500,000, which has been recorded in the
financial statements as of and for the period ended December 31, 2000.
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

THE FOLLOWING CAUTIONARY STATEMENT IS INCLUDED IN THIS QUARTERLY REPORT PURSUANT
TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995:

Certain expectations and projections regarding the future performance of Toymax
International, Inc. and its subsidiaries ("Toymax") discussed in this quarterly
report are forward-looking and are made under the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These expectations and
projections are based on currently available competitive, financial, and
economic data along with Toymax's operating plans and are subject to certain
future events and uncertainties. Forward-looking statements can be identified by
the use of forward-looking terminology, such as "may", "will", "should",
"expect", "anticipate", "estimate", "project", "continue", "plans", "intends" or
other similar terminology. Management cautions you that the following factors,
among others, could cause Toymax's actual consolidated results of operations and
financial position in fiscal 2001 and thereafter to differ significantly from
those expressed in forward-looking statements:

Marketplace Risks

o     Dependence on the timely development, introduction and customer acceptance
      of new products, which may affect Toymax's ability to successfully
      redesign, restyle and extend existing core products and product lines and
      successfully bring new products to market

o     Increased competitive pressure, both domestically and internationally,
      which may negatively affect the sales of Toymax's products

o     Possible weaknesses in economic conditions, both domestically and
      internationally, which may negatively affect the sales of Toymax's
      products and the costs associated with manufacturing and distributing
      these products

o     Failure to successfully integrate recent acquisitions

Financial Considerations

o     Significant changes in interest rates, both domestically and
      internationally, which may negatively affect Toymax's cost of financing
      its operations

o     Currency fluctuations, which may affect Toymax's reportable income

Other Risks

o     Development of new technologies, including the Internet, which may create
      new risks to Toymax's ability to protect its intellectual property rights

o     Changes in laws or regulations, both domestically and internationally,
      including those affecting consumer products, environmental activities or
      trade restrictions, which may lead to increased costs or interruption in
      normal business operations of Toymax

o     Other factors and risks that may be described from time to time in
      Toymax's public announcements and filings with the Securities and Exchange
      Commission
<PAGE>

RESULTS OF OPERATIONS

      For purposes of the fiscal year comparisons which follow, figures
referring to the financial performance of Toymax Inc. ("TMI"), Toymax (H.K.)
Limited ("THK") and the Company's equity investment in Yaboom Limited ("Yaboom")
are referred to as Toymax Brands and those referring to the performance of Go
Fly A Kite, Inc. ("GFK"), Candy Planet, Monogram International, Inc.
("Monogram") and the Funnoodle product line ("Funnoodle") are referred to as
Toymax Enterprises.

Three months ended December 31, 2000 compared with the three months ended
December 31, 1999

      Net Sales. Net sales for the quarter ended December 31, 2000 decreased
$11.2 million, or 22.3%, to $38.9 million from $50.1 million for the quarter
ended December 31, 1999.

      Net sales of Toymax Brands for the quarter ended December 31, 2000
decreased $3.4 million, or 9.6%, to $32.0 million, or 82.3% of total net sales,
from $35.4 million, or 70.7% of total net sales for the quarter ended December
31, 1999. The decrease in net sales was primarily due to a decrease in
electronic toys that was partially offset by an increase in sales of infrared,
radio-controlled and programmable vehicles.

      Net sales of Toymax Enterprises for the quarter ended December 31, 2000
decreased $7.8 million, or 52.9% to $6.9 million, or 17.7% of total net sales,
from $14.7 million, or 29.3% of total net sales for the quarter ended December
31, 1999. The decrease in net sales was primarily the result of a decrease in
licensed candy and gift product sales.

      Gross Profit. Gross profit for the quarter ended December 31, 2000,
decreased by $2.7 million, or 14.7%, to $15.9 million, or 40.8% of net sales,
from $18.6 million, or 37.1% of net sales, for the quarter ended December 31,
1999.

