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

                                    FORM 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES
EXCHANGE ACT OF 1934

                                       OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the Fiscal Year Ended December 31, 2001.

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934


For the Transition period from ________________________ to ____________________
Commission File Number: 0-23696


                              RADICA GAMES LIMITED
             (Exact name of registrant as specified in its charter)

                                     BERMUDA
                 (Jurisdiction of incorporation or organization)

                       SUITE R, 6/FL. 2-12 AU PUI WAN ST.
                                FO TAN, HONG KONG
                    (Address of principal executive offices)

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to section 12(g) of the Act:

                          Common Stock, Par Value $.01

          Securities for which there is a reporting obligation pursuant
                         to Section 15(d) of the Act.

                                      None

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

         Title of each class                          Amount Outstanding
         -------------------                          ------------------
    Common Stock, Par Value $.01                          17,646,740

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

Indicate by check mark which financial statement item the registrant has elected
to follow:

         Item 17           Item 18    X
                 ---------        ---------


<PAGE>


                              RADICA GAMES LIMITED

                       INDEX TO ANNUAL REPORT ON FORM 20-F
                          YEAR ENDED DECEMBER 31, 2001


                               ITEMS IN FORM 20-F

                                                                           Page
                                                                           ----

PART I                                                                        4



  ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS              4

  ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE                            4

  ITEM 3.  KEY INFORMATION                                                    4

  ITEM 4.  INFORMATION ON THE COMPANY                                        12

  ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS                      28

  ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                        35

  ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                 42

  ITEM 8.  FINANCIAL INFORMATION                                             43

  ITEM 9.  THE OFFER AND LISTING                                             43

  ITEM 10.  ADDITIONAL INFORMATION                                           44

  ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK        49

  ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES           49

PART II                                                                      49

  ITEM 13.  DEFAULTS, DIVIDEND AVERAGES AND DELINQUENCIES                    49

  ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
            AND USE OF PROCEEDS                                              50

  ITEM 15.  RESERVED                                                         50

  ITEM 16.  RESERVED                                                         50

PART III                                                                     50

  ITEM 17.  FINANCIAL STATEMENTS                                             50

  ITEM 18.  FINANCIAL STATEMENTS                                             50

  ITEM 19.  EXHIBITS                                                         50



                                       2
<PAGE>




DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This report includes "forward-looking statements" within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. For example,  statements included in this report regarding
our financial  position,  business  strategy and other plans and  objectives for
future operations,  and assumptions and predictions about future product demand,
supply,   manufacturing,   costs,   marketing   and  pricing   factors  are  all
forward-looking  statements.  We believe that the assumptions  and  expectations
reflected  in  such   forward-looking   statements  are  reasonable,   based  on
information  available to us on the date hereof,  but we cannot  assure you that
these  assumptions and  expectations  will prove to have been correct or that we
will  take  any  action  that  we may  presently  be  planning.  Forward-looking
statements  involve risks and  uncertainties  that could cause actual results to
differ  materially from projected  results.  These risks include those set forth
elsewhere in this Annual Report on Form 20-F for the fiscal year ended  December
31, 2001.  See "Item 3. Key  Information  - Risk Factors" in this report on Form
20-F. We are not  undertaking to publicly  update or revise any  forward-looking
statement if we obtain new  information  or upon the occurrence of future events
or otherwise.





                                       3

<PAGE>



                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

         Not Applicable

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

         Not Applicable

ITEM 3.  KEY INFORMATION

SELECTED FINANCIAL DATA

         Set forth below is the selected income statement and balance sheet data
for each of the two years in the period ended October 31, 1998, of two months in
the period  ended  December  31, 1998 and of the three years in the period ended
December 31, 2001.  This summary should be read in conjunction  with  "Operating
and Financial  Review and Prospects" and the combined  financial  statements and
notes thereto included elsewhere in this document.

<TABLE>
<CAPTION>
                                                                         TWO MONTHS ENDED
(in thousands, except per share data             YEAR ENDED DECEMBER 31,        DECEMBER 31,       YEAR ENDED
and margins)                                                                                       OCTOBER 31,
                                              2001        2000         1999         1998        1998         1997
                                              ----        ----         ----         ----        ----         ----

<S>                                        <C>         <C>          <C>          <C>         <C>          <C>
INCOME STATEMENT DATA:
Net sales                                     $98,554     $106,696     $136,716     $21,071     $155,618      $87,760
Cost of sales                                  64,698       83,041       80,910      10,717       70,576       40,888
                                              -------     --------     --------     -------     --------      -------

Gross profit                                   33,856       23,655       55,806      10,354       85,042       46,872
                                              -------     --------     --------     -------     --------      -------

Operating expenses:
  Selling, general and administrative          26,498       32,273       28,049       3,657       27,788       14,403
  Research and development                      5,775        5,210        6,036         730        3,710        2,099
  Acquired research and development                 -            -            -           -        1,500            -
  Depreciation and amortization                 4,013        5,427        4,956         612        3,423        2,278
  Restructuring charge                          1,551        1,190            -           -            -            -
                                              -------     --------     --------     -------     --------      -------
Total operating expenses                       37,837       44,100       39,041       4,999       36,421       18,780
                                              -------     --------     --------     -------     --------      -------

Operating (loss) income                        (3,981)     (20,445)      16,765       5,355       48,621       28,092
Other income                                       24          781          718         471          807          915
Share of loss of affiliated company                 -            -       (1,748)       (120)        (334)        (141)
Net interest income                               136          664        1,469         289        1,896          913
                                              -------     --------     --------     -------     --------      -------

(Loss) income before income taxes              (3,821)     (19,000)      17,204       5,995       50,990       29,779
(Provision) credit for income taxes              (553)         901         (149)       (176)         226         (193)
                                              -------     --------     --------     -------     --------      -------

Net (loss) income                             $(4,374)    $(18,099)     $17,055      $5,819      $51,216      $29,586
                                              =======     ========      =======      ======      =======      =======

Net (loss) earnings per share - basic          $(0.25)      $(1.03)       $0.94       $0.31        $2.53        $1.43
                                              =======     ========      =======      ======      =======      =======

Weighted average number of shares              17,612       17,608       18,144      18,883       20,240       20,761
                                                   (continued)
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                         TWO MONTHS ENDED
(in thousands, except per share data             YEAR ENDED DECEMBER 31,        DECEMBER 31,       YEAR ENDED
and margins)                                                                                       OCTOBER 31,
                                              2001        2000         1999         1998        1998         1997
                                              ----        ----         ----         ----        ----         ----

<S>                                        <C>         <C>          <C>          <C>         <C>          <C>
Net (loss) earnings per share and dilutive
  potential common stock                       $(0.25)      $(1.03)       $0.90       $0.29        $2.39        $1.37
                                              =======     ========      =======      ======      =======      =======
Weighted average number of shares and
  dilutive potential common stock used         17,612       17,608       18,979      20,094       21,488       21,636
  in computation

STATISTICAL DATA:
Gross margin                                    34.4%        22.2%        40.8%       49.1%        54.6%        53.4%
Operating margin                                (4.0%)      (19.2%)       12.3%       25.4%        31.2%        32.0%

BALANCE SHEET DATA (AT PERIOD END):
Working capital                               $36,709      $42,619      $65,123     $65,776      $59,913      $48,860
Total assets                                   91,829       99,315      122,174     108,190      113,521       79,449
Long-term debt                                  1,825        5,473       10,946           -            -            -
Total debt                                      6,319       12,901       13,809           -            -            -
Capital stock                                     176          176          176         189          189          209
Shareholders' equity                           63,052       67,388       86,062      85,735       79,839       61,593
</TABLE>

RISK FACTORS

         The shares of Common Stock of the Company involve a significant  degree
of risk.  Prospective  investors should carefully consider the following factors
together  with the other  information  contained  or  incorporated  by reference
herein  prior to making any  investment  decision  regarding  the Company or its
securities.

RISKS OF MANUFACTURING IN CHINA

         The  Company's   factory   location  is  in  Southern   China  and  its
headquarters  are in Hong  Kong,  which is a  Special  Administrative  Region of
China.

         Risk of China  Losing  Normal  Trade  Relations  ("NTR")  Status  or of
Changes  in Tariff or Trade  Policies.  The  Company  manufactures  in China and
exports  from  Hong Kong and  China to the  United  States  and  worldwide.  Its
products  sold in the  United  States  are  currently  not  subject to US import
duties.  On September  19, 2000,  the US Senate voted to  permanently  normalize
trade with China,  which provides a favorable  category of US import duties.  In
addition,  on  December  11,  2001  China  was  accepted  into the  World  Trade
Organization ("WTO"), a global international  organization of 144 countries that
regulates international trade.

         As a result of opposition to certain policies of the Chinese government
and China's growing trade surpluses with the United States,  there has been, and
in the future may be,  opposition to the extension of NTR status for China.  The
loss of NTR status for China,  changes in current tariff  structures or adoption
in the United  States of other  trade  policies  adverse to China  could have an
adverse effect on the Company's business.

         Chinese  Political,  Economic  and  Legal  Risks.  The  success  of the
Company's  current  and  future  operations  in China  and Hong  Kong is  highly
dependent  on the Chinese  government's  continued  support of  economic  reform
programs that encourage  private  investment,  and particularly  foreign private
investment.  Although the Chinese  government  has adopted an "open door" policy
with respect to foreign  investment,  there can be no assurance that such policy
will continue. A change in policies by the Chinese


                                       5

<PAGE>


government could adversely  affect the Company by, among other things,  imposing
confiscatory taxation,  restricting currency conversion,  imports and sources of
supplies, or expropriating private enterprises.  Although the Chinese government
has been pursuing economic reform policies for nearly two decades,  no assurance
can be given that the Chinese  government  will continue to pursue such policies
or that such policies may not be significantly altered,  especially in the event
of a change in leadership or other social or political disruption.

         The Company's  production and shipping  capabilities could be adversely
effected by ongoing tensions between the Chinese and Taiwanese  governments.  In
the event that Taiwan does not adopt a plan for unifying with China, the Chinese
government has threatened  military action against Taiwan. As of yet, Taiwan has
not indicated that they intend to propose and adopt a reunification  plan. If an
invasion were to occur,  Radica's supply of components from Taiwanese suppliers,
including  computer  processing  units  (CPUs),  could be cut  off,  potentially
limiting the  Company's  production  capabilities.  Invasion  could also lead to
sanctions or military  action by the US and/or European  countries,  which could
materially effect sales to those countries.

         China  does not have a  comprehensive  system of laws.  Enforcement  of
existing  laws may be sporadic and  implementation  and  interpretation  thereof
inconsistent. The Chinese judiciary is relatively inexperienced in enforcing the
laws that exist,  leading to a higher than usual degree of uncertainty as to the
outcome of any  litigation.  Even where adequate law exists in China,  it may be
impossible to obtain swift and equitable  enforcement  of such law, or to obtain
enforcement  of a  judgment  by a court of  another  jurisdiction.  It is widely
believed  that  China's   entry  into  the  WTO  should   expedite  the  uniform
interpretation and enforcement of laws throughout China.

         Dependence  on Local  Government.  The Company  operates its factory in
China  under  agreements  with  the  local  government.  Many  aspects  of  such
agreements  and  operation  of  the  Factory  are  dependent  on  the  Company's
relationship  with the  local  government  and  existing  trade  practices.  The
relationship  of the  Company  with the local  government  could be  subject  to
adverse change in the future,  especially in the event of a change in leadership
or other social or political disruption.

         Chinese Taxation.  The Company paid $271,766 in income tax on the Joint
Venture in China in 2001,  the third year it has paid  income tax in China.  The
Company was granted 50% relief from income tax through  December  31, 2001 under
the  Income  Tax Law of the PRC,  and was  therefore  taxed at 12%  during  this
period. After this it will be taxed at the full rate of income tax; however, the
Company is applying for extension of the reduced  rate.  In addition,  under the
existing  processing   arrangement  and  in  accordance  with  the  current  tax
regulations in the PRC, manufacturing income generated in the PRC is not subject
to PRC income taxes (see "Item 4.  Information  on the Company - Description  of
Business - Manufacturing Facilities").

         The PRC assesses tax on the Company based on two separate contracts:  a
Processing Agreement (PA) and a Joint Venture (JV) contract.  The JV contract is
a joint venture with the local  township that lasts through  August 12, 2024 and
tax is  payable  quarterly  based on tax  rates  determined  upon  entering  the
agreement. The tax on a PA is assessed on labor and raw material costs submitted
periodically to the PRC customs offices throughout the year.

         The Chinese tax system is subject to substantial  uncertainties and has
been subject to recently enacted changes,  the interpretation and enforcement of
which are also uncertain. There can be no


                                       6


<PAGE>

assurance  that  changes in Chinese  tax laws or their  interpretation  or their
application  will not subject the Company to  substantial  Chinese  taxes in the
future.

         The Company's  operations  involve a significant amount of transactions
which  cross a number of  international  borders.  In  addition,  the  Company's
manufacturing  operations are in China,  where the negotiation and settlement of
tax obligations with the local tax authorities are a normal occurrence.

         The Company  establishes  provisions for its known and estimated income
tax  obligations.  However,  whether  through a challenge by one of the many tax
authorities   in   international   jurisdictions   where  the  Company  and  its
subsidiaries  operate of the Company's  transfer  pricing,  the Company's  claim
regarding lack of permanent establishment,  or other matters that may exist, the
Company is exposed to possible additional taxation that has not been accrued.

