##### Table of Contents



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
June 30, 2002

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

22619 Pacific Coast Highway
Malibu, California 90265
(Address, including zip code, of principal executive offices)

(310) 456-7799
(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.

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, 12,316,586 as of August 14, 2002.

1



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TABLE OF CONTENTS



|                           |                                                                    |                                                                                       |  |  |  |  |  | 
|-------------------------- | ------------------------------------------------------------------ | ------------------------------------------------------------------------------------- |  |  |  |  |  | 
|                           |                                                                    | CONDENSED CONSOLIDATED BALANCE SHEETS                                                
|                           |                                                                    | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                      
|                           |                                                                    | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|                           |                                                                    | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                 
|                           |                                                                    | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|PART II. OTHER INFORMATION
|                           | ITEM 1. LEGAL PROCEEDINGS                                         
|                           | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                 
|                           | ITEM 3. DEFAULTS BY THE COMPANY UPON ITS SENIOR SECURITIES        
|                           | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS       
|                           | ITEM 5. OTHER INFORMATION                                         
|                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                          
|SIGNATURES                
|EXHIBIT 99.1              
|EXHIBIT 99.2              



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##### Table of Contents



TOYMAX INTERNATIONAL, INC. AND SUBSIDIARIES

FORM 10-Q

JUNE 30, 2002

INDEX

|        |  |                                                                                                               |  |     
|------- |  | ------------------------------------------------------------------------------------------------------------- |  | ----
|        |  |                                                                                                               |  | Page
|        |  | PART I  FINANCIAL INFORMATION                                                                                |  |     
|       
|Item 1. |  | Financial Statements:                                                                                         |  |     
|       
|        |  | Condensed Consolidated Balance Sheets as of
March 31, 2002 and June 30, 2002 (Unaudited)                      |  | 3   
|       
|        |  | Condensed Consolidated Statements of Operations for the
Three Months Ended June 30, 2002 and 2001 (Unaudited) |  | 4   
|       
|        |  | Condensed Consolidated Statements of Cash Flows for the
Three Months Ended June 30, 2002 and 2001 (Unaudited) |  | 5   
|       
|        |  | Notes to Condensed Consolidated Financial
Statements                                                          |  | 6   
|       
|Item 2. |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations                         |  | 12  
|       
|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                                                    |  | 17  
|       
|        |  | PART II  OTHER INFORMATION                                                                                   |  |     
|       
|Item 1. |  | Legal Proceedings                                                                                             |  | 18  
|       
|Item 2. |  | Changes in Securities and Use of Proceeds                                                                     |  | 18  
|       
|Item 3. |  | Defaults by the Company upon Its Senior Securities                                                            |  | 18  
|       
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                                           |  | 18  
|       
|Item 5. |  | Other Information                                                                                             |  | 18  
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                                                                              |  | 18  
|       
|        |  | Signatures                                                                                                    |  | 19  