      The gross profit of Toymax Brands increased by $3.1 million, or 28.0%, to
$14.3 million, or 44.6% of net sales, from $11.1 million, or 31.5% of net sales
for the quarter ended December 31, 1999. The increase in gross profit, despite
the decrease in net sales, is primarily attributable to the decrease in sales
promotional expenses and improved inventory management. The gross profit of
Toymax Enterprises decreased by $5.9 million, or 78.5%, to $1.6 million, or
23.2% of net sales, from $7.5 million, or 50.9% of net sales in the quarter
ended December 31, 1999. The decrease in gross profit is primarily attributable
to the effect of price reductions on certain licensed candy products.

      Selling and Administrative Expenses. Selling and administrative expenses
for the quarter ended December 31, 2000 decreased by $4.5 million, or 20.5%, to
$17.6 million, or 45.2% of net sales, from $22.1 million, or 44.2% of net sales
for the quarter ended December 31, 1999.

      Selling and administrative expenses of Toymax Brands for the quarter ended
December 31, 2000 decreased by $3.1 million, or 18.5%, to $13.7 million, or
42.7% of net sales, from $16.8 million, or 47.4% of net sales for the quarter
ended December 31, 1999. The decrease was primarily due to lower advertising
costs and royalty expense. Selling and administrative expenses of Toymax
Enterprises for the quarter ended December 31, 2000 decreased $1.4 million, or
26.9%, to $3.9 million from $5.3 million, despite the addition of operating
expenses related to the businesses acquired in the latter part of fiscal 2000,
primarily due to decreased royalties related to licensed candy products.
<PAGE>

      Operating Income. As a result of the foregoing, operating income for the
quarter ended December 31, 2000 increased by $1.8 million, or 51.5%, to a loss
of $1.7 million from an operating loss of $3.5 million for the quarter ended
December 31, 1999.

      Operating income for Toymax Brands increased by $6.2 million, or 110.5%,
to $.6 million from an operating loss of $5.6 million for the quarter ended
December 31, 1999. The operating loss for Toymax Enterprises increased by $4.4
million, to a loss of $2.3 million from operating income of $2.1 million for the
quarter ended December 31, 1999.

      Other Income (Expense), Net. Net other expense was $0.1 million for the
quarter ended December 31, 2000, compared to net other income of $0.8 million
for the quarter ended December 31, 1999. Net other income in the prior year
period consisted primarily of an insurance claim settlement and income derived
from the Company's investment in Yaboom.

      Interest Income (Expense), Net. Net interest expense for the quarter ended
December 31, 2000 was $0.3 million, compared to $0.5 million for the quarter
ended December 31, 1999. The decrease in net interest expense was primarily due
to lower average outstanding borrowings, offset by higher effective interest
rates.

      Income (Loss) before Taxes. Income before taxes for the quarter ending
December 31, 2000 increased by $1.1 million, or 34.2%, to a pre-tax loss of $2.1
million, compared to a loss before taxes of $3.2 million for the quarter ended
December 31, 1999. Income before taxes for Toymax Brands increased by $5.6
million, or 106.0%, to $0.3 million, compared to a pre-tax loss of $5.3 million
for the quarter ended December 31, 1999. The pre-tax loss for Toymax Enterprises
increased by $4.5 million to $2.4 million, compared to income before taxes of
$2.1 million for the quarter ended December 31, 1999.

      Provision for Income Taxes. The effective tax rate for the quarter ending
December 31, 2000 decreased to 18.9% from 31.6% for the quarter ended December
31, 1999 due to the geographic distribution of income and the reduction in the
deferred tax benefit of a subsidiary.

      Net Income. As a result of the foregoing, net income for the quarter ended
December 31, 2000 increased $0.6 million, or 26.4%, to a net loss $1.6 million,
or $0.14 per diluted share, from a net loss of $2.2 million, or $0.20 per
diluted share, for the quarter ended December 31, 1999.

Nine months ended December 31, 2000 compared with the nine months ended December
31, 1999

      Net Sales. Net sales for the nine months ended December 31, 2000 increased
$0.4 million, or 0.4% to $113.4 million from $113.0 million for the nine months
ended December 31, 1999.

      Net sales of Toymax Brands for the nine months ended December 31, 2000
decreased 2.0% to $80.5 million, or 71.0% of total net sales, from $82.2
million, or 72.7% of total net sales for the nine months ended December 31,
1999. The decrease in net sales was primarily due to a decrease in electronic
toys that was partially offset by an increase in sales of infrared,
radio-controlled and programmable vehicles.