         Limited Infrastructure. Electricity, water, sewage, telephone and other
infrastructure are limited in the locality of the Factory. In the past, the
Company has experienced temporary shortages of electricity and water supply. The
Company has installed seven back-up electrical generators in the Factory which
can support it in the event of a power shortage. There can be no assurance that
the infrastructure on which the Factory is dependent will be adequate to operate
the Factory successfully.

DEPENDENCE ON PRODUCT APPEAL AND NEW PRODUCT INTRODUCTIONS

         The Company's  operating  results depend largely upon the appeal of its
products to consumers. Consumer preferences are highly subjective, and there can
be no assurance that consumers will continue to find existing products appealing
or will find new  products  appealing.  Also,  the Company  continues to offer a
relatively  limited range of products that are all in the categories of games or
video game  accessories.  This  exposes the Company to the risks of any narrowly
focused  business.  Changes  in  consumer  preferences  away  from the  kinds of
products offered by the Company could have an adverse effect on the Company.

         Some of the Company's  products have been only recently  introduced and
although they may  experience  good initial sales growth,  there is no assurance
that such initial  success is  indicative  of  significant  future  sales.  As a
general  matter,  the  Company  expects  that the sales of these  products  will
eventually  decline.  The Company cannot predict how long the product cycle will
last for any  product.  In order to control  costs,  and take  advantage  of the
finite  shelf  space  available  to the  Company,  it will  also  need to delete
products from its line periodically.  The Company's  long-term operating results
will therefore  depend largely upon its continued  ability to conceive,  develop
and introduce new appealing products at competitive prices.

         Once  a  new  product  is  conceived,   the  principal   steps  to  the
introduction  of  the  product  include  design,  sourcing  and  testing  of the
electronic  components,  tooling,  and  purchase  and  design  of  graphics  and
packaging.  At any stage in the process,  there may be difficulties or delays in
completing the necessary  steps to meet the  contemplated  product  introduction
schedule.  It is, for example,  common in new product  introductions  or product
revisions to encounter technical and other difficulties affecting  manufacturing
efficiency and, at times, the ability to manufacture at all, that will typically
be  corrected  or improved  over a period of time with  continued  manufacturing
experience  and  engineering  efforts.  If one or  more  aspects  necessary  for
introduction  of  products  are not met in a  timely  fashion,  or if  technical
difficulties take longer than anticipated to overcome,  the anticipated  product
introductions will be delayed, or in some


                                       7

<PAGE>

cases may be terminated. Therefore no assurances can be given that products will
be introduced in a timely fashion.

         For most of the Company's history,  electronic handheld games made up a
significant portion of the Company's overall sales. In 1998 and 1999, electronic
handheld games made up 77.1% and 65.7%,  respectively.  In response to the heavy
concentration of sales within this category,  Radica has worked to diversify its
product lines.  Electronic handheld games accounted for 46.2% and 38.5% of sales
in 2000 and 2001, respectively.

         Future  products  may  utilize   different   technologies  and  require
knowledge  of  markets  in which the  Company  does not  presently  participate.
Significant  delays in the  introduction  of, or the failure to  introduce,  new
products  or improved  products  would have an adverse  effect on the  Company's
operating results.

NO ASSURANCE OF GROWTH

         There can be no assurance  that the Company will achieve  future growth
in net sales or that it will be able to maintain its present levels of net sales
or return to profitability.  The Company's current business strategy  emphasizes
the sale of a controlled number of products,  while  representing a more diverse
range of products,  e.g.,  Sports games,  Heritage card games,  the Girl Tech(R)
line, Play TV(TM), video game accessories ("VGA"), Original Design Manufacturing
("ODM") and Original Equipment Manufacturing ("OEM") products.

DEPENDENCE ON MAJOR CUSTOMERS

         Historically,  a significant  portion of the  Company's  sales has been
concentrated  in a few  large  retail  customers.  See  Note 18 of  Notes to the
Consolidated  Financial Statements included herein. Most of the Company's retail
customers  operate  on a  purchase  order  basis and the  Company  does not have
long-term  contracts with its retail customers.  While management  considers the
Company's  relationships with its major retail customers to be good, the loss of
one or more of its major retail  customers  would have an adverse  effect on the
Company's results of operations.

         On January 22, 2002 the Kmart Corporation filed for protection from its
creditors under Chapter 11 of the United States  Bankruptcy  Code. The Company's
receivable  exposure  was entirely  provided  for during 2001 and no  additional
write-downs  or expenses  related to the  bankruptcy  are expected in 2002.  The
Company has  decided to  continue to sell to Kmart under a  debtor-in-possession
agreement  during 2002 and will closely  monitor its account with Kmart in order
to minimize future exposure.

         During 2002, a significant portion of the Company' sales also came from
Shinsedai Co., Ltd.  ("SSD") in the form of ODM/OEM  projects.  The Company does
not have a specific  contract with SSD regarding  these projects and there is no
assurance that the Company will continue to receive orders from SSD, which could
have an adverse effect on the Company.

DEPENDENCE ON SUPPLIERS AND SUBCONTRACTORS

         The Company is dependent on suppliers for the components and parts that
it  assembles  to produce its  products.  The Company  generally  purchases  the
specific LCDs or  semiconductor  chips for any  particular  product model from a
single supplier. While the Company believes that there are alternative

                                       8
<PAGE>

sources  for  all of its  supplies,  an  interruption  of the  supply  of  LCDs,
semiconductor   chips  or  other  supplies  from  a  supplier  could  result  in
significant production delays.

         The Company also relies on outside manufacturers for production of some
of its video game accessories.  While the Company has moved the majority of this
production into its own Factory,  manufacturer delays or shut downs could have a
significant impact on future sales of VGA products.

CONCENTRATED MANUFACTURING FACILITIES

         A disruption of operations at the Factory due to fire,  labor  dispute,
dispute with the local government or otherwise,  would have an adverse effect on
the Company's results of operations. In such event, the Company believes that it
could  partially  mitigate the effect of a disruption by  increasing  the use of
subcontractors  to assemble its products,  but there can be no assurance that it
would be able to do so. In addition, the Company's manufacturing  facilities are
dependent on the Company's relationship with the local government.

NO ASSURANCE OF SUCCESS IN NEW BUSINESS

         In order to  sustain  growth,  Radica  intends to expand  into  related
businesses,  including ODM and OEM  production  for third  parties.  Until 1999,
Radica had only been successful in developing an ODM  relationship  with Hasbro.
During 2000,  Radica  entered into an ODM/OEM  agreement  with Konami Co.,  Ltd.
("Konami")  and SSD,  and also  manufactured  Othello  product for Mattel,  Inc.
During 2001, Radica  manufactured  several products for SSD. The Company intends
to  maintain  relationships  with  its  existing  ODM  and  OEM  partners  while
continuing to pursue new partners.

NO ASSURANCE OF CONTINUED ODM/OEM BUSINESS

         The Company's  contract with the Hasbro Games Group expired on December
31, 2001.  However the Company  continues to manufacture under the same terms as
specified in the expired contract.  The Company's  contracts with Konami and SSD
can be ended on 180 days notice.  There can be no assurance  that such  business
can be retained beyond the next 180 days. Loss of such business would materially
effect the Company's revenues.

DEPENDENCE ON KEY PERSONNEL

         The  success  of  the  Company  is  substantially  dependent  upon  the
expertise  and  services  of its senior  management  personnel.  The loss of the
services  of senior  executives  would have an adverse  effect on the  Company's
business.

SEASONALITY

         The Company experiences a significant seasonal pattern in its operating
results and working capital  requirements.  The Company typically generates most
of its sales in the third and fourth  quarters of its fiscal year,  prior to the
traditional  gift season.  The Company's  operating  results may also  fluctuate
during the year due to other factors such as the timing of the  introduction  of
new products. The market price of the Common Stock may be subject to significant
fluctuations in response to variations in quarterly  operating results and other
factors.  See Exhibit  12.1  Statement  re  Selected  Quarterly  Financial  Data
included herein.

                                       9
<PAGE>

COMPETITION

         Both the games and VGA businesses are highly  competitive.  The Company
currently faces direct  competition from a number of other producers of handheld
electronic games and video game  accessories,  the barriers for new producers to
enter into the Company's markets are relatively low and the Company expects that
it will  face  increased  competition  in the  future.  Some  competitors  offer
products at lower prices,  are better  established in the toy and games industry
and  are  larger  than  the  Company.  In  addition,  with  respect  to  ODM/OEM
manufacturing,  the Company competes with a number of  substantially  larger and
more  experienced  manufacturers.  As  the  Company  enters  other  markets  and
businesses, it expects to face new competition.

INTELLECTUAL PROPERTY RISKS

         From time to time, other companies and individuals may assert exclusive
patent,   copyright,   trademark  and  other  intellectual  property  rights  to
technologies  or  marks  that  are  important  to the  electronic  handheld  and
mechanical games industry generally or to the Company's  business  specifically.
The Company will evaluate  each claim  relating to its products or other aspects
of its business  and, if  appropriate,  will seek a license to use the protected
technology.  There can be no  assurance  that the Company will be able to obtain
licenses to intellectual  property of third parties on  commercially  reasonable
terms,  if at all. In addition,  the Company could be at a  disadvantage  if its
competitors  obtain licenses for protected  technologies on more favorable terms
than does the  Company.  If the Company or its  suppliers  are unable to license
protected  technology  used in the  Company's  products,  the  Company  could be
prohibited from marketing those products or may have to market products  without
desirable  features.  The Company could also incur substantial costs to redesign
its  products or to defend any legal action  taken  against the Company.  If the
Company's products should be found to infringe protected technology, the Company
could be enjoined from further  infringement  and required to pay damages to the
infringed  party.  Any of the  foregoing  could  have an  adverse  effect on the
results of operations and financial position of the Company.

PRODUCT LIABILITY

         Historically, the Company has had only a minor experience of complaints
relating to injuries or other damages caused by its products. However, in recent
years the  Company  has  introduced  products  that  involved  more  active play
including its baseball and golf games.  In fiscal 2000,  the Company  received a
number of  consumer  complaints  that bats used in the  baseball  game  could be
broken  resulting  in a  projectile  striking a game  participant.  The  Company
recalled the bats for replacement with a reengineered bat. The Company is in the
process of  handling  all  remaining  claims  resulting  from  damages  from the
recalled  bat and all  pending  claims  are  covered  by the  Company's  product
liability  insurance.  The Company may be exposed to claims for damages in these
or other circumstances, some or all of which may not be covered by insurance.

TAXATION

         The Company cannot predict  whether its tax rates will remain as low as
they  have  been  in  the  past  as  tax  regulations  and  the  application  or
interpretation  thereof in the various  jurisdictions  within  which the Company
operates are always subject to change. See "Item 4. Information on the Company -
Description of Business - Taxation of the Company and its Subsidiaries".

                                       10
<PAGE>

COPY PRODUCT

         On  occasion in the  electronic  games and VGA  industries,  successful
products are  "knocked-off" or copied.  While the Company strives to protect its
intellectual  property there can be no guarantee that knock-offs will not have a
significant effect on its business.

BAD DEBTS AND RETURNS

         While the Company  does full credit  checks on all of its  customers it
cannot be assured that any customer will not default on a payment of debt.  Such
a default  could  have a  significant  effect on the  Company's  results.  It is
industry practice for retailers to hold back payments on slow moving stock or to
request  markdowns or returns on such stock. It is the Company's  policy to only
take back  defective  product and while the Company  believes it will be able to
enforce this policy under normal industry conditions,  it may not be possible to
enforce this policy in all cases. The VGA market generally  experiences a higher
rate of defective and overstock  returns than the electronic and mechanical game
market  does.  Generally,  defective  VGA that are  manufactured  by third party
manufacturers  are returned to the  manufacturer  for credit.  It is the general
policy  of the  Company  to refuse  the  return of  non-defective  products  and
management  believes that there is little risk of  significant  levels of future
returns of non-defective product.

CONTROL BY EXISTING SHAREHOLDERS

         The Company's largest shareholders (see "Item 7. Major Shareholders and
Related Party  Transactions  - Control of  Registrant")  including Mr. Robert E.
Davids,  Vice Chairman of the Company,  and a group that consists of Dito Devcar
Corporation  and  certain  related  persons,  and a group that  consists  of RAD
Partners 1999 LLC and certain related persons, own beneficially in the aggregate
a  majority  of the  outstanding  Common  Stock.  Assuming  that  they  were  in
agreement,  such persons would have the power to elect the  Company's  directors
and to approve or disapprove all other matters requiring  shareholders' approval
regardless of the vote of any other shareholders.

ENFORCEABILITY OF CIVIL LIABILITIES

         The Company is a Bermuda holding company,  and a substantial portion of
its assets are located  outside the United States.  In addition,  certain of the
Company's  directors  and officers  and certain of the experts  named herein are
resident outside the United States (principally in Hong Kong, the United Kingdom
and the People's  Republic of China),  and all or a  substantial  portion of the
assets of such  persons are or may be located  outside the United  States.  As a
result, it may not be possible for investors to effect service of process within
the United States upon such persons,  or to enforce  against them or the Company
judgments  obtained  in the  United  States  courts  predicated  upon the  civil
liability  provisions of the United States  securities laws. Among other things,
the Company  understands that there is doubt as to the enforceability in Bermuda
and Hong Kong,  respectively,  in original actions or in actions for enforcement
of judgments of United States courts,  of civil  liabilities  predicated  solely
upon the United States securities laws.