2



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TOYMAX INTERNATIONAL, INC.
AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                    |                                                                                                |                           |                      |                            |            |            |            |             |            |             |            | 
|--------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------- | -------------------- | -------------------------- | ---------- | ---------- | ---------- | ----------- | ---------- | ----------- | ---------- | 
|                                                    |                                                                                                |                           |                      |                            |            | March 31,  |            | June 30,   
|                                                    |                                                                                                |                           |                      |                            |            | 2002       |            | 2002       
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                |                           |                      |                            |            |            | (*)        |             |            | (Unaudited)
|Assets                                              |                                                                                                |                           |                      |                            |            |            |            |            
|Current:                                            |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    | Cash and cash equivalents                                                                      |                           | $                    | 940,136                    |            |            | $          | 5,006,490   |           
|                                                    | Due from Factor                                                                                |                           |                      | 9,084,009                  |            |            |            | 2,774,692   |           
|                                                    | Accounts receivable, less allowance for possible
losses of $341,000 and $467,000               |                           |                      | 3,750,699                  |            |            |            | 13,687,635  |           
|                                                    | Inventories                                                                                    |                           |                      | 8,954,348                  |            |            |            | 8,254,462   |           
|                                                    | Prepaid expenses and other current assets                                                      |                           |                      | 1,233,352                  |            |            |            | 349,704     |           
|                                                    | Income tax refunds receivable                                                                  |                           |                      | 2,405,741                  |            |            |            | 2,424,816   |           
|                                                    | Deferred income taxes                                                                          |                           |                      | 648,612                    |            |            |            | 648,612     |           
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                |                           | Total current assets |                            |            | 27,016,897 |            |             |            | 33,146,411  |           
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|Property and equipment, net                         |                                                                                                |                           | 1,533,625            |                            |            |            | 1,344,569  |            
|Deferred income taxes                               |                                                                                                |                           | 10,470,003           |                            |            |            | 10,470,003 |            
|Intangible
assets,net of amortization of $1,984,367 |                                                                                                |                           | 15,739,482           |                            |            |            | 15,739,482 |            
|Other assets                                        |                                                                                                |                           | 1,045,984            |                            |            |            | 909,181    |            
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                | $                         | 55,805,991           |                            |            | $          | 61,609,646 |            
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|Liabilities and Stockholders Equity                |                                                                                                |                           |                      |                            |            |            |            |            
|Current
liabilities:                                |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    | Accounts
payable and accrued expenses                                                          |                           | $                    | 24,488,433                 |            |            | $          | 23,678,246  |           
|                                                    | Due to affiliates                                                                              |                           |                      | 13,404,492                 |            |            |            | 20,209,670  |           
|                                                    | Current portion of long-term obligations                                                       |                           |                      | 14,790                     |            |            |            | 12,632      |           
|                                                    | Income taxes payable                                                                           |                           |                      | 3,262,417                  |            |            |            | 2,804,472   |           
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                | Total current liabilities |                      |                            | 41,170,132 |            |            |             | 46,705,020 |            
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                | Total liabilities         |                      |                            | 41,170,132 |            |            |             | 46,705,020 |            
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|Commitments and contingencies                       |                                                                                                |                           |                      |                            |            |            |            |            
|Stockholders Equity                                |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    | Common stock, par value $.01 per share; 50,000,000 shares authorized;
12,316,241 shares issued |                           |                      | 123,162                    |            |            |            | 123,162     |           
|                                                    | Additional paid-in capital                                                                     |                           |                      | 30,079,944                 |            |            |            | 30,079,944  |           
|                                                    | Accumulated
deficit                                                                            |                           |                      | (15,341,692                | )          |            |            | (15,063,912 | )         
|                                                    | Treasury
stock at cost; 66,200 shares                                                          |                           |                      | (210,403                   | )          |            |            | (210,403    | )         
|                                                    | Accumulated other comprehensive income                                                         |                           |                      | (15,152                    | )          |            |            | (24,165     | )         
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                |                           |                      | Total stockholders equity |            |            | 14,635,859 |             |            |             | 14,904,626 | 
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            
|                                                    |                                                                                                | $                         | 55,805,991           |                            |            | $          | 61,609,646 |            
|                                                    |                                                                                                |                           |                      |                            |            |            |            |            

(*)  Derived from audited financial
statements.

See accompanying notes to condensed consolidated financial statements.