      Net sales of Toymax Enterprises for the nine months ended December 31,
2000 increased 6.7% to $32.9 million, or 29.0% of total net sales, from $30.8
million, or 27.3% of total net sales for the nine months ended December 31, 1999
due to the increased sales from the acquisition of Funnoodle in December 1999,
which were offset by the decrease in sales of certain licensed candy and novelty
gift products.
<PAGE>

      Gross Profit. Gross profit for the nine months ended December 31, 2000,
decreased by $0.9 million, or 2.2%, to $41.8 million, or 36.9% of net sales,
from $42.7 million, or 37.8% of net sales, for the nine months ended December
31, 1999.

      The gross profit of Toymax Brands increased by $2.4 million, or 8.4%, to
$31.4 million, or 39.0% of net sales, from $29.0 million, or 35.3% of net sales
for the nine months ended December 31, 1999. The increase in gross margin is
primarily attributable to the decrease in sales promotional expenses, which were
adversely affected by the product recall in the prior year. The gross profit of
Toymax Enterprises decreased by $3.4 million, or 24.5%, to $10.4 million, or
31.6% of net sales, from $13.7 million, or 44.6% of net sales in the nine months
ended December 31, 1999, primarily as a result of sales incentives and inventory
adjustments related to licensed candy and novelty gift products.

      Selling and Administrative Expenses. Selling and administrative expenses
for the nine months ended December 31, 2000 decreased by $3.7 million, or 8.9%,
to $37.3 million, or 32.9% of net sales, from $41.0 million for the nine months
ended December 31, 1999, or 36.2% of net sales.

      Selling and administrative expenses of Toymax Brands for the nine months
ended December 31, 2000 decreased by $5.6 million, or 18.9%, to $24.2 million,
or 30.0% of net sales, from $29.8 million, or 36.3% of net sales for the nine
months ended December 31, 1999. The decrease was primarily due to lower
advertising costs and royalty expenses. Selling and administrative expenses of
Toymax Enterprises for the nine months ended December 31, 2000 increased by $1.9
million, or 17.6%, to $13.1 million, or 39.9% of net sales, from $11.2 million,
or 36.2% of net sales for the nine months ended December 31, 1999. The increase
in expenses was primarily due to the operating expenses related to the
acquisition of Monogram and the Funnoodle product line, which were partially
offset by the decrease in royalties related to licensed product sales.

      Operating Income. As a result of the foregoing, operating income for the
nine months ended December 31, 2000 increased by $2.7 million, or 153.1%, to
$4.5 million from $1.8 million for the nine months ended December 31, 1999.

      Operating income for Toymax Brands increased by $8.1 million to $7.3
million from a loss of $0.8 million for the nine months ended December 31, 1999.
Operating income for Toymax Enterprises decreased by $5.3 million to an
operating loss of $2.7 million from an operating profit of $2.6 million for the
nine months ended December 31, 1999.

      Other Income (Expense), Net. Net other expense for the nine months ended
December 31, 2000 was $0.6 million, compared to net other income of $0.6 million
for the nine months ended December 31, 1999. The increase in net other expense
was primarily attributable to the Company's equity in the net loss of Yaboom and
the insurance claim settlement recorded in the prior year.

      Interest Income (Expense), Net. Net interest expense for the nine months
ended December 31, 2000 was $1.0 million, compared to $0.4 million for the nine
months ended December 31, 1999. The increase in net interest expense was
primarily due to the use of funds to acquire businesses in the prior year and
the increase in the effective interest rates.

      Income (Loss) before Taxes. Income before taxes for the nine months ending
December 31, 2000 increased by $1.0 million, or 51.4%, to $2.9 million, compared
to $1.9 million for the nine months ended December 31, 1999. Income before taxes
for Toymax Brands increased by $6.5 million to $6.0 million, compared to a
pre-tax loss of $0.5 million for the nine months ended December 31, 1999. Income
before taxes for Toymax Enterprises decreased by $5.5 million to a
<PAGE>

loss of $3.1 million, compared to income before taxes of $2.4 million for the
nine months ended December 31, 1999.