SHARES ELIGIBLE FOR FUTURE SALE


                                       11

<PAGE>

         At December 31, 2001, the Company had 17,646,740 shares of Common Stock
outstanding.  The  Company  estimates  that most of such  shares  were sold in a
registered  offering or in a  transaction  under Rule 144,  and  therefore  such
shares  (other than any shares  purchased  by  "affiliates"  of the Company) are
tradable   without   restriction.   The  remaining   shares  owned  by  existing
shareholders  are  restricted  securities  under the  Securities Act of 1933, as
amended (the  "Securities  Act") and may be sold only pursuant to a registration
statement  under  the  Securities  Act  or  an  applicable  exemption  from  the
registration  requirements of the Securities Act, including Rule 144 thereunder.
Most of these restricted shares are currently eligible for sale pursuant to Rule
144,  subject to the  limitations  of such rule.  In  addition,  the Company has
granted to Mr.  Davids  and  another  shareholder,  the  Hansen  Trust,  certain
registration   rights  with  respect  to  their  shares.  (See  "Item  7.  Major
Shareholders and Related Party  Transactions - Interest of Management in Certain
Transactions")  Mr.  Davids has exercised  his  registration  rights for all his
outstanding  shares.  No predictions can be made as to the effect,  if any, that
market  sales of shares by existing  shareholders  or the  availability  of such
shares for future sale will have on the market price of Common Stock  prevailing
from  time to time.  The  prevailing  market  price  of  Common  Stock  could be
adversely effected by future sales of Common Stock by existing shareholders.

LICENCES AND ROYALTIES

         The Company has entered into various license and royalty  agreements in
which it pays fees in exchange  for rights to the use of product  inventions  or
trademarked names, shapes and likenesses for use in development of the Company's
product line. The agreements generally include minimum fee guarantees based on a
reasonable  expectation of the product sales to be generated throughout the life
of the  agreement.  There can be no  assurance  that the Company will be able to
meet these  projected  expections and may be obligated to pay unearned fees as a
result.

REPLACEMENT OF HONG KONG STAFF

         During January of 2002, the Company  replaced a significant  portion of
its Hong Kong  operations  staff  with  similarly  qualified  staff in China and
required  certain other staff to spend more time in China. The move was intended
to reduce costs and increase  efficiency.  While the  management  of the Company
believes  that  the plan  will  achieve  its  intended  objectives,  there is no
assurance that this decision will not result in production  delays,  new product
development  delays or other  problems  (see "Item 5.  Operating  and  Financial
Review and Prospects - Fiscal 2001 Compared to Fiscal 2000").

RISK OF CONSIGNMENT INVENTORY

         During 2001, the Company entered into distribution agreements in France
and Germany in which  inventory  is sold to the  distributors  on a  consignment
basis.  The  Company  has  implemented  controls  to  ensure  that the  physical
inventory is regularly matched to the Company's  internal  records.  There is no
assurance  that the  consumer  demand for the product in France and Germany will
match the distributors'  anticipated demand and there is a risk that the Company
will be left with excess inventories in these markets.

ITEM 4.  INFORMATION ON THE COMPANY

DESCRIPTION OF BUSINESS

                                       12
<PAGE>

         Radica Games Limited (the "Company") manufactures and markets a diverse
line of electronic entertainment products including handheld and tabletop games,
high-tech toys, and video game accessories. The Company is headquartered in Hong
Kong at the address set forth on the cover of this report and  manufactures  its
products in its  factory in southern  China.  The Company  markets its  products
through  subsidiaries in the United States, the United Kingdom,  Canada and Hong
Kong. Its largest market is in the United States where in 2001 it had the second
largest market share in handheld and tabletop  electronic games according to the
NPD Group,  Inc.,  the  primary  source for such  industry  data.  In the United
Kingdom, the Company's subsidiary had the largest market share of the video game
controller market among third-party  manufacturers in 2001 according to industry
data source, Chart Track.

         The  Company  has  operated  as a  manufacturer  of games  since  1983,
starting with a small operation in Hong Kong providing souvenir casino games for
the Las Vegas market  including  mechanical bank slot machines.  Radica expanded
into the  electronic  game business  setting up a factory in China in 1991 and a
distribution  operation  in  the  United  States  in  1992.  The  business  grew
substantially  from that point and the Company  became the  leading  supplier of
casino  type  electronic  handheld  games in the U.S.  market with games such as
Video Poker and Video Blackjack.  In 1994 the Company went public and its shares
began trading on the NASDAQ exchange under the RADA symbol.

         In  1995  Radica  began  to  diversify  its  product  line  into  other
electronic handheld and tabletop game areas. The Company began to offer heritage
games such as  Solitaire,  Hearts and Gin  Rummy,  and sports  games such as its
World Class Golf(TM) and Football.  In addition to the casino and heritage games
that helped build the company,  Radica offers a broad line of  electronic  games
including virtual fishing games such as Sport Bass Fishin'(TM),  virtual hunting
games such as  Buckmasters(R)  Deer  Huntin'  II(TM),  a line of games  based on
popular EA SPORTS(TM) products,  and NASCAR(R) and  Harley-Davidson(R)  licensed
games.

         Radica's line of fishing games feature  motion-sensing  technology that
allows the player to use the games as a rod and reel.  The player  casts,  feels
the fish  bite,  sets the hook  with a jerk,  and  reels in the fish with a real
handle. This product started an industry trend in creating virtual reality games
where the product  provides  the feel of the real sport.  This is  delivered  by
uniquely realistic game shapes, motion sensors and tactile feed back. An example
of this is the Company's  Airforce  iCombat.  This virtual reality fighter pilot
game  provides  the sights and  sounds of real air  combat  with a full  handset
complete with  headphones  and 3D graphics  along with a handheld pitch and roll
joystick featuring motion sensors and vibration feedback.

         In 2001, Radica introduced Skannerz(TM).  Targeting boys 7-12, Skannerz
utilizes  UPC  scanner  technology  to  create a fun,  collectible-driven  game.
Players use  Skannerz to scan the UPC code of any  consumer  product to download
monsters,  magic potions and weapons to use in battle. Each game unit includes a
comic book and collectible  poster.  The product was successful in 2001 and is a
continuing item in 2002.

         The  Company  continues  to pursue  licensed  properties  and added the
Tetris license to the Radica line for 2001. With over 50 million fans, Tetris is
the world's  most  popular and best  selling  video game of all time.  Radica is
introducing two versions of Tetris,  one in the mass market and a second game in
the  specialty  channel.  Both  games  feature  classic  Tetris  play with added
features such as backlighting and head to head play through an IR link.

                                       13
<PAGE>

         Radica   introduced   Radica  Play  TV(TM)  games  featuring   XaviX(R)
technology in 2000. The technology  provides  consumers with easy-to-use Play TV
games, which are freestanding devices that plug directly into the TV and use the
screen as the display. This single-chip,  multi-processor  integrated circuit is
designed to generate  high-quality  graphics and sound on a television set. Play
TV Baseball, Buckmasters(R) Huntin', Play TV Bass Fishin', Play TV Snowboard and
Play TV Cardnight  shipped during 2001. Radica is expanding this line of product
in 2002 with Play TV Soccer, Play TV Boxing,  Play TV Construction,  and Play TV
Baseball 2.

         In  2002,  Radica  will  introduce  its  Barbie(TM)  licensed  line  of
products.  The 2002 line will  consist of five  products,  including  Barbie(TM)
Dance  Party,  a TV dance  mat game  that  utilizes  the  XaviX  technology  and
Barbie(TM)  Secret  Treasure  Box, a decorative  storage box that is opened by a
magnetic butterfly pendant.

         Girl  Tech,  which  was  acquired  in  1998,  was  created  to  design,
manufacture  and market  personal  electronics for girls ages 8-12. Girl Tech is
dedicated  to  creating  technology  enhanced  toys  designed  with  girls' play
patterns and  preferences  in mind and that address issues that are important to
them such as privacy and  communication.  Girl Tech's  products and services are
tied by the  common  theme  of  encouraging  girls'  to have fun with the use of
technology.  The web site  (www.girltech.com)  currently  receives almost 75,000
hits per month from girls from over 85 countries.

         In June  of  1999,  Radica  announced  the  acquisition  of Leda  Media
Products Limited, now called Radica UK Limited ("Radica UK"), a UK company that,
with its  Gamester(TM)  brand, is a leader in video game  controllers in Europe.
Radica UK brings Radica into a new market that is closely  aligned with handheld
games.  Controllers  are handheld  devices that plug into video games  platforms
such as those that Nintendo,  Microsoft and Sony  manufacture.  They provide the
control  of the game as a  peripheral  device.  Included  in this range are game
pads,  steering wheels,  memory cards and other accessories used to enhance game
play  and  performance.  Radica  UK is  the  current  leader  among  third-party
companies  in the UK and has a strong  position in Europe as well.  Radica began
shipping and selling the product line to the United States and Canada during the
second  half of 2001 and hopes to  significantly  increase  its market  share in
those markets during 2002.  Radica had success with its Gamester brand Pro Racer
and Sportsboard  controllers during 2001 and recently  introduced the innovative
Floodlight(TM) for Nintendo's Game Boy Advance.

         The Company undertakes  Original Design  Manufacturing  ("ODM") for the
Hasbro Games Group,  producing  well-known  electronic versions of games such as
Yahtzee(TM), Trivial Pursuit(TM) and Monopoly(TM).  During 2001 the Company also
undertook ODM/OEM products for SSD,  producing Excite Ping Pong, Excite Striker,
Gingin Boarders and e-Kara.

         The  Company  also  sources   batteries,   power  sources  and  various
electronic  devices from various  manufacturers for Argos, a catalog retailer in
the United  Kingdom.  Radica expects to continue  operating in this capacity for
Argos in 2002.

BACKGROUND

         The Company  completed an Initial  Public  Offering  (IPO) in May 1994.
Prior to the IPO,  the  principal  shareholders  of the  Company  conducted  the
Company's  business  through  two  separate,  jointly  owned  companies  (Radica
Limited,  which  manufactured  the  Company's  products,  and Radica USA,  which
distributed and currently distributes products in the United States) and through
a third company, Disc Inc., 14
<PAGE>

that was solely owned by Robert E. Davids,  Vice Chairman of the Company,  which
provided  certain design and  engineering  services to Radica  Limited  ("Radica
HK"), and now provides similar services to Radica China Limited ("Radica China")
and Radica Games Limited ("Radica Games").

         Radica HK was  established  in Hong Kong in September  1983 by James J.
Sutter  and John N.  Hansen and  originally  sold two  models of  souvenir  slot
machine banks.  In 1988,  Robert E. Davids joined the Company as General Manager
and  led the  Company's  development  of one of the  first  souvenir  electronic
tabletop  poker games.  In 1989,  Mr. Davids became an equal  shareholder in the
Company with Mr. Sutter and Mr. Hansen.  In 1991, the Company  introduced one of
the first handheld electronic poker games.

         Radica   initially   had  its  products   assembled  in  Hong  Kong  by
subcontractors and sold through distributors in the United States.  Between 1988
and 1990, the Company brought certain of its production  activities in house. At
the beginning of 1992, the Company opened a factory in Tai Ping,  China,  moving
its production  activities  from Hong Kong to southern China. In April 1992, Mr.
Sutter, Mr. Hansen and Mr. Davids established Radica USA to take greater control
of the distribution of the Company's  products in the United States. The Company
made over 60% of its sales through Radica USA in fiscal 2001.

         In December  1993,  Radica  Games was  incorporated  in Bermuda and was
established as a holding  company of Radica HK. Prior to the closing of the IPO,
Radica Games acquired all of the outstanding common stock of Radica USA from Mr.
Davids,  Mr.  Sutter and Mr.  Hansen in exchange  for  additional  shares of the
Company's common stock and acquired all of the outstanding  common stock of Disc
from Mr. Davids. In May 1995 the Company opened its purpose built factory in Tai
Ping,  China on a 3.7 acre site under the terms of a  cooperative  joint venture
agreement with the local government.

         In April 1998 the Company acquired the assets and business of Girl Tech
from KidActive, LLC.

         In June 1999,  the  Company  acquired  Radica UK,  formerly  Leda Media
Products  Limited,  a leading  supplier of video game  controllers in the United
Kingdom.

         During the fourth quarter of 1999, the Company  commenced  construction
of a $3 million  extension to its factory to add 202,000  square feet of factory
space  and  178,000  square  feet  of  dormitory  space  allowing  for  up to an
additional  3,000 employees to be housed.  As a result of the drop in demand for
Radica product in the US during 2000,  work towards  completion of this addition
has been  postponed  and may  continue  when market  demand  warrants use of the
additional space.

BUSINESS STRATEGY

         The  Company  intends  to  provide  a  broad  line  of  electronic  and
mechanical  games and video game  accessories.  In order to provide  innovative,
high quality games at low prices, Radica employs a strategy of product design in
the United  States and  United  Kingdom,  where a  substantial  majority  of the
Company's  products are sold,  combined with  engineering and low cost materials
procurement  in Asia and low cost  manufacturing  in China,  where  the  Company
operates  its  Factory.  The  Company  also  consults a select  group of outside
inventors  for product  concepts.  The  Company's  current  products and planned
products are  intended to reach retail price points  covering the range of large
volume gift products.  The Company  historically  focused  primarily on products
that combine  knowledge of the casino  gaming  industry  with  experience in new
product introduction,  electronic game design and low cost manufacturing.  Since
1996 the  Company  has placed more  emphasis  on  non-casino  games and with the
acquisition of


                                       15
<PAGE>

Radica UK in 1999, has expanded  beyond  electronic  games, to include a line of
video  game  joypads,   steering   wheels,   memory  cards  and  other  assorted
accessories.  The Company also designs and manufactures electronic games and VGA
on behalf  of third  parties  under  ODM/OEM  agreements.  The games and VGA are
generally based on third party games.