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TOYMAX INTERNATIONAL, INC.
AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                    |                            |                            |            |                    |            |      |            |            |            | 
|--------------------------------------------------- | -------------------------- | -------------------------- | ---------- | ------------------ | ---------- | ---- | ---------- | ---------- | ---------- | 
|                                                    |                            |                            |            | Three Months Ended
|                                                    |                            |                            |            | June
30,          
|                                                    |                            |                            |            |                   
|                                                    |                            |                            |            | 2001               |            | 2002
|                                                    |                            |                            |            |                    |            |     
|Net sales                                           |                            | $                          | 20,007,541 |                    |            | $    | 18,747,922 |           
|                                                    |                            |                            |            |                    |            |      |            |           
|Costs and expenses                                  |                            |                            |            |                    |            |      |            |           
|                                                    | Cost of goods sold         |                            |            | 14,653,387         |            |      |            | 13,174,102 |           
|                                                    | Selling and administrative |                            |            | 6,404,637          |            |      |            | 5,255,508  |           
|                                                    |                            |                            |            |                    |            |      |            |           
|                                                    |                            |                            | 21,058,024 |                    |            |      | 18,429,610 |           
|                                                    |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Operating income (loss)    |            |                    | (1,050,483 | )    |            |            | 318,312    | 
|                                                    |                            |                            |            |                    |            |      |            |           
|Other income (expenses):                            |                            |                            |            |                    |            |      |            |           
|                                                    | Other income, net          |                            |            | (4,239             | )          |      |            | 75,037     |           
|                                                    | Interest income            |                            |            | 53,002             |            |      |            | 421        |           
|                                                    | Interest expense           |                            |            | (294,883           | )          |      |            | (5,203     | )         
|                                                    | Finance charges            |                            |            | (177,773           | )          |      |            | (7,982     | )         
|                                                    |                            |                            |            |                    |            |      |            |           
|                                                    |                            |                            | (423,893   | )                  |            |      | 62,273     |           
|                                                    |                            |                            |            |                    |            |      |            |           
|Income (loss) before
income taxes                   |                            |                            | (1,474,376 | )                  |            |      | 380,585    |           
|Provision (benefit) for income taxes                |                            |                            | (489,953   | )                  |            |      | 102,803    |           
|                                                    |                            |                            |            |                    |            |      |            |           
|Income (loss) from continuing operations            |                            |                            | (984,423   | )                  |            |      | 277,782    |           
|Loss from discontinued operations                   |                            |                            | (747,087   | )                  |            |      |           |           
|                                                    |                            |                            |            |                    |            |      |            |           
|Net income (loss)                                   |                            | $                          | (1,731,510 | )                  |            | $    | 277,782    |           
|                                                    |                            |                            |            |                    |            |      |            |           
|Basic earnings (loss) per
share from:               |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Continuing operations      |            | $                  | (.08       | )    |            | $          | .02        | 
|                                                    |                            | Discontinued operations    |            | $                  | (.06       | )    |            | $          |           | 
|                                                    |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Basic earnings per share   |            | $                  | (0.14      | )    |            | $          | .02        | 
|                                                    |                            |                            |            |                    |            |      |            |           
|Diluted
earnings (loss) per share from:             |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Continuing
operations      |            | $                  | (.08       | )    |            | $          | .02        | 
|                                                    |                            | Discontinued
operations    |            | $                  | (.06       | )    |            | $          |           | 
|                                                    |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Diluted
earnings per share |            | $                  | (0.14      | )    |            | $          | .02        | 
|                                                    |                            |                            |            |                    |            |      |            |           
|Shares used in computing earnings (loss)
per share: |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Basic                      |            |                    | 12,131,441 |      |            |            | 12,131,441 | 
|                                                    |                            |                            |            |                    |            |      |            |           
|                                                    |                            | Diluted                    |            |                    | 12,131,441 |      |            |            | 12,384,162 | 
|                                                    |                            |                            |            |                    |            |      |            |           

See accompanying notes to condensed consolidated financial statements.