      Provision for Income Taxes. The effective tax rate for the nine months
ended December 31, 2000 increased to 44.6% from 15.4% for the nine months ended
December 31, 1999 due to the geographic distribution of income and the reduction
of the deferred tax benefit of a subsidiary.

      Net Income. As a result of the foregoing, net income for the nine months
ended December 31, 2000 increased to $1.7 million, or $0.16 per diluted share,
from $1.6 million, or $0.15 per diluted share, for the nine months ended
December 31, 1999.
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has funded its operations and capital requirements from
cash generated from operations and from financing activities. During the nine
months ended December 31, 2000 cash and cash equivalents increased $.6 million
to $5.1 million.

The Company's operating activities provided net cash of approximately $.8
million, as compared to $14.3 million used in operations in the nine months
ended December 31, 1999. The increase was primarily due to net income and the
increase in due to affiliates and the decrease in inventories, which was offset
by the increase in due from factor and accounts receivable and the decrease in
accounts payable. The changes in the net assets are primarily attributable to
the seasonal effects of the business.

Investing activities used $4.9 million in net cash, as compared to $22.1 million
in the nine months ended December 31, 1999. Investing activities in the current
period consisted of $2.3 million of capital expenditures, principally for the
purchase of tooling for new products and equipment, and the payment of $2.6
million of additional purchase price for the Funnoodle product line. Investing
activities in the prior year period included $19.3 million related to business
acquisitions and $2.8 million in capital expenditures.

Financing activities provided $4.7 million in net cash, primarily due the
private placement of common stock in December 2000. Pursuant to the offering,
the Company issued 1,533,333 shares of common stock of Toymax and approximately
46 million shares of stock in a subsidiary that is developing wireless
communication products for children and young adults. Toymax retains controlling
ownership of the subsidiary. The capital infusion will be used for general
corporate purposes and to fund the development of the Company's expansion into
the wireless communications market. In December 2000, the Company replaced the
TMI and GFK subsidiaries' existing $30.0 million credit facility and the
Funnoodle $5.0 million line of credit with a $40.0 million facility for all of
its U.S. based operating subsidiaries. Borrowings, which are subject to
availability according to a formula based on eligible accounts receivable and
inventory, bear interest at either the lender's U.S. prime rate or LIBOR plus
2.50%. The credit agreement, which expires in December 2003, is secured by the
accounts receivable and inventories of the Company's domestic subsidiaries, as
well as other properties, and is guaranteed by Toymax. The agreement contains
certain restrictions relating to limitations on debt, certain investments and
the payment of dividends. As of December 31, 2000, the outstanding balance under
the Agreement was $14.0 million and borrowing availability was approximately
$8.4 million. The Agreement is terminable by the Bank at any time at its sole
discretion, at which time the Company's obligations to the Bank would become due
and payable.

In April 2000, the Company's Toymax (H.K.) Limited subsidiary renewed its credit
facility with The Hongkong and Shanghai Banking Corporation Limited ("Hongkong
Bank"). The facility provides for a line of credit of $500,000 and a letter of
credit guarantee of up to approximately $2.3 million. The facility is terminable
by the Hongkong Bank at any time at its sole discretion, at which time the
Company's obligations to the Hongkong Bank would become due and payable. As of
December 31, 2000, there were no outstanding borrowings under this facility.

The Company expects to fund its near-term cash requirements from a combination
of existing cash balances, cash flow from operations and borrowings under its
banking arrangements. The Company expects to finance its longer-term growth
primarily with cash flow from operations and with externally generated funds,
which will likely include borrowings under its existing or future credit
facilities. There can be no assurance that sufficient cash flows from operations
will materialize or that financing under a credit facility will be available in
amounts, or at rates, or on terms and conditions acceptable to the Company. In
such event, additional funding would be required.
<PAGE>

In connection with any future cash needs or acquisition opportunities, the
Company may incur additional debt or issue additional equity or debt securities
depending on market conditions and other factors.