         To  provide  differentiation  between  high-end  and  low-end  markets,
products are packaged under the name  'RADICA:(R)'  for the low-end mass markets
and under the name 'Radica:(R)  Gold' for the more exclusive  high-end  markets.
Girl Tech  products are packaged  under the name of "Girl  Tech(R)".  Video game
accessories  are packaged  under the Gamester  name.  Radica's  line of products
using the XaviX  technology are packaged under the name of Connectv(R) in Europe
and Play TV(TM) in the US and other world markets.

         Radica believes its ability to develop and introduce innovative
products is enhanced by its established innovative product design and
engineering in the United States and the United Kingdom, and its multiple
channel distribution capabilities, which allow for close customer contact. Large
manufacturing volumes and low cost production activities in China have allowed
the Company to keep its prices competitive. In addition, electronic parts and
subassemblies can be purchased efficiently and at low cost in Asia.

         The Company has expanded and  continues to expand  distribution  of its
existing  products,  both inside and outside the United States.  As part of this
goal,  Radica Canada and a predecessor of Radica UK were  established in 1995 to
distribute  products in these markets.  UK distribution was assumed by Radica UK
upon its  acquisition  by the  Company in 1999.  The  Company  intends to pursue
related  business   opportunities   that  leverage  off  the  Company's  product
development  expertise to access new  markets.  Related  business  opportunities
include ODM/OEM for other companies,  of which the  manufacturing for the Hasbro
Games Group and SSD are examples.

PRODUCTS

         At the end of fiscal year 2001,  Radica's principal products by product
line were as follows:

<TABLE>
<CAPTION>
FISHING                                     HUNTING                                   SPORTS
<S>                                         <C>                                       <C>
Ultimate Bass Fishin'(TM)                   Buckmasters(R)Deer Huntin'(TM)            Harley Davidson(R)Game Glove(TM)
Sport Bass Fishin'(TM)                      Buckmasters(R)Mini Huntin'(TM)            Tiger Woods Ultimate Golf(TM)
Pro Guide Bass Fishin'(TM)                  Buckmasters(R)Deer Huntin'(TM)II          Tiger Woods Tournament Golf(TM)
Mini Bass Fishin'(TM)                                                                 Nascar(R)I-Racer(TM)
                                                                                      EA Premium League Football
                                                                                         Manager(TM)
                                                                                      EA Stadium Football(TM)
                                                                                      EA Stadium Baseball(TM)
                                                                                      EA Mouse Hockey(TM)
                                                                                      EA Mouse Basketball(TM)
                                                                                      Soccer Striker

HERITAGE                                    CASINO                                    GIRL TECH(R)
--------                                    ------                                    ------------
Big Screen Solitaire(TM)                    Pocket Draw Deuces Poker(TM)              Password Journal(R)2
Travel Solitaire(TM)                        Pocket Poker(R)                           Password Journal(R)
Freecell Solitaire(TM)                      Pocket Blackjack 21(R)                    Keep Safe Box(TM)
</TABLE>


                                       16
<PAGE>

<TABLE>
<S>                                         <C>                                       <C>
2-in-1 Solitaire(TM)                        Pocket Slot(TM)                           Password Notes(TM)
Solitaire Lite(TM)                          Jackpot Slot(TM)                          Plan Girl(TM)
Travel Checkers(TM)                         Color Poker(TM)                           Password Phone(TM)
Travel Tic-Tac-Toe(TM)                      Draw Poker(TM)                            Personology(TM)
Pocket Word Scramble(TM)                                                              Password Keepsafe Box(TM)
3-in-1 Tetris(R)Light(TM)
</TABLE>



                                       17
<PAGE>

<TABLE>
<CAPTION>
PLAY TV(TM)                                         ODM/OEM                           VGA (PLAYSTATION)
-----------                                         -------                           -----------------
<S>                                                 <C>                               <C>
Radica Play TV Baseball(TM)                         Connect Four(TM)                  PS2 Vibra Force 2 Controller
Radica Play TV Ping Pong(TM)                        Battleship(TM)                    PS2 Vibra Force 2 Racing Wheel
Radica Play TV Bass Fishin'(TM)                     Yahtzee(TM)                       PS2 Dual Force Joypad
Radica Play TV Buckmasters(R)Huntin'(TM)            Hangman(TM)                       PS2 Dual Force Steering Wheel
Radica Play TV Snowboard(TM)                        Mr. Potato Head(TM)               PS2 Pro Racer
Radica Play TV Cardnight(TM)                        CandyLand(TM)                     PS2 Sportsboard
                                                    Monopoly(TM)                      PS2 DVD Remote Control
ACTION                                              Excite Ping Pong                  Playstation Dualshock
------                                              Gingin Boarders                        Analog Joypad
Skannerz(TM)                                        Excite Striker                    Assorted Color Memory Cards
Air Force iCombat(TM)                               e-Kara
Radica Rock(TM)

VGA (HANDHELD)                                      VGA (XBOX(TM))
--------------                                      --------------
GBA Powerpack                                       Xbox(TM) Pro Racer
GBA Profold Light                                   Xbox(TM) Vortex Assortment
     Magnifying Glass                               Xbox(TM)Cortex Pack
GBA Ultimate Essentials                             Xbox(TM)Arcade Stick
GBA Wallet (Adult)                                  Xbox(TM)8 MB Memory Card
GBA Trap Light
GBA Main Adaptor
GBA Essentials
Gameboy Essentials Pack
Gameboy Powerpack
GBA Link Lead 4
GBA Car Adaptor
GBA Link Lead 2
GBA Power Station
GBA Kit Bag
</TABLE>

         In  addition  the Company has a number of  discontinued  lines,  which,
unless the market warrants reintroduction,  the Company only intends to continue
selling  so  long  as  inventories  exist.  The  Company  intends  to  introduce
approximately 64 new models in 2002 (including 33 VGA products). In fiscal 2000,
the Company's products had retail prices ranging from $5 to $500.

         The following  table sets forth a breakdown of the  Company's  sales by
major product category for the last four fiscal years.


                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                    ----------------------------------------------------------------------------------------------------------
                                           2001                                                 2000
                    -------------------------------------------------    -------------------------------------------------
                      % OF NET         NET         UNITS     NO. OF        % OF NET         NET         UNITS     NO. OF
Product Lines       Sales Value    Sales Value     Sold      Models      Sales Value    Sales Value     Sold      Models
---------------------------------  ------------- ---------- ---------    -------------  ------------- ---------- ---------
(in thousands, except percentage and no. of models information)

<S>                        <C>         <C>           <C>         <C>            <C>         <C>           <C>         <C>
Handheld                   38.5%       $ 38,001      5,505       130            46.2%       $ 49,307      6,644       110
Play TV                    14.5%         14,315        502         7             8.0%          8,561        289         4
Girl Tech                  11.9%         11,723      1,042        16            13.0%         13,897      1,211        12
ODM / OEM                  19.2%         18,890      3,973        15            18.1%         19,271      4,686        22
VGA                        10.5%         10,337      2,070       130             9.5%         10,116      1,752       108
                           ----          ------      -----       ---             ---          ------      -----       ---

                           94.6%         93,266     13,092       298            94.8%        101,152     14,582       256
Sourcing                    5.4%          5,288                                  5.2%          5,544
                          -----        --------                                -----       ---------
Total                     100.0%       $ 98,554                                100.0%      $ 106,696
                          =====        ========                                =====       =========
</TABLE>

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                    ------------------------------------------------------------------------------------------------------
                                           1999                                                 1998
                    -------------------------------------------------    -------------------------------------------------
                      % OF NET         NET         UNITS     NO. OF        % OF NET         NET         UNITS     NO. OF
Product Lines       Sales Value    Sales Value     Sold      Models      Sales Value    Sales Value     Sold      Models
---------------------------------  ------------- ---------- ---------    -------------  ------------- ---------- ---------
(in thousands, except percentage and no. of models information)

<S>                        <C>         <C>           <C>         <C>            <C>        <C>           <C>          <C>
Handheld                   64.2%       $ 87,775      8,667       100            77.1%      $ 122,902     11,903       110
Girl Tech                   5.4%          7,444        594         6             0.1%            145         11         2
ODM / OEM                  20.4%         27,897      6,109        22            22.8%         36,322      6,144        20
VGA                         7.0%          9,558      1,871       139                -              -          -         -
                          ------      ---------     ------       ---           ------      ---------     ------       ---
Total                      97.0%      $ 132,674     17,241       267           100.0%      $ 159,369     18,058       132
Sourcing                    3.0%          4,042                                     -              -
                          ------      ---------                                ------      ---------
Total                     100.0%      $ 136,716                                100.0%      $ 159,369
                          ======      =========                                ======      =========
</TABLE>

         Radica sells a broad range of electronic  and  mechanical  handheld and
tabletop  games  under the Radica  and Radica  Gold  brand  names.  These  games
simulate sports and recreational  activities,  such as fishing,  hunting,  golf,
baseball and snowboarding; casino games, such as blackjack, poker and slots; and
popular heritage games such as solitaire, checkers and crossword puzzles.

         During  1999,  Radica  introduced  its  Girl  Tech  line of  electronic
products.  The Girl Tech line provides  unique and innovative  gadgets for girls
that utilize  technologies  such as the  electronic  voice  recognition  used in
Password Journal(R) and Password Door Pass(TM).

         In June of 1999,  the Company  acquired  Radica UK, which  expanded its
product portfolio to include VGA such as steering wheels,  joypads, memory cards
and other video game  accessories for  Playstation,  PlayStation 2, Nintendo 64,
Nintendo Gameboy and PC Platforms.

         During 2000,  Radica  introduced  its Play TV line,  featuring  the new
XaviX technology which allows users to plug games directly into their television
set for display of the game contact on the screen without  requiring  connection
through a video game system.

         During  2001,  Radica  entered  into an agreement to become an approved
licensed vendor of video game  accessories for the Microsoft  Xbox(TM).  Several
new items were introduced for Xbox(TM) in 2001, including the Xbox(TM) Pro Racer
and the Xbox(TM) Vortex Assortment and the Xbox(TM).



                                       19
<PAGE>

NEW PRODUCT INTRODUCTION

         In  fiscal  2002,  Radica  intends  to  update  its  line of  games  by
introducing  approximately 64 new games/accessories in the following categories:
Handhelds,  with  Radica  Fishing  (1 game),  Radica  Sports (4  games),  Radica
Heritage (9 games),  Radica  Hunting (1 game),  Barbie(TM)  (4 games),  Pino(TM)
Robot (2 games) and Radica  Casino (2  games);  Girl Tech (5 games),  Play TV (3
games) and VGA (33 products). The Company believes that its strategy of offering
various game models with differing  features enables it to market its games to a
wide age range of consumers  with  different  tastes and  financial  means.  The
Company will also  continue to provide its Radica Gold brand  products to higher
end retailers.

             2002 vs. 2001 New Product Introductions (by category)
             -----------------------------------------------------

                                        2002              2001
                                        ----              ----
           Handheld                       23                45
           Play TV                         3                 5
           Girl Tech                       5                 9
           VGA                            33                46
                                          --                --
           TOTAL                          64               109

         The Company  anticipates that new product  introductions in fiscal 2002
will be  concentrated  in the second and third quarters of that year. By the end
of fiscal 2002,  the Company  expects its product line to include  approximately
180 models, of which 91 will be in VGA. However, it is possible that the Company
will determine not to proceed with any given product or that one or more aspects
necessary for introduction of the products in fiscal 2002 will be delayed, which
could delay or prevent certain anticipated product introductions.

LICENSING

         During fiscal 2001, Radica engaged in several  licensing  agreements in
which Radica was given  permission to use the name,  logo,  game concept  and/or
license of a person, company or brand in exchange for a royalty fee.

         Among the  licensors  were NASCAR  (NASCAR(R)  Racer(TM) and NASCAR (R)
Speedzone(TM)),  Tiger Woods (Tiger  Woods  Ultimate  Golf(TM),  Tiger Woods Tee
Time(TM) and Tiger Woods Tournament Golf(TM)), Electronic Arts (EA No Hitter(TM)
and EA Madden Football(TM)), Sloane Vision Unlimited, developers of Chicken Soup
for the  Soul  (Chicken  Soup for the  Soul(R),  Chicken  Soup  for the  Teenage
Soul(TM)),  Anjar Co, developers of Othello,  Buckmasters  (Buckmasters(R)  Deer
Huntin'(TM)  II  and   Buckmasters(R)   Elk  Huntin'(TM),   Buckmasters(R)   Bow
Huntin'(TM)), Hank Parker (Ultimate Bass Fishin'(TM), Pro Guide Bass Fishin'(TM)
and Sport Bass Fishin'(TM)),  Elvis Presley Enterprises (Elvis Slot), the Tetris
Company  (Tetris  Lite  and  Tetris  Challenge)  and  SSD,  developers  of Xavix
technology (Play TV series TV games) and Microsoft(TM),  developers of Microsoft
Xbox(TM) (VGA line of products specifically made for the Xbox(TM)).