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TOYMAX INTERNATIONAL, INC.
AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                                     |                                              |                                           |                                         |           |                    |            |           |           |            |            |  
|------------------------------------------------------------------------------------ | -------------------------------------------- | ----------------------------------------- | --------------------------------------- | --------- | ------------------ | ---------- | --------- | --------- | ---------- | ---------- | -
|                                                                                     |                                              |                                           |                                         |           | Three Months Ended
|                                                                                     |                                              |                                           |                                         |           | June
30,          
|                                                                                     |                                              |                                           |                                         |           |                   
|                                                                                     |                                              |                                           |                                         |           | 2001               |            | 2002     
|                                                                                     |                                              |                                           |                                         |           |                    |            |          
|Cash flows from operating activities:                                                |                                              |                                           |                                         |           |                    |            |           |          
|Net income (loss)                                                                    |                                              | $                                         | (1,731,510                              | )         |                    | $          | 277,782   |          
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|Adjustments
to reconcile net income (loss) to net cash used in operating activities: |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     | Depreciation and amortization                |                                           |                                         | 896,414   |                    |            |           | 294,812   |           
|                                                                                     | Minority interest                            |                                           |                                         | (246,096  | )                  |            |           |          |           
|                                                                                     | Bad debts                                    |                                           |                                         | 50,000    |                    |            |           |          |           
|                                                                                     | Changes in operating assets and liabilities: |                                           |                                         |           |                    |            |           |           |           
|                                                                                     |                                              |                                           | Due from Factor and accounts receivable |           |                    | (4,110,342 | )         |           |            | (3,627,619 | )
|                                                                                     |                                              |                                           | Inventories                             |           |                    | (1,078,743 | )         |           |            | 699,886    |  
|                                                                                     |                                              |                                           | Prepaid expenses and other              |           |                    | (68,128    | )         |           |            | 1,011,436  |  
|                                                                                     |                                              |                                           | Income tax refunds receivable           |           |                    | 304,932    |           |           |            | (19,075    | )
|                                                                                     |                                              |                                           | Accounts
payable and accrued expenses   |           |                    | (188,416   | )         |           |            | (810,187   | )
|                                                                                     |                                              |                                           | Due to affiliates                       |           |                    | 3,423,316  |           |           |            |           |  
|                                                                                     |                                              |                                           | Income taxes payable                    |           |                    | (620,188   | )         |           |            | (457,945   | )
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     |                                              | Net cash used in operating activities     |                                         |           | (3,368,761         | )          |           |           | (2,630,910 | )         
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|Cash flows from investing activities:                                                |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     | Acquisition of property and equipment        |                                           |                                         | (754,693  | )                  |            |           | (105,756  | )         
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     |                                              | Net cash used in investing activities     |                                         |           | (754,693           | )          |           |           | (105,756   | )         
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|Cash flows from financing activities:                                                |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     | Increase in bank credit facility             |                                           |                                         | 3,524,732 |                    |            |           |          |           
|                                                                                     | Decrease in long-term obligations            |                                           |                                         | (10,385   | )                  |            |           | (2,158    | )         
|                                                                                     | Increase
in due to affiliates                |                                           |                                         |          |                    |            |           | 6,805,178 |           
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     |                                              | Net cash provided by financing activities |                                         |           | 3,514,347          |            |           |           | 6,803,020  |           
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|Net
increase (decrease) in cash and cash equivalents                                 |                                              |                                           | (609,107                                | )         |                    |            | 4,066,354 |          
|Cash and cash equivalents,beginning of period                                        |                                              |                                           | 1,718,754                               |           |                    |            | 940,136   |          
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|Cash and cash equivalents,end of period                                              |                                              | $                                         | 1,109,647                               |           |                    | $          | 5,006,490 |          
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|Supplemental cash flow information:                                                  |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     | Interest paid                                |                                           | $                                       | 266,189   |                    |            | $         | 5,202     |           
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          
|                                                                                     | Income taxes paid                            |                                           | $                                       | 25,886    |                    |            | $         | 31,992    |           
|                                                                                     |                                              |                                           |                                         |           |                    |            |           |          

See accompanying notes to condensed consolidated financial statements.

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Toymax International, Inc. and Subsidiaries 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2001 and 2002

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, 2002 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, 2002.
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, 2003, due, in part, to seasonal fluctuations which are normal for the
Companys business.

Certain reclassifications have been made to the prior period amounts to
conform with the current period presentation and with the presentation of
discontinued operations.

NOTE 2  EARNINGS PER SHARE

Basic earnings (loss) per share is computed by dividing income (loss)
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 2,866,190 and 251,383 shares of common stock were outstanding at June 30, 2001 and 2002,
respectively. Such options and warrants are not included in the
computation of diluted earnings per share because they are
anti-dilutive.

Average shares of
common stock outstanding are:

|                               |  |      |            |      |  |  |            | 
|------------------------------ |  | ---- | ---------- | ---- |  |  | ---------- | 
|                               |  | 2001 |            | 2002
|                               |  |      |            |     
|Basic                          |  |      | 12,131,441 |      |  |  | 12,131,441 | 
|Effect
of options and warrants |  |      |           |      |  |  | 252,721    | 
|                               |  |      |            |      |  |  |            | 
|Diluted                        |  |      | 12,131,441 |      |  |  | 12,384,162 | 
|                               |  |      |            |      |  |  |            | 