NEW ACCOUNTING STANDARDS

      In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements." In
June 2000, the SEC delayed the required implementation date to the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 will not have a material effect on the Company's results of operations
and financial position.
<PAGE>

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to certain market risks, which arise from transactions
entered into in the normal course of business. The Company's primary exposures
are changes in interest rates with respect to its debt and foreign currency
exchange fluctuations.

Interest Rate Risk

The interest payable on the Company's revolving line-of-credit is variable based
on LIBOR and/or the prime rate, and therefore, affected by changes in market
interest rates. The Company does not use derivative financial instruments.

Foreign Currency Risk

While the Company's product purchases are transacted in U.S. dollars, most
transactions among the suppliers and subcontractors of Tai Nam Industrial
Company Limited, the Company's purchasing agent, are effected in Hong Kong
dollars. Accordingly, fluctuations in Hong Kong monetary rates may have an
impact on the Company's cost of goods. However, since 1983, the value of the
Hong Kong dollar has been tied to the value of the United States dollar,
eliminating fluctuations between the two currencies. Despite the announcements
by the Hong Kong Government that it is determined to maintain such a fixed
exchange rate, there can be no assurance that the Hong Kong dollar will continue
to be tied to the United States dollar in the near future or longer term.
Furthermore, appreciation of Chinese currency values relative to the Hong Kong
dollar could increase the cost to the Company of the products manufactured in
China, and thereby have a negative impact on the Company.
<PAGE>

                                    PART II.
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in various legal proceedings in the ordinary course of
its business activities. The Company believes that the resolution of such legal
proceedings and claims, individually and in aggregate, are not likely to have a
material adverse effect on its financial position or results of operations.

Toymax Inc. ("TMI") and Link Group International have settled (the "Settlement")
the litigation captioned Link Group International v. Toymax Inc., U.S. District
Court for the District of Connecticut (as more particularly described in Part I,
Item 3, Legal Proceedings, in the Registrant's Annual Report on Form 10-K for
the year ended March 31, 2000). Pursuant to the Settlement, TMI and Link Group
International have entered into a license agreement (the "License Agreement")
with respect to the Laser Challenge products. The License Agreement and the
Settlement provide for an initial payment from TMI of $500,000.

The Company has been notified by the Internal Revenue Service concerning a
pending examination covering tax years 1993, 1994, 1995 and 1996. As of the date
of this Form 10-Q, no issues have been raised by the Internal Revenue Service.
The Company cannot predict at this time what the outcome of the examination will
be or the impact on the Company's results of operations, if any.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Through December 31, 2000, the Company issued 1,533,333 million shares of common
stock of Toymax and approximately 46 million shares of common stock of the
subsidiary pursuant to a $4.6 million private placement. The Company retains
controlling interest in the subsidiary.

Reference is made to Part II, Item 5, Market for the Registrant's Common Equity
and Related Stockholder Matters, in the Registrant's Annual Report on Form 10-K
for the year ended March 31, 2000.

Under the Company's stock repurchase program approved by the Board of Directors
in May 1999, as of February 9, 2001, a total of 35,000 shares of Toymax common
stock have been repurchased for a total purchase price of $177,869.

ITEM 3. DEFAULTS BY THE COMPANY UPON ITS SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      a)    Exhibits

      10.24 Financing Agreement, dated December 27, 2000 among the CIT
            Group/Commercial Services, Inc. and Fleet Capital Corporation and
            Toymax Inc., Go Fly A Kite, Inc., Monogram International, Inc. and
            Funnoodle, Inc.

      b)    Reports on Form 8-K

            A Current Report on Form 8-K dated December 27, 2000 was filed by
            the Company announcing the financing agreement with the CIT
            Group/Commercial Services, Inc. and Fleet Capital Corporation.
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                           TOYMAX INTERNATIONAL, INC.
                                                  (Registrant)

                                           By /s/ Steven A. Lebensfeld
                                                  ---------------------------
                                                  Steven A. Lebensfeld
                                                  Chief Executive Officer and
                                                   Director

                                           By /s/ William A. Johnson, Jr.
                                                  ---------------------------
                                                  William A. Johnson, Jr.
                                                  Chief Financial Officer and
                                                  Treasurer (Principal Financial
                                                  and Accounting Officer)

Date: February 14, 2001