         The Company intends to incorporate some of these licenses into its 2002
product line and will pursue new licenses in instances where management feels it
will enhance the value and marketability of a particular product.

MANUFACTURING



                                       20
<PAGE>

         Radica's manufacturing is generally limited to IC chip bonding, plastic
injection,  clamshell  production,  mold  manufacture,  surface mount technology
("SMT") and assembly  operations.  The Company orders customized  components and
parts from suppliers and uses  subcontractors  for more  complicated  operations
such as masking of the Company's  proprietary  software  onto the  semiconductor
chips used in its games,  LCD tooling and a  proportion  of tooling of molds for
its plastic parts.

         In 2001 the Company  assembled all of the Radica and Girl Tech lines of
products  in order to  control  its  costs,  quality,  production  and  delivery
schedules.  VGA were  assembled  both in-house and by third party  manufacturers
during 2001.

         The Company's products are not required to obtain any quality approvals
prior to sales in the United States. The Company,  however,  is required to have
and has obtained CE approval,  Europe's  toy safety  standard,  for its products
sold in Europe.  The Company has been granted a Chinese toy quality license from
the Chinese Import and Export Commodity  Inspection Bureau, which is required of
toy and game  manufacturers  in China to export toys or games. In addition,  the
Company voluntarily complies with ASTM 963, a US toy safety standard.

         The Company received renewal of its ISO 9001 quality certification from
Underwriters  Laboratory  on January  24,  2001.  The scope of the  registration
covers the design,  sales and distribution of electronic and  electro-mechanical
games and related gift products.

MANUFACTURING FACILITIES

         Radica currently manufactures its products at its Tai Ping factory (the
"Factory") in Dongguan,  Southern China approximately 40 miles northwest of Hong
Kong. The Factory was constructed  with the cooperation of the local  government
according  to  the  Company's  design  specifications  on a 3.7  acre  site.  An
extension of the Factory  commenced in December 1999 to add 202,000  square feet
of factory space and 178,000  square feet of dormitory  space allowing for up to
an additional  3,000  employees to be housed.  The cost of  construction  of the
extension would have been approximately $3.0 million, exclusive of manufacturing
equipment. As a result of the drop in demand for Radica product in the US during
2000,  work  towards  completion  of this  addition has been  postponed  and may
continue when market demand warrants use of the additional  space. The expansion
has been sufficiently completed to the point that no impairment issues exist and
it is currently being used for storage during peak production  season.  The unit
capacity of the Factory depends on the product mix produced. In any event, there
can be no assurance that the Company will be able to operate at full capacity or
have sufficient sales to warrant doing so.

         In June,  1994  the  Company  entered  into a joint  venture  agreement
("Joint Venture  Agreement")  with the local  government to operate the Factory.
The Company contributed the cost of the construction of the factory to the joint
venture  while the local  village  contributed  the land-use  rights.  The joint
venture is for 30 years after  which it may be  renegotiated.  The  construction
cost of the  factory is being  treated  as a prepaid  30-year  leasehold  on the
factory.  Upon the commencement of production,  the local government  received a
fixed  annual  fee as the joint  venture  partner.  The annual fee is subject to
increases  every three years and had originally been set at a 20% increase every
3 years but has been  successfully  renegotiated to be 10% every 3 years.  Aside
from the fixed  annual fee paid to the  Company's  joint  venture  partner,  the
Company is the sole  beneficiary  of the results of the joint  venture,  and the
Company solely controls the joint venture's operations,  including the operating
and capital decisions of the joint venture in the ordinary course of business.



                                       21
<PAGE>

         The  Company  also  manufactures  in the  Factory  under  a  processing
agreement  ("Processing  Agreement") with the local  government.  The Processing
Agreement  provides  by  its  terms  that  the  local  government  will  provide
manufacturing  facilities and supply workers to the Company and that the Company
will pay a management  fee and  processing  fee and certain other  charges.  The
management fee is paid to the local  government and is based on a negotiated sum
per  worker  at the  Factory.  The  processing  fee is based on the value of raw
materials  shipped  into the Factory and the value of products  shipped from the
Factory  and is  established  in  production  agreements  agreed upon with local
government  officials.  The Company pays the processing fees through the Bank of
China in Hong  Kong  and the  funds  are then  placed  in an  operating  account
including  other Company funds in China,  all of which are used to pay the costs
of the  Factory  including  fees  due to the  local  government  as  part of the
processing  agreement.  Changes  in  PRC  tax  and  customs  law  have  made  it
increasingly  difficult to use the Processing Agreement.  The Company intends to
phase  out the use of the  Processing  Agreement  in 2002  and  manufacture  the
majority of future products through the JV.

         In practice, the Company operates all aspects of the Factory, including
hiring,  paying and terminating  workers.  Most of the Company's factory workers
are hourly employees and are provided room and board in addition to their wages.
In  addition,  the  Company  bears all other  costs of  operating  the  Factory,
including  utilities and certain employee social welfare charges  established by
the local government.  Many aspects of the Processing Agreement and operation of
the  Factory  are  dependent  on  the  Company's  relationship  with  the  local
government  and  existing  trade  practices  in  addition  to the  terms  of the
Processing Agreement.  The Company believes that its relationship with the local
government is good.

MATERIALS

         Major  components  used in the  Company's  products are liquid  crystal
displays  ("LCDs"),  semiconductor  chips,  printed  circuit boards ("PCBs") and
molded plastic parts. The Company purchases LCDs, PCBs, and semiconductor  chips
from several suppliers,  although specific LCDs, PCBs or semiconductor chips for
any particular model are generally purchased from a single supplier. The Company
generally  provides six to nine months order  indications  to its  semiconductor
chip suppliers and must place firm orders a minimum of eight weeks in advance of
delivery.  This lead time in some cases  extends to twenty weeks when the market
is in short  supply.  The Company  generally  tries to maintain  only two months
supply of semiconductor  chips, which may constrain increased  production of its
products on short  notice.  The  Company  pays for most of its  materials  in US
dollars.

         The Company's major suppliers of electronic and mechanical handheld and
tabletop game materials in fiscal 2001 included Arrow / Components Agent Limited
(semi-conductor   chips),  Epson  Hong  Kong  Limited   (semi-conductor  chips),
Evergreen PCB Factory Limited (PCBs),  GPI  International  Limited  (batteries),
Lead Jump Development Limited (PCBs), Meise Label Printing Fty (printing),  Just
Technology Co., Limited  (keypads),  Sensory,  Inc.  (semiconductor  chips), SSD
Company,  Ltd  (semi-conductor  chips),  United Radiant  Technology (HK) Limited
(LCDs), Wintek Corporation (LCDs) and Yu Lee Printing Co. (printing).

         The  Company's  major  suppliers of VGA in fiscal 2001  included  Minwa
(power adaptors), Mascotte (game accessories) and Hip Hing (cables).

SALES AND DISTRIBUTION



                                       22
<PAGE>

         Radica's  products  are sold in 33  countries,  with the United  States
accounting  for over 60% of net  sales in fiscal  2001.  The  Company  sells its
products  directly  to over 350 active  retailers  in the  United  States and to
approximately  30  distributors  worldwide.  The  Company  participates  in  the
electronic data interchange ("EDI") program maintained by 15 customers including
J.C. Penney's,  Sears, Target,  Wal-Mart,  Kohl's and Kmart. In fiscal 2001, the
largest customer of the Company, Wal-Mart,  accounted for 22.8% of net sales; in
addition  ODM/OEM work for SSD accounted for 11.1% of net sales. All other sales
to third party  distributors  and retail  customers  are final upon  transfer of
title.  In the  case of the  distributors  in  France  and  Germany,  sales  are
recognized   only  upon   verification  of  sell-through  to  the  customers  of
distributors. The top five customers were as follows:

                                                   % OF SALES
        CUSTOMER NAME                          FOR THE FISCAL YEAR
                                               2001          2000
                                               ----          ----
        1.  Wal-Mart (USA)                     22.8%         17.0%
        2.  SSD (Japan)                        11.1%          1.0%
        3.  Hasbro (worldwide)                  7.9%         16.7%
        4.  Target (USA)                        6.1%          9.3%
        5.  Kmart (USA)                         5.3%          5.0%

         On January 22, 2002 the Kmart Corporation filed for protection from its
creditors under Chapter 11 of the United States  Bankruptcy  Code. The Company's
receivable  exposure  was entirely  provided  for during 2001 and no  additional
write-downs  or expenses  related to the  bankruptcy  are expected in 2002.  The
Company has  decided to  continue to sell to Kmart under a  debtor-in-possession
agreement  during 2002 and will closely  monitor its account with Kmart in order
to minimize future exposure.

         The following table sets forth certain of the Company's major customers
in 2001, including distributors (alphabetical order).

<TABLE>
<CAPTION>
DEPARTMENT STORES                  DRUG STORES                            MASS MERCHANDISERS           CATALOG SHOWROOMS
-----------------                  -----------                            ------------------           -----------------
<S>                                <C>                                    <C>                          <C>
Dayton Hudson                      Arbor Drugs Inc.                       Ames                         Argos
Dillards                           Eckerd Corporation                     Army Airforce Exch.          Brookstone
Foley's                            Genovese Drugs                         Bradlees                     Index
J.C. Penney's                      London Drugs                           Fred Meyer                   Intermediates
John Lewis                         Long's Drugs                           Kmart                        Littlewoods / Index
Kohl's                             Osco Drug                              Mervyns                      Sharper Image
Macy's                             Thrifty Payless Drug                   QVC
Marshall Fields                                                           Shopko
Neimann Marcus                                                            Target
Robinson's-May                                                            Bust
Woolworth's                                                               Wal-Mart
                                                                          Woolworths
                                                                          Zellers
</TABLE>


                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                                          CONSUMER                     GROCERY &
MAIL ORDER RETAILERS               SPECIALTY GIFT SHOP OPERATORS          ELECTRONICS STORES           CONVENIENCE STORES
--------------------               -----------------------------          ------------------           ------------------
<S>                                <C>                                    <C>                          <C>
Fingerhut                          Bass Pro                               Best Buy                     Albertsons
Home Shopping Network              Caesar's World                         Comat                        Emro Marketing
H. Schneider                       Circus Circus                          Dixon's                      Kroger
Wish Book                          Dufferen Game Room Stores              Electronics Boutique         L&L Jiroch
Innovations                        Spencer Gifts                          Fry's                        M.W. Kasch
                                   Zany Brainy                            KF Group (Tempo)             W.H. Smith
                                                                                                       Westfair Super Stores
</TABLE>

<TABLE>
<CAPTION>

TOY RETAILERS        SPORTING GOODS STORES          INTERNET RETAILERS      DISTRIBUTORS (RADICA)
-------------        ---------------------          ------------------      ---------------------
<S>                  <C>                            <C>                     <C>
Hamleys              Sports Authority               e-Toys.com              Agerex (Finland)
Kay Bee              Bass Pro Shops                 Amazon.com              Black Jack Int., S.A. (Panama)
Toys`R'Us                                                                   Caterways Co. Ltd (Cyprus)
                                                                            Cherry Wood Int. Corp (Columbia)
                                                                            Danzes S.A. (Uruguay)
                                                                            Distribution Y Servicio D & S S.A. (Chile)
                                                                            Gemini Industria F Comericio (Brazil)
                                                                            Hiro Co., Ltd (Japan)
                                                                            Importadora Maduro S.A. (Panama)
                                                                            Irwin Pacific Pty, Ltd. (Australia)
                                                                            Lansay (France)
                                                                            Playthings Pte Ltd. (Singapore)
                                                                            Popular de Juguetes (Spain)
                                                                            SMP Enterprises (Hawaii)
                                                                            The Oriental Trading Co. (Hong Kong)
                                                                            Universal Electronics (Lebanon)
</TABLE>

DISTRIBUTORS (VGA)
Infogrames Benelux (Netherlands)             Infogrames Portugal (Portugal)
Infogrames Espania (Spain)                   Koch (Germany)
Infogrames Israel (Israel)                   Manta Co. (Poland)
Nobilis (France)                             Toptronics Oy (Finland)
Unsaco AS (Norway)

         The Company has  improved  the quality of its  distribution  network by
adding  new VGA  distributors  in  fiscal  2001,  in  Germany  and  France.  The
acquisition  of Radica UK gave the  Company  the  resources  to move UK sales of
Radica  product  in-house.  Subsequently,  Radica  terminated  its  distribution
agreement with its UK distributor in 1999.

         Radica's  USA  distribution  operations  use  regional  sales  managers
working for the Company to manage manufacturers representatives and brokers that
sell its products. These manufacturers  representatives are not employees of the
Company and work on a commission basis.

         The Company's customers normally provide indications of interest, which
may be  canceled  at any  time,  from  three to six  months  prior to  scheduled
delivery,   but  only  confirm  orders  eight  weeks  in  advance  of  delivery.
Accordingly  the Company  generally  operates  without a significant  backlog of
regular orders.



                                       24
<PAGE>

         The Company sells on consignment to two of its distributors: Nobilis in
France and Koch in Germany (see "Item 3. Key  Information  - Risk Factors - Risk
of Consignment Inventory").

         In certain  instances,  where retailers are unable to sell the quantity
of products  which have been  ordered  from the  Company,  the  Company  may, in
accordance with industry practice,  assist retailers to enable them to sell such
excess inventory by offering discounts, accepting returns and other concessions.
A portion of firm  orders,  by their  terms,  may be canceled if shipment is not
made by a  certain  date.  The  Company  minimizes  the  related  costs  of such
discounts  and returns by engaging  personnel to visit  selected  customers  and
assist in the management of Radica product returns.  The return of non-defective
products  occurs  infrequently.  The  Company  establishes  provisions  based on
historical experience at the time of sale of the related products.