NOTE 3  OTHER COMPREHENSIVE INCOME

Other comprehensive income (loss) refers to revenue, expenses, gains and
losses that under generally accepted accounting principles are excluded from
net income (loss), as these amounts are recorded directly as an adjustment to
shareholders equity. The Companys other comprehensive income (loss) is
comprised of foreign currency translation adjustments. The comprehensive income
(loss) for the three months ended June 30, 2001 is the
same as the reported net income (loss). Comprehensive income for the
three months ended June 30, 2002 is comprised of the following:

|                                                   |  |  |  |  |  |   |         |  
|-------------------------------------------------- |  |  |  |  |  | - | ------- | -
|                                                   |  |  |  | 
|                                                   |  |  |  | 
|Net
income                                         |  |  |  |  |  | $ | 277,782 |  
|Change
in foreign currency translation adjustments |  |  |  |  |  |   | (9,013  | )
|                                                   |  |  |  |  |  |   |         |  
|Comprehensive
income                               |  |  |  |  |  | $ | 268,769 |  
|                                                   |  |  |  |  |  |   |         |  

NOTE 4  RECENT ACCOUNTING STANDARDS

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Toymax International, Inc. and Subsidiaries 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2001 and 2002



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Toymax International, Inc. and Subsidiaries 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2001 and 2002

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires the fair value of a liability
for an asset retirement obligation to be recognized in the period in which it
is incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. We believe the adoption of this statement will have no material
impact on the financial statements.

NOTE 5  SEGMENT AND GEOGRAPHIC DATA

The Company operates two reportable segments: Toymax Brands (which
consists of Toymax Inc. and Toymax (H.K.) Limited and Toymax Enterprises
(which consists of Go Fly A Kite, Inc., and Funnoodle, Inc.).

The following tables present summarized information about the Companys
operations by reportable segments (net of consolidating eliminations) as of and
for the three months ended June 30, 2001 and 2002:

8



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Toymax International, Inc. and Subsidiaries 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2001 and 2002

|                                  |  |        |            |             |  |              |            |  |  |   |            |  
|--------------------------------- |  | ------ | ---------- | ----------- |  | ------------ | ---------- |  |  | - | ---------- | -
|                                  |  | Toymax |            | Toymax      |  |              |            | 
|Three Months Ended
June 30, 2001  |  | Brands |            | Enterprises |  | Consolidated
|                                  |  |        |            |             |  |             
|Revenues-net sales                |  | $      | 6,802,143  |             |  | $            | 13,205,398 |  |  | $ | 20,007,541 |  
|Income (loss) before income taxes |  |        | (3,187,772 | )           |  |              | 1,713,396  |  |  |   | (1,474,376 | )
|Total assets                      |  |        | 37,797,530 |             |  |              | 35,441,515 |  |  |   | 73,239,045 |  
|Interest income                   |  |        | 39,746     |             |  |              | 13,256     |  |  |   | 53,002     |  
|Interest expense                  |  |        | 293,701    |             |  |              | 1,182      |  |  |   | 294,883    |  
|Depreciation and amortization     |  |        | 571,045    |             |  |              | 325,369    |  |  |   | 896,414    |  
|Capital expenditures              |  |        | 734,898    |             |  |              | 19,795     |  |  |   | 754,693    |  
|                                  |  |        |            |             |  |              |            |  |  |   |            |  

|                                  |  |        |            |             |  |              |            |  |  |   |            | 
|--------------------------------- |  | ------ | ---------- | ----------- |  | ------------ | ---------- |  |  | - | ---------- | 
|                                  |  | Toymax |            | Toymax      |  |              |            | 
|Three Months Ended
June 30, 2002  |  | Brands |            | Enterprises |  | Consolidated
|                                  |  |        |            |             |  |             
|Revenues-net sales                |  | $      | 7,187,913  |             |  | $            | 11,560,009 |  |  | $ | 18,747,922 | 
|Income (loss) before income taxes |  |        | (1,560,110 | )           |  |              | 1,940,695  |  |  |   | 380,585    | 
|Total assets                      |  |        | 28,417,358 |             |  |              | 33,192,288 |  |  |   | 61,609,646 | 
|Interest income                   |  |        | 421        |             |  |              |           |  |  |   | 421        | 
|Interest expense                  |  |        | 3,140      |             |  |              | 2,063      |  |  |   | 5,203      | 
|Depreciation and amortization     |  |        | 270,594    |             |  |              | 24,218     |  |  |   | 294,812    | 
|Capital expenditures              |  |        | 100,056    |             |  |              | 5,700      |  |  |   | 105,756    | 
|                                  |  |        |            |             |  |              |            |  |  |   |            | 

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Toymax International, Inc. and Subsidiaries 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2001 and 2002

NOTE 6  INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or
market. 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s federal tax returns for 1992 through 2000 and New York State
returns for 1999 through 2001 are under examination. As of the date of this
Form 10-Q, the tax authorities have raised no issues that would have a
material effect on the financial statements. The Company cannot predict at this
time what the outcome of the examinations will be or the impact, if any, on the
Companys results of operations.