         The  Company's  Radica,  Radica Gold,  Girl Tech,  Play TV and Connectv
products  carry a 90 days  consumer  warranty  from the  date of  sale,  and the
Company  generally honors warranty claims even after that period.  The Company's
VGA products  carry a one year  warranty  from the date of sale.  In each of the
last two years,  warranty costs incurred have been less than 3% of net sales and
substantially all warranty claims are received within 120 days of invoice.

PRODUCT DEVELOPMENT

         At the end of 2001, Radica's engineering and development department had
approximately 130 staff worldwide. The Company's product development starts with
teams in Dallas, Texas; San Francisco,  California;  and Hertfordshire,  England
and continues through to the engineering teams in Hong Kong, Shenzhen and in the
Dongguan Factory.  The Company has a formalized product development process that
includes  quarterly  meetings of its  worldwide  product  development  and sales
departments.  In fiscal 1999,  2000 and 2001,  the Company  spent  approximately
$6,036,000, $5,210,000 and $5,775,000 respectively, on research and development.
The Company's research and development is heavily oriented toward market demand.
Based  on  its  ongoing  contact  with  consumers,  retailers  and  distributors
worldwide,  the Company's sales and marketing departments seek to understand and
assist the product  development  teams in  responding  to consumer  and retailer
preferences.  The sales  department also targets certain retail price points for
new  products  which drive the  Company's  product  development,  with  designs,
features,  materials,  manufacturing  and  distribution all developed within the
parameters  of the  target  retail  price.  The  Company  also  reviews  product
submission  from a network of third party  inventors  that have been approved by
management.  These  submissions  are  subjected to the same product  development
process and market demand considerations as internal submissions.

         In  January  of  2002,   the  Company   executed  its   December   2001
reorganization  plan that included the closure of the San Francisco research and
development office and the relocating of several Hong Kong engineering positions
to offices in China. It is the Company's  belief that this  reorganization  will
significantly  reduce  costs  without  decreasing  efficiency  (see "Item 3. Key
Information - Risk Factors - Replacement  of Hong Kong Staff").  By trimming the
breadth of its product  lines  going  forward,  the Company  expects to continue
developing the majority  products  internally during 2002.  However,  changes in
business  philosophy or unforeseen  circumstances may arise that could force the
Company to outsource a larger than expected amount of its development work.

SEGMENT INFORMATION

         See  Note 19 of the  Notes  to the  Consolidated  Financial  Statements
included herein.



                                       25
<PAGE>

ORIGINAL DESIGN MANUFACTURING AND ORIGINAL EQUIPMENT MANUFACTURING

         In 1995, the Company was successful in establishing a relationship with
the Hasbro  Games Group to design and  manufacture  product  for them.  In April
1999, the Company signed two new  agreements  with Hasbro.  The first, a new ODM
agreement and the second,  a license  agreement  allowing  Radica to continue to
sell high end versions of Yahtzee(TM), Connect Four(TM) and Battleship(TM) under
its Radica Gold brand  name.  The ODM  agreement  ended on  December  31,  2001,
however,  the Company continues to manufacture for Hasbro under the terms of the
expired agreement.  It also has several ongoing OEM and ODM projects with SSD of
Japan.  The Company  intends to pursue other ODM and OEM business in the future.
However it is uncertain whether the Company can retain its current business on a
long-term basis or successfully attract additional original design manufacturing
business or that it will be profitable.

INTELLECTUAL PROPERTY

         The Company  currently owns 42 design patents,  9 utility  patents,  57
trademarks and has 14 copyrights over its artwork. It also has 5 design patents,
3 utility patents and 21 trademarks applications in process and will continue to
obtain copyrights, trademarks, design and utility patents for new products.

         The Company anticipates that patents, trademarks,  copyrights and other
intellectual   property  rights  will  become  increasingly   important  in  the
electronic handheld and mechanical games industry in which the Company operates,
particularly  since the Company is  introducing  a wider range of products  with
themes and  features  that do not  duplicate  casino or heritage  games.  As the
industry focuses on intellectual  property matters,  there will be opportunities
for the Company to protect its products  through  patents,  trademarks and other
formalized  filings,  although the efficacy of these  protections is variable at
best. By the same token,  the Company will be exposed to risks that its products
or other  aspects of its  business  will be found to infringe  the  intellectual
property  rights  of  others.  See  "Item 3. Key  Information  - Risk  Factors -
Intellectual Property Risks".

COMPETITION

         The games business is highly  competitive.  Radica  believes that it is
one of the dominant sellers of handheld  electronic games. The Company's primary
competitor is the Hasbro Games Group,  which  includes Tiger  Electronics,  Inc.
Hasbro procures its products from  manufacturers  in China. The barriers for new
producers  to enter the  Company's  markets are  relatively  low and the Company
expects  that it will face  increased  competition.  The  Company  competes  for
consumer  purchases  on the basis of price,  quality and game  features  and for
retail  shelf  space  also on the basis of  service,  including  reliability  of
delivery,  and breadth of product line. Some competitors offer products at lower
prices than the Company,  are better  established  in the toy and games industry
and are larger than the Company.  The Company's products also compete with other
gifts and games for consumer  purchases.  In  addition,  with respect to ODM/OEM
activities,  the Company will compete with a number of substantially  larger and
more  experienced  manufacturers.  As  the  Company  enters  other  markets  and
businesses, it expects to face new competition.

         In the VGA market, Radica UK was the largest third-party distributor of
VGA in the UK in 2001  according to Chart Track.  The VGA market share is spread
primarily  amongst ten  companies  which have 54.5% of the overall  market.  The
Company began significant distribution of VGA in the US market in 2001. Like the
handheld electronic games market, the Company competes for customer purchases on


                                       26
<PAGE>

the basis of price,  quality,  and  features  and for retail  shelf space on the
basis of service. Major competitors are MadCatz,  InterAct,  Pelican,  Guillemot
and Big Ben.

TAXATION OF THE COMPANY AND ITS SUBSIDIARIES

         There is  currently  no Bermuda  income,  corporation  or  profits  tax
payable by the Company. As an exempted company,  the Company is liable to pay to
the Bermuda government an annual  registration fee calculated on a sliding scale
basis by reference to its  assessable  capital,  that is, its  authorized  share
capital plus any share premium on its issued shares of Common Stock currently at
a rate not exceeding $25,000 per annum.

         The Hong Kong profits tax rate currently  applying to  corporations  is
16%. Currently, Radica HK and one other Hong Kong-based subsidiary pay Hong Kong
profits tax on service and sales income.

         On  July  1,  1994,  the  Company's   manufacturing   operations   were
transferred  to a Sino-Foreign  Joint  Venture.  As Radica Games itself does not
carry on any  business  in China,  it is not subject to tax.  The Joint  Venture
enjoyed a two year tax holiday  which  expired in 1999.  From January 1, 1999 to
December  31, 2001 its  profits  were taxed at a reduced  rate of 12%,  half the
regular tax rate of 24%. After this the Company will be taxed at the regular tax
rate,  but has  applied  for a continued  tax  holiday  amounting  to 50% of the
regular tax rate.

         Radica USA and Disc are fully subject to US federal  taxation,  as well
as any applicable state or local taxation,  on their taxable income.  Currently,
the  highest  marginal  rate of US  federal  corporate  income  tax is  35%.  In
addition,  dividends  paid by Radica USA and Disc to the Company will be subject
to a 30% US  federal  withholding  tax,  resulting  in an  effective  rate of US
federal taxation on distributed profits of up to 54.5%.

         Radica UK is fully subject to UK corporate taxation. The UK profits tax
rate currently applying to corporations is 30%.

EMPLOYEES

         As of December 31, 2001 the  Company's  workforce  was comprised of the
following:

         Production    Sales and     R&D   Finance  Operations       Total by
                       Marketing                     & Admin         location


Asia         3757          9         105     21        191             4083
USA             4         21          26      9          8               68
Europe          5         12           8      5          4               34
Total        3766         42         139     35        203             4185

         At December 31, 2000 and 1999 the Company's  workforce  comprised 4,378
persons and 3,048 persons, respectively.

         None of the Company's employees are subject to a collective  bargaining
agreement  and the Company has never  experienced  a work  stoppage.  Management
believes that its employee relations are good.



                                       27
<PAGE>

DESCRIPTION OF PROPERTIES

         See  "Manufacturing  Facilities" above. The Company completed the first
phase of construction  of its Factory  (241,000 sq. ft.) on a 3.7 acre parcel of
land in May 1995 and the second  phase  (223,000  sq.  ft.) in August  1998.  An
extension  of the factory  commenced  in December of 1999 to add 202,000  square
feet of factory space and 178,000 square feet of dormitory space. As a result of
the drop in demand  for  Radica  product  in the US during  2000,  work  towards
completion  of this  addition has been  postponed  and will continue when market
demand  warrants  use of the  additional  space.  The  Company  owns a long-term
leasehold on its executive  offices  (15,400 sq. ft.) and warehouse space (7,900
sq. ft.) in Fo Tan,  Hong Kong as well as two houses for  employees in Hong Kong
(2,100  sq.  ft.  each)  which have been made  available  to Mr.  Howell and Mr.
Storey,  officers of the Company. Radica operates its Factory under the terms of
the Joint  Venture  Agreement  and  Processing  Agreement.  The  Company  leases
additional  storage and office  space in  Hertfordshire,  UK and office space in
Dallas, Texas, Pasadena, California and San Francisco, California. Following the
implementation of the December 2001  restructuring  plan Mr. Storey has now been
relocated  to  Dallas  and the San  Francisco  office  closed.  The  Company  is
obligated  to pay  $74,880  and $38,938 for 2002 and 2003 under the terms of the
San Francisco lease. It intends to sublease this property.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

RESULTS OF OPERATIONS

         In December of 1998, Radica Games' Board of Directors approved a change
in the  Company's  fiscal year end from October 31 to December 31. This resulted
in a transition  period from  November 1, 1998 to December  31, 1998,  which has
been  audited.

FISCAL 2001 COMPARED TO FISCAL 2000

         The following  table sets forth items from the  Company's  Consolidated
Statements of Operations as a percentage of net revenues:

                                       28
<PAGE>


                                                 Year ended December 31,
                                             ----------------------------
                                             2001                    2000
                                             ----                    ----


Net sales                                    100.0%                  100.0%
Cost of sales                                 65.6%                   77.8%

Gross margin                                  34.4%                   22.2%
Selling, general and administrative
  expenses                                    26.9%                   30.3%
Research and development                       5.8%                    4.9%
Depreciation and amortization                  4.1%                    5.1%
Restructuring charge                           1.6%                    1.1%

Operating loss                               (4.0%)                 (19.2%)
Other income                                   0.0%                    0.7%
Interest income, net                           0.1%                    0.6%

Loss before income taxes                     (3.9%)                 (17.9%)
(Provision) credit for income taxes          (0.5%)                    0.9%

Net loss                                     (4.4%)                 (17.0%)

         The Company  experienced  an after tax loss of $4.4  million for fiscal
year 2001 or $0.25 per diluted share versus a loss of $18.1 million or $1.03 per
diluted share for fiscal year 2000.

         Net sales for 2001 were $98.6  million,  compared to $106.7  million in
2000.  The decline in net sales during 2001  resulted  from  worldwide  economic
recession;  and the effect of the  September 11  terrorist  attacks in New York,
which eroded US consumer confidence and as a result caused retailers to exercise
caution in their buying.  Several top US retailers cancelled holiday reorders in
the wake of the attacks.

         Summary of sales achieved from each category of products:

                                     YEAR ENDED DECEMBER 31,
                    ------------------------------------------------------------
                                   2001                           2000
                    ----------------------------    ----------------------------
                      % OF NET         NET            % OF NET           NET
PRODUCT LINES       SALES VALUE    SALES VALUE      SALES VALUE      SALES VALUE
-------------       -----------    ------------     -----------      -----------
(US$ in thousands)

Handheld                   38.5%       $ 38,001            46.2%       $ 49,307
Play TV                    14.5%         14,315             8.0%          8,561
Girl Tech                  11.9%         11,723            13.0%         13,897
ODM/OEM                    19.2%         18,890            18.1%         19,271
VGA                        10.5%         10,337             9.5%         10,116
Sourcing                    5.4%          5,288             5.2%          5,544
                          -----        --------           -----       ---------
Total                     100.0%       $ 98,554           100.0%      $ 106,696
                          =====        ========           =====       =========



                                       29
<PAGE>

         Gross  margin for the year was 34.4%  compared  to 22.2% in fiscal year
2000 as a result of a combination of improvements to inventory  control allowing
for less closeout product and continued cost reduction on products.

         Management  expects 2002 gross margins to remain  consistent  with 2001
margins.  The Company will  continue to look for ways to improve  product  costs
without affecting product quality and will endeavor to avoid excess inventories.
The Company continues its plans to diversify by expanding its VGA lines, finding
new ODM and OEM partners  and  expanding  sales of its product in Europe.  While
successes in these areas should increase gross profits,  the increase of VGA and
ODM sales as a percentage of total Company sales may cause total gross margin to
decrease.

         Operating  expenses for 2001,  excluding $1.6 million of  restructuring
costs,  were $36.3  million  compared to  operating  expenses of $42.9  million,
excluding  $1.2  million of  restructuring  costs in fiscal year 2000.  The 2001
restructuring  plan was approved by the Board of Directors in December  2001 for
implementation  in  February of 2002 and  included  the  elimination  of the San
Francisco R&D office, the elimination of several R&D and operational  provisions
in Hong Kong with the intent of replacing many of these positions with new staff
at the China factory,  the elimination of certain other positions  worldwide and
the transfer of two employees to other offices.  The estimated  costs related to
the  reorganization  were accrued in the fourth quarter of 2001 and include $1.4
million in severance-related costs and $0.2 million in office shutdown and other
reorganization related costs. Through the restructuring, the Company believes it
will significantly decrease operating costs without decreasing efficiency.

         The 2000  restructuring plan occurred in the second quarter of 2000 and
included the elimination of several positions worldwide. The costs included $1.1
million in severance-related costs and $0.1 million in office shutdown and other
reorganization related costs.

         The following  table shows the major operating  expenses,  other income
and income taxes:

                                                  Year ended December 31,
                                         ---------------------------------------
(US dollars in millions)                       2001                   2000
                                         -----------------     -----------------

Commissions                                   $ 0.7                  $ 2.3
Indirect salaries and wages                     8.2                    7.5
Advertising and promotion expenses              8.1                   11.1
Research and development expenses               5.8                    5.2
Other income                                     -                     0.8
Provision (credit) for income taxes             0.6                   (0.9)

         The decrease in commissions in 2001 was the result of both the decrease
in sales from 2000 and Radica USA's decision to increase  efficiency by changing
its sales  force from third  party sales  representatives  to an in-house  sales
team.  Because the Play TV line of products  was in its second year and required
less promotion, advertising and promotional costs decreased in 2001 from 2000.

         The Company expects to see significant  drops in its SG&A costs in 2002
and beyond. With the adoption of SFAS No. 142 concerning Goodwill and Intangible
Assets,   the   Company   anticipates   amortization   expense  to  decrease  by
approximately $0.8 million during 2002. As a result of the


                                       30
<PAGE>

reorganization that took place during 2002, the Company expects to realize up to
$4 million in reduced salaries  expense,  office rents and  miscellaneous  other
general and  administrative  costs. The Company gives no assurances that it will
realize these reduced SG&A costs going forward and changes in market  conditions
could create dramatic variances from the Company's expectations.

CAPITAL RESOURCES AND LIQUIDITY

         At December  31,  2001 the  Company  had $25.8  million of cash and net
assets of $63.1  million.  The Company  generates a significant  majority of its
cash from its normal  operations  but seasonal cash  requirements  have been met
with the use of short-term  borrowings,  which included borrowings under secured
lines of credit. Long-term debt decreased from $5.5 million at December 31, 2000
to $1.8 million at December 31, 2001. The long-term debt was originally  used to
purchase LMP in 1999. During 2001, the Company made no acquisitions.

         At December  31, 2001,  cash and cash  equivalents,  net of  short-term
borrowings,  were $25.0 million of which $8.9 million of cash deposits have been
pledged as security for undrawn or substantially  repaid facilities.  Management
does not consider that there are any significant  restrictions on its ability to
gain access to these deposits. This compares with cash and cash equivalents, net
of short-term borrowings of $19.3 million and $30.7 million at December 31, 2000
and December 31, 1999,  respectively.  The Company generated approximately $10.3
million,  $(4.7  million)  and  $8.5  million  of net cash  from  its  operating
activities in 2001, 2000 and 1999, respectively.  The increase in 2001 from 2000
was  primarily  the result of a decrease  in  operating  losses for the year and
better management of the Company's  receivables.  Receivables decreased to $17.3
million  from the December  31, 2000 level of $25.9  million and fourth  quarter
days  sales  outstanding  in  2001  improved  to 40 days  from 67 days in  2000.
Accounts  receivable  at  year-end  is  primarily  composed  of  fourth  quarter
revenues.  Inventories increased to $17.2 million from $14.0 million at December
31, 2000  primarily as a result of in-transit  inventory to the United States of
video game accessory product and Skannerz for Q1 2002. Current  liabilities were
$27.0  million at December  31, 2001  compared to $26.5  million at December 31,
2000.  The increase was primarily the result of increased 4th quarter  materials
costs related to the increased  inventories.  Prepaid assets increased from $1.6
million in 2000 to $2.3 million in 2001 as a result of prepaid US federal income
tax in 2001.  Income  taxes  receivable  dropped  $3.6  million from 2000 due to
repayment  of an  outstanding  US federal  income tax  receivable.  The  Company
believes that during 2002 and beyond,  its most  significant cash source will be
from its  operating  profits.  The  Company's  management  believes that it will
realize  an  operating  profit  in  2002  and  will  successfully   convert  its
receivables  into  the cash  used to fund the  business.  The  Company  gives no
assurances that it will  successfully be able to achieve an operating  profit in
2002.

         Cash flows from  investing  activities  were a net  utilization of $1.0
million,  $4.3  million and $6.8 million in 2001,  2000 and 1999,  respectively.
During 2001, the Company expended  approximately $1.0 million on the purchase of
property,  plant and  equipment,  while in 2000 it expended  $3.1  million.  The
factory  expansion  comprised most of the expenditures  during 2000. The Company
plans on making limited fixed asset expenditures during 2002.

         Cash used in financing  activities  was $6.4  million in 2001  compared
with $0 in 2000.  This change was primarily  due to repayment of short-term  and
long-term debt during 2001.

         The Company commits to inventory production,  advertising and marketing
expenditures prior to the peak third and fourth quarter  retail-selling  season.
Accounts receivable increase during the third and



                                       31
<PAGE>

fourth  quarter as customers  increase their  purchases to meet customer  demand
during the holiday season.  Due to the  concentrated  time frame of this selling
period,  payments for these accounts  receivable are generally not due until the
fourth quarter or early in the first quarter of the subsequent year. This timing
difference  between expenses paid and revenues  collected makes it necessary for
the Company to  sometimes  borrow  amounts  during the year.  As of December 31,
2001,  the  Company  had more  than  $6.6  million  of  various  lines of credit
available.  A breakdown of the  Company's  short-term  and  long-term  financing
during 2001 is as follows:

<TABLE>
<CAPTION>
                                      Loan Amount             Debt             Loan Amount            Date of
              Bank                   as at 1/1/2001         Repayment       as at 12/31/2001         Maturity
---------------------------------  -------------------  ------------------  ------------------   ------------------
(US$ in thousands)

<S>                                      <C>                 <C>                <C>                <C>
China Construction Bank                  $ 1,814             $ (968)            $ 846              Aug. 3, 2002
(Humen, China)
HSBC                                     $ 11,087            $ (5,614)          $ 5,473            Jun. 22, 2003
</TABLE>

Both loans are payable in  installments.  Loan  installments  due within  twelve
months of year-end are included in short-term liabilities;  installment payments
scheduled beyond twelve months from year-end are included in long-term debt (See
Note 9 of the Consolidated  Financial  Statements).  The term loan and revolving
loan are secured by certain  properties and deposits of the Company (see Note 16
of the Consolidated  Financial  Statements).  The agreement  contains  covenants
that, among other things,  require the Company to maintain a minimum of tangible
net worth, gearing ratio and other financial ratios.

         Management  believes  that the  Company's  existing  credit  lines  are
sufficient  to meet  future  short-term  cash  demands.  The  Company  funds its
operations and liquidity needs primarily  through cash flow from operations,  as
well as utilizing  borrowings  under the Company's  secured and unsecured credit
facilities when needed. During 2002, the Company expects to continue to fund its
working capital needs through  operations and its revolving  credit facility and
believes  that the funds  available  to it are  adequate to meet its needs.  The
Company  expects  to be in  compliance  with its  covenants  in  2002.  However,
unforeseen circumstances, such as severe softness in or a collapse of the retail
environment  may result in a  significant  decline  in  revenues  and  operating
results  of the  Company,  thereby  causing  the  Company  to  exhaust  its cash
resources.  If  this  were  to  occur,  the  Company  may be  required  to  seek
alternative  financing of its working capital.  In addition,  this may cause the
Company  to be in  non-compliance  with its debt  covenants  and to be unable to
utilize its revolving credit facility.

         The  Company  had  no  derivative  instruments  or  off  balance  sheet
financing  activities  during fiscal years 2000 and 2001.  The Company  believes
that its existing cash and cash  equivalents  and cash generated from operations
are sufficient to satisfy the current  anticipated  working capital needs of its
core business.

FISCAL 2000 COMPARED TO FISCAL 1999

         The Company  experienced  an after tax loss of $18.1 million for fiscal
year 2000 or $1.03 per diluted share versus an after tax profit of $17.1 million
or $0.90 per diluted share for fiscal year 1999.

         Net sales for 2000 were $106.7 million,  compared to $136.7 million for
1999.  The sales decline during 2000 resulted  primarily  from severely  adverse
market conditions in the electronic handheld game



                                       32
<PAGE>

category  which were only  partially  offset by the growth of the Company's Girl
Tech product line and the introduction of Radica's new Play TV line of games.

         Net sales for the year ended  December  31, 2000 were  $106.7  million,
decreasing 21.9% from $136.7 million for the prior year.  Approximately 46.2% of
sales related to handheld games, 8.0% to Play TV, 13.0% to Girl Tech games, 9.5%
to VGA,  5.2% to  Sourcing  and 18.1% to  ODM/OEM  sales  during  the year ended
December 31, 2000 in comparison to 64.2%,  0%, 5.4%, 7.0%, 3.0% and 20.4% in the
same period in 1999.

         During the year ended  December 31, 2000,  Radica  recorded a charge of
$10.2 million consisting of $1.4 million in organization  restructuring charges,
$4.6 million in  provisions  against  inventories,  $1.8  million in  provisions
against prepaid royalties and $2.4 million in provisions against receivables and
bad debts as a result of the  downturn in its  handheld  games  business.  Gross
margin for the year was 22.2%  compared to 40.8% in fiscal year 1999 as a result
of these charges and a mix shift to lower margin Gamester business.

         Operating  expenses  for  the  year  including   restructuring  charges
incurred in Q2 were $44.1 million compared to $39.0 million in fiscal year 1999.

         The following  table shows the major operating  expenses,  other income
and income taxes:

                                                 Year ended December 31,
                                        ----------------------------------------
(US dollars in millions)                      2000                   1999
                                        -----------------      -----------------

Commissions                                   $ 2.3                  $ 2.9
Indirect salaries and wages                     7.5                    8.2
Advertising and promotion expenses             11.1                    8.9
Research and development expenses               5.2                    6.0
Other income                                    0.8                    0.7
(Credit) provision for income taxes            (0.9)                   0.1

         The decrease in commissions in 2000 was the result of both the decrease
in sales from 1999 and Radica USA's decision to increase  efficiency by changing
its sales force from third party sales representative to an in-house sales team.
The  decrease  in  indirect  salaries  and  wages in 2000 was the  result of the
Company's  reorganization  in the second  quarter.  Advertising  and promotional
costs increased in 2000 due to the introduction of the Play TV line in the US.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The  Company   prepares  its  consolidated   financial   statements  in
accordance with accounting principles generally accepted in the United States of
America.  Management is required to make certain  estimates and assumptions that
affect the reported  amounts of assets and liabilities and the reported  amounts
of revenue and  expenses.  Below is a listing of  accounting  policies  that the
Company considers critical in preparing its consolidated  financial  statements.
These  policies  include  estimates  made by  management  using the  information
available to them at the time the estimates are made, but these  estimates could
change considerably if different information or assumptions were used.

BAD DEBT ALLOWANCE



                                       33
<PAGE>

         The bad debt allowance is an adjustment to customer  trade  receivables
for amounts that are determined to be uncollectible or partially  uncollectible.
The bad debt allowance  offsets gross trade receivables and is computed based on
management's  best assessment of the impact on trade receivables of the business
environment,  customers'  financial  condition,  historical  trends and customer
disputes. Deterioration in the retail environment or the economy could adversely
impact the trade receivables valuation.

ALLOWANCE FOR SALES RETURNS, MARKETING AND ADVERTISING

         A sales return  allowance is recorded for estimated  sales returns from
customers.  The allowance is based on historical  trends and  management's  best
assessment of sales returns as a percentage of overall  sales.  The Company also
records an allowance for marketing and advertising  costs agreed to with certain
customers. These allowances are based on other specific dollar-value programs or
percentages  of sales,  depending  on how the  program  is  negotiated  with the
individual customer.

WARRANTY

The Company records a warranty  allowance for costs related to defective product
sold to  customers.  The warranty  allowance is based on  historical  trends and
management's best assessment of what the defective return percentage will be for
a given product.  Due to the introduction of new product,  actual warranty costs
could deviate  significantly from the recorded  allowance.  This deviation could
have a material impact on the financial results of the Company.

INVENTORIES

         The Company states its inventory values at the lower of cost or market.
Inventory reserves are accrued for slow-moving and obsolete inventory.  Radica's
management  uses estimates to record these  reserves.  Slow-moving  and obsolete
inventory may be partially or fully reserved depending on the length of time the
product has been in inventory  and the  forecast  sales for the product over the
course of the following  year.  Changes in public and consumer  preferences  and
demand for product or changes in the buying patterns and inventory management of
customers could adversely impact the inventory valuation.