NOTE 8  DISCONTINUED OPERATIONS

Effective November 30, 2001, the Company sold the net assets of the
Monogram and Candy Planet segments of the business to an entity controlled by
David Chu, the former Chairman of the Companys board of directors, for $2.25 million.
A gain of $0.5 million was recognized on the sale. In March
2002, the Company decided to abandon and discontinue the operations
of Maxverse, which commenced operations in fiscal 2001. The results of these
operations, which have been classified as discontinued operations in the
accompanying financial statements, are as follows:

|                                      |  |      |            |  
|------------------------------------- |  | ---- | ---------- | -
|For the Three
Months Ended June 30,   |  | 2001
|                                      |  |     
|Net sales                             |  | $    | 3,174,011  |  
|                                      |  |      |            |  
|Loss before income taxes              |  |      | (1,158,379 | )
|Income tax benefit                    |  |      | (165,195   | )
|Minority
interest                     |  |      | (246,097   | )
|                                      |  |      |            |  
|Net loss from discontinued operations |  | $    | (747,087   | )
|                                      |  |      |            |  

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Toymax International, Inc. and Subsidiaries 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
June 30, 2001 and 2002

NOTE 9  ACQUISITION

On February 9, 2002, the Company entered into an agreement with JAKKS
Pacific Inc. (JAKKS) for JAKKS to acquire all of the outstanding shares of
the Companys common stock. In a two-step transaction, JAKKS
initially acquired approximately 66.8% of the Companys outstanding shares from the Companys
principal shareholders pursuant to a stock purchase agreement and
JAKKS will acquire
the remaining outstanding shares of the Companys common stock pursuant to a merger agreement that is subject to
stockholder approval. JAKKS will pay $3 per share in cash and .0798
shares of JAKKS common stock, subject to adjustment based on the 10-day trailing average closing price prior to the closing of the merger. The Company and JAKKS have filed a joint
proxy statement/prospectus with the Securities and Exchange Commission
(SEC) and are
currently awaiting the SECs comments.

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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002




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 2003 and thereafter to differ
significantly from those expressed in forward-looking statements:

Marketplace Risks



| |  |  | 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 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.                                        
|
| |  |  | Dependence on the success of new licenses, which Toymax acquires
for marketing with new and existing products.                                                                                                                                                    
|
| |  |  | Toymaxs inability to accurately predict future consumer demand.                                                                                                                                                                                                  
|
| |  |  | Increased competitive pressure, both domestically and
internationally, which may negatively affect the sales of Toymaxs
products.                                                                                                                                
|
| |  |  | Changes in consumer preferences, which may negatively affect
Toymaxs business.                                                                                                                                                                                   

Financial Considerations



| |  |  | Significant changes in interest rates, both domestically and
internationally, which may negatively affect Toymaxs cost of financing
its operations
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Currency fluctuations, which may affect Toymaxs reportable income                                                                                 

Other Risks



| |  |  | Development of new technologies, including the Internet, which may
create new risks to Toymaxs ability to protect its intellectual
property rights                                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 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
|
| |  |  | 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                                                                                                     

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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002

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), are referred to as Toymax Brands
and those referring to the performance of Go Fly A Kite, Inc. (GFK) and the
Funnoodle product line (Funnoodle) are referred to as Toymax Enterprises. The
operations of Candy Planet, Monogram International, Inc, Monogram Products
(H.K.) Limited (collectively with Monogram International,
Inc.,Monogram) and Maxverse Interactive, Inc.
(Maxverse) are
reflected as discontinued operations.

Three months ended June 30,
2002 compared with the three months ended
June 30, 2001

Recent Developments

On March 11, 2002, Jakks Pacific, Inc (JAKKS), acquired approximately a 66.8%
controlling interest in Toymax. In connection with this acquisition by JAKKS,
Toymax developed and began to implement a restructuring plan to maximize its
future operating results. As part of this plan Toymax has determined not to
continue the operations of Maxverse. Thus, for the quarter ended June 30, 2001,
Maxverse is treated as a discontinued operation along with Monogram and Candy
Plant, which were both sold effective November 30, 2001.

Net Sales. Net sales for the quarter ended June 30, 2002 decreased $1.3
million, or 6.3%, to $18.7 million from $20.0 million for the quarter ended
June 30, 2001.

Net sales of Toymax Brands for the quarter ended June 30, 2002 increased
5.7% to $7.2 million, or 38.3% of total net sales, from $6.8 million, or 34.0%
of total net sales for the quarter ended June 30, 2001. The increase in net
sales was primarily due to a concentrated effort to reduce on hand inventory in
connection with the restructuring plan implemented in March 2002.

Net sales of Toymax Enterprises for the quarter ended June 30, 2002,
decreased 12.5% to $11.6 million, or 61.7% of total net sales, from $13.2, or
66.0% of total net sales for the quarter ended June 30, 2001. The decrease in
net sales was primarily due to reduced sales of water leisure products and wind
wheels.

Gross Profit.Gross profit for the quarter ended June 30, 2002, increased by
$0.5 million, or 8.8%, to $5.8 million, or 31.1% of net sales, from $5.4
million, or 26.8% of net sales, for the quarter ended June 30, 2001.

The gross profit of
Toymax Brands for the quarter ended June 30, 2002 increased by $0.5 million to $1.7
million, or 24.2% of net sales, from $1.2 million, or 18.6% of net sales for
the quarter ended June 2001. The increase in gross margin was primarily the
result of product mix. The gross profit of Toymax Enterprises remained
unchanged at $4.1 million or 35.3% of net sales compared to 31.0% of net sales
for the quarter ended June 30, 2001. The increase in the gross profit
percentage was primarily due to the product mix of kites and banners and to a
lesser extent water leisure products.

Selling and Administrative Expenses. Selling and administrative expenses for
the quarter ended June 30, 2002 decreased by $0.9 million, or 14.0%, to $5.5
million from $6.4 million for the quarter ended June 30, 2001.

Selling and administrative expenses of Toymax Brands for the quarter ended
June 30, 2002 decreased $0.7 million, or 17.9%, to $3.4 million from $4.1
million for the quarter ended June 30, 2001. The decrease was primarily due to
the benefits being realized from the restructuring which began in March 2002.
Selling and administrative expenses of Toymax Enterprises for the quarter ended
June 30, 2002 decreased by $0.2 million, or 7.1%, to $2.1 million from $2.3 million for the quarter ended June
30, 2001. The decrease was





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##### Table of Contents

primarily due to the benefits being realized from
the restructuring which began in March 2002.

Operating Income (Loss).As a result of the foregoing, operating income for the
quarter ended June 30, 2002 increased by $1.4 million, to $0.3 million from a
operating loss of $1.1 million.

The operating loss of
Toymax Brands for the quarter ended June 30, 2002 decreased by $1.2 million to $1.6
million from $2.8 million for the quarter ended June 30, 2001. Operating income
for Toymax Enterprises increased by $0.2 million to $2.0 million from $1.8 million
for the quarter ended June 30, 2001.

Other Expense, Net.Other expense, net
decreased to other income of $0.1 million
for the quarter ended June 30, 2002 compared to other expenses of $0.4 million
primarily due to the termination of both the bank facility and the factoring
agreement.

Income (Loss) Before Income Taxes.Income before income taxes for the quarter
ended June 30, 2002 was $0.4 million compared to a loss before income taxes of
$1.5 million for the quarter ended June 30, 2001. Toymax Brands had a loss before income taxes for the quarter
ended June 30, 2002 of $1.6 million compared to a loss of $3.2 million for the
quarter ended June 30, 2001. Toymax Enterprises had income before income taxes
of $2.0 million for the quarter ended June 30, 2002 compared to $1.7 million
for the quarter ended June 30, 2001.

Provision (Benefit) For Income Taxes.The effective rate for the quarter ended
June 30, 2002 is 27% compared to a benefit of 33% for the quarter ended June
30, 2001 which approximates the expected annual effective rate.

Income (Loss) From Continuing Operations. Income from continuing operations is
$0.3 million for the quarter ended June 30, 2002 compared to a loss of $1.0
million for the quarter ended June 30, 2001.

Loss From Discontinued Operations.The loss from discontinue operations for
the quarter ended June 30, 2001 was $0.7 million, for the quarter ended June
30, 2002 there was no discontinued operations.

Net Income (Loss). As a result of the foregoing, net income for the quarter
ended June 30, 2002 increased $2.0 million to
$0.3 million ($0.02 per diluted
share) from a net loss of $1.7 million ($0.14 per diluted share) for the
quarter ended June 30, 2001.



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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002





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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002

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 three months ended June 30, 2002, cash and cash equivalents
increased $4.1 million to $5.0 million.

Cash used in
operating activities was approximately $2.6 million in 2002, as
compared to $3.4 million in 2001. The increase was primarily due to the net income for the
period and the decrease in prepaid expenses and inventories, which
was partially offset by the increase in due from factor and accounts
receivable and
the decrease in accounts payable and accrued expenses and income taxes payable.

Investing activities
used $0.1 million in net cash in 2002, as compared to
$0.8 million in 2001. Investing activities in the
current and prior year periods consisted of capital expenditures,
principally for the purchase of molds and equipment for new products.

Financing activities
provided $6.8 million in net cash in 2002 primarily due to
funding received by JAKKS partially offset by the decrease in
long-term obligations. In 2001, financing activities provided
$3.5 million in net
cash due to an increase in our bank credit facility, partially offset
by a decrease in long term obligations.

In March 2002,
Toymaxs $25.0 million bank facility was paid off
in full and terminated.

In April 2002, Toymax (H.K.) Limited subsidiary terminated its credit
facility with The Hongkong and Shanghai Banking Corporation Limited.
The facility had provided for an import line of credit of $500,000
and the acceptance of an export letter of credit guarantee for
documents presented with discrepancies of up to approximately
$2.3 million.

Toymax expects to fund its near-term and long-term cash requirements
from a combination of existing cash balances, cash flow from
operations and borrowings from JAKKS. There can be no assurance that
sufficient cash flows from operations will materialize or that
financing from JAKKS will be available in
amounts, at rates, or on terms and conditions acceptable to Toymax.
In such event, additional funding would be required.

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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002

NEW ACCOUNTING STANDARDS

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires the fair value of a liability
for an asset retirement obligation to be recognized in the period in which it
is incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset. SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002. We believe the adoption of this statement will have no material
impact on the financial statements.

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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002




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 exposure is to foreign currency
exchange fluctuations.

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, an OEM toy manufacturer that has been the Companys most
important manufacturer since inception, 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.

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Toymax International, Inc. and Subsidiaries 
June 30, 2001 and 2002




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 the aggregate, are not likely
to have a material adverse effect on its financial position or results of
operations.

Reference is made to Part I, Item 3, Legal Proceedings, in the Registrants
Annual Report on Form 10-K for the year ended March 31, 2002.




ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

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, 2002.

Under the Companys stock repurchase program approved by the Board of Directors
in May 1999, as of February 8, 2002, a total of 66,200 shares of Toymax common
stock have been repurchased for a total purchase price of $210,403.




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

At the Companys Annual Meeting of Stockholders on August 9, 2001, the
stockholders approved that the name of the Company be changed to Maxx
Enterprises, Inc. The steps to be taken to effectuate the name change from
Toymax International, Inc. to Maxx Enterprises, Inc. are not complete as of the
date of this report.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

| |      |  |                                         
| | ---- |  | ----------------------------------------
| | 99.1 |  | Certification of Chief Executive Officer
|
| | 99.2 |  | Certification of
Chief Financial Officer

b) Reports on Form
8-K



| |                                                                                                             |  | 
| | ----------------------------------------------------------------------------------------------------------- |  | 
| | A current Report on
Form 8-K relating to changes in our certifying accountants was
filed on August 1, 2002.

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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/ Joel M. Bennett                                                 
| |    |                                                                     
| |    | Joel M. Bennett
Chief Financial Officer(Principal
Financial Officer)

Date: August 14, 2002

19