IMPAIRMENT OF LONG-LIVED ASSETS

         Long-lived  assets,  identifiable  intangibles  and goodwill  have been
reviewed for  impairment  based on Statement of Financial  Accounting  Standards
("SFAS") No. 121,  Accounting  for the  Impairment of Long-Lived  Assets and for
Long-Lived Assets to be Disposed Of. This statement  requires that an impairment
loss  be  recognized  whenever  the  sum  of  the  expected  future  cash  flows
(undiscounted and without interest charges)  resulting from the use and ultimate
disposal  of an asset is less than the  carrying  amount of the asset.  Radica's
management  reviews for indicators that might suggest an impairment loss exists.
Testing   long-lived   assets,   identifiable   intangibles   and  goodwill  for
recoverability  requires  estimates of expected cash flows to be generated  from
the use of the  assets.  Various  uncertainties,  including  changes in consumer
preferences,  deterioration  in the political  situation in a country or adverse
changes in the general economic conditions in the US and internationally,  could
adversely impact the expected cash flows to be generated by an asset or group of
assets. See discussion under "New Accounting  Pronouncements" regarding SFAS No.
144, which supercedes SFAS No. 121 effective the first quarter of 2002.



                                       34
<PAGE>

DEFERRED TAX ASSETS

         The Company  records  valuation  allowances  against its  deferred  tax
assets.  In  determining  the  allowance,  management  considers  all  available
evidence  for  certain  tax  credit,   net  operating   loss  and  capital  loss
carryforwards that would likely expire prior to their utilization.  The evidence
used in assessing the need for valuation allowances includes the use of business
planning,  projections of future taxable income and corporate-wide tax planning.
Differences in actual results from projections used in determining the valuation
allowances could result in future adjustments to the allowance.

RECENTLY ISSUED ACCOUNTING STANDARDS

         A discussion of certain  recently issued  accounting  standards and the
estimated  impact  on the  Company  is set  out  in  note 2 to the  consolidated
financial statements.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

         The following table sets forth the directors and executive  officers of
the Company in fiscal 2001.


<TABLE>
<CAPTION>
                                 Term
Name                             Expires    Residency         Position
----                             -------    ---------         --------


<S>                              <C>        <C>               <C>
Jon N. Bengtson                  2002       USA               Chairman of the Board and Director

Albert J. Crosson (1)(2)         2002       USA               Director

Robert E. Davids (2) (3)         2002       USA               Vice-Chairman of the Board and Director

Patrick S. Feely                 2002       USA               President, Chief Executive Officer and Director

David C.W. Howell                2002       Hong Kong         President Asia Operations,
                                                              Chief Financial Officer and Director

Henry Hai-Lin Hu (1)(2)(3)       2002       Australia         Director

Siu Wing Lam                     2002       USA               Executive Vice President, Engineering and Director

James O'Toole (2)(3)             2002       USA               Director

Millens W. Taft (1)(2)(3)        2002       USA               Director

Peter L. Thigpen (1)(2)(3)       2002       USA               Director

Jeanne M. Olson                  N/A        USA               Executive Vice President/General Manager, Radica USA

John J. Doughty                  N/A        UK                Managing Director, Radica UK

James M. Romaine                 N/A        USA               Senior Vice President Sales

Craig D. Storey                  N/A        USA               Vice President and Chief Accounting Officer

Kam Cheong Wong                  N/A        Hong Kong         Vice President of China Operations

Milly M.L. Chan                  N/A        Hong Kong         Engineering Director

</TABLE>



                                       35
<PAGE>

<TABLE>
<S>                              <C>        <C>               <C>
Larry C.N. Cheng                 N/A        Hong Kong         Engineering Director

Rick C.K. Chu                    N/A        Hong Kong         International Sales Director

Tiki K.K. Ho                     N/A        Hong Kong         Engineering Director

Louis S.W. Kwok                  N/A        Hong Kong         Plant Administration Director

Mark K. Liddle                   N/A        UK                Business Development Director

Lavinia K.W. Wong                N/A        Hong Kong         Director of VGA & Sourcing

Hermen H.L. Yau                  N/A        Hong Kong         MIS Director

<FN>
(1)      Member of the Audit Committee.
(2)      Member of the Executive Committee.
(3)      Member of the Compensation, Organization and Nominating Committee.
</FN>
</TABLE>

         The Company annually prepares a proxy statement/management  information
circular for  distribution  to its  shareholders  in connection  with its annual
meeting of  shareholders.  Additional  information  is  contained  in such proxy
statement with respect to the ownership of shares of the Company's  common stock
by directors and executive officers, the ages of such persons, and the functions
or board  practices of the committees of the Company's  board of directors.  The
information  contained in such proxy  statement  for the current  fiscal year is
incorporated  herein by reference.  Such proxy statement is filed as part of the
Company's report on Form 6-K for the period in which the proxy statement is sent
to shareholders.

         Jon N.  Bengtson,  formerly  the  Executive  Vice  President  and Chief
Operating  Officer  of the  Company,  became  the  Chairman  of the Board of the
Company in January  1996,  and has been a director of the Company  since January
1994.  He was Chief  Financial  Officer  of the  Company  from  January  1994 to
September  1995,  and was  appointed  President and Chief  Executive  Officer of
Radica USA in December  1993. Mr.  Bengtson  joined The Sands Regent in 1984 and
served  in  various   positions,   including   Vice  President  of  Finance  and
Administration,  Chief Financial  Officer,  Treasurer and Director,  Senior Vice
President and Director and Executive Vice President and Chief Operating  Officer
and Director until December 1993. From 1980 to 1984, Mr. Bengtson was a director
and served in various  positions with  International  Game  Technology  ("IGT"),
including  Treasurer and Vice President of Finance and  Administration  and Vice
President  of  Marketing.  Mr.  Bengtson  is  currently  a director of The Sands
Regent.

         Albert J. Crosson was  appointed a director of the Company in May 2001.
He became a director of International Game Technology ("IGT") in 1988. He became
Vice  Chairman of the Board of IGT in July 1996 and an employee of such company.
He  resigned as an  employee  in  December  2000 and as Vice  Chairman of IGT in
August 2001.  Mr.  Crosson was  employed  for 34 years by ConAgra,  Inc. and its
predecessor  companies.  He was President of ConAgra Grocery Products  Companies
from 1993 until  January 1996 when he retired.  From 1986 until January 1993, he
was President of Hunt-Wesson Foods, Inc., a ConAgra company.

         Robert E. Davids  became  Chairman of the  Executive  Committee  of the
Board  of   Directors,   Vice   Chairman  of  the  Board  and  Chief   Executive
Officer-Emeritus  in April 1999 and has been a director  since December 1989. He
was Chief Executive  Officer of the Company from January 1994 to April 1999, and
President of the Company from  December  1993 to July 1997.  Prior to 1993,  Mr.
Davids had been the Co-Chief  Executive  Officer and director of Radica HK since
he joined the Company in 1988.  Mr.  Davids has over 30 years  experience in the
development,  design and  engineering of non-gambling  casino gifts,  commercial
gaming


                                       36
<PAGE>

machines, automobiles and other products. From 1984 until he joined the Company,
he was the General Manager of Prospector  Gaming  Enterprises  Inc., a casino in
Reno, Nevada.  From 1978 through 1984, Mr. Davids served in various positions at
IGT, including Director of Special Projects and Director of Engineering.

         Patrick S. Feely has been Chief Executive  Officer since April 1999. He
has been Chief  Operating  Officer and  President of the Company since July 1997
and a director of the Company since July 1996. Previously,  he was President and
CEO of Spectrum HoloByte,  Inc. from 1993 to 1995;  President of Bandai America,
Inc.  from 1991 to 1992;  founder and  President of Toy  Soldiers,  Inc.  (which
merged  with  Bandai  America)  from 1988 to 1991;  and  President  of the Tonka
Products Division of Tonka, Inc. from 1986 to 1988, after previously  serving as
Senior Vice President  Commercial  Operations from 1982 to 1986. As president of
Tonka,  Mr. Feely was  responsible  for the successful  launch of the Sega video
game system into the US market.  Mr.  Feely was an executive at Mattel Toys from
1977 to 1982 and began his career at RCA  Corporation in 1970. Mr. Feely is also
a Director and Chairman of the Toy Industry  Association.  He has a BA from Duke
University and an MBA from the University of Michigan.

         David C.W.  Howell was appointed  President Asia Operations in December
1998. He has been  Executive Vice  President and Chief  Financial  Officer and a
director  of the  Company  since  September  1995.  Prior to  that,  he was Vice
President  and Chief  Accounting  Officer  and a director  of the  Company  from
January 1994 to September  1995.  From 1992 to 1994,  Mr. Howell was the Finance
Director and Company  Secretary of Radica HK. From 1984 to 1991,  Mr. Howell was
employed by Ernst & Young in London,  Hong Kong and Vietnam. He has a B.Sc. from
Nottingham University,  is a Fellow of the Institute of Chartered Accountants in
England and Wales and is a Fellow of the Hong Kong Society of Accountants.

         Henry  Hai-Lin Hu was  appointed  a director of the Company in December
1998.  He is  currently  the  Principal  of Business  Plus  Consultants  Limited
providing services to Hong Kong toy companies on business development. From 1993
through 1996, he was Chairman and Chief Executive Officer of Zindart  Industrial
Co.  Ltd.,  a NASDAQ  listed  manufacturer  of die cast car replicas and premium
giftware.  He  co-founded  Wah Shing Toy Group in 1982,  a Singapore  listed toy
company,  and retired from Wah Shing in 1991.  Mr. Hu has served in director and
senior  officer roles in several toy companies in Hong Kong since 1967. He has a
B.Sc.  in  Mechanical  Engineering  from Hong Kong  University,  is a Registered
Professional  Engineer, and a member of the Institution of Electrical Engineers,
Hong Kong.

         Siu Wing Lam has been a director of the Company  since January 1994. He
was an  Executive  Vice  President,  Engineering  of the  Company  from  1998 to
February 2002, Vice President, Engineering and the head of Radica HK engineering
department from 1988 to 1998 and joined the Company in 1985. Mr. Lam has over 21
years of experience in manufacturing, product design and engineering management.
He has an Associateship in Production and Industrial  Engineering from Hong Kong
Polytechnic,   a  postgraduate  diploma  in  Engineering  Management  from  City
Polytechnic  of Hong  Kong,  and is an  associate  member  of the  Institute  of
Electrical Engineers of the UK.

         James O'Toole has been a director of the Company since June 1994. He is
Research Professor in the Center for Effective Organization at the University of
Southern  California's  Marshall School of Business. He is Chairman of the Board
of Academic Advisors of the Booz Allen Hamilton Strategic Leadership Center.

         Millens W. Taft has been a director of the Company since April 1997. He
brings with him five decades of toy and games  experience and currently  advises
companies in the toy industry on marketing, product development and licensing in
both the domestic and international  markets. He retired from the Milton Bradley
Company in 1984,  where he was Corporate  Senior Vice  President of Research and
Development  and was also a Director of the firm.  Mr. Taft had been with Milton
Bradley since  graduating from Harvard  Business School in June of 1949 with the
degree  of Master of  Business  Administration.  From 1942 to 1945 he was in the
military service with the 8th Air Force as First Lieutenant and Pilot.  Upon his
early  retirement  from Milton Bradley,  he started his own company,  Mel Taft &
Associates in 1984, which helps companies in the USA and around the



                                       37
<PAGE>

world with marketing,  product  development and licensing  projects primarily in
the Toy, Games, Craft, Specialty and International Markets.

         Peter L. Thigpen has been a Director of the Company since June 1998. He
is a Lecturer in Ethics & Great  Books in the  Graduate  Business  School at the
University  of  California,  Berkeley,  a Senior Fellow & Moderator at the Aspen
Institute  and on the Board of  Trustees  of the  Kentfield,  California  School
District.  Prior to 1992,  Mr. Thigpen was Senior Vice President - US Operations
and a member of the  Executive  Management  Committee at Levi Strauss & Company,
retiring after 23 years with the San Francisco-based apparel company. During his
tenure at Levi  Strauss,  Mr.  Thigpen  held  positions of President of European
Operations,  President - Levi Strauss USA, President - The Jeans Company and was
a member of the Board of Directors.

         Jeanne M.  Olson is the  Executive  Vice  President/General  Manager of
Radica USA.  Prior to joining the company in 2000, she was Senior Vice President
of  Sales  &  Marketing  at  Lyrick   Studios,   a   privately-held   children's
entertainment  company.  Ms.  Olson has over 15 years of  experience  in the toy
industry,  having held executive  marketing and  management  positions at Mattel
Toys, Hasbro Inc., and Tonka Toys. She started her career in marketing  research
with The Pillsbury Company and with Custom Research Inc.

         John J.  Doughty has been  Managing  Director  with Radica UK since May
2001, having  previously held the positions  General Manager,  Head of Sales and
Marketing,  Head of Sales,  and UK Sales Manager since joining in March 1998. He
personally  manages Radica UK's major European  Accounts,  and also oversees the
day to day running of the UK operation.  Mr. Doughty has had 14 years experience
in the 'gaming'  industry having  previously worked at Entertainment UK, part of
the Kingfisher  Group,  as Senior Buyer,  and prior to that having worked at HMV
UK, as a Buyer.

         James M. Romaine  joined  Radica USA in  September  1999 as Senior Vice
President  of Sales for Radica USA. He has been an executive in the Toy Industry
for over 28  years.  He spent  the  1980's  and into the  early  90's at  Parker
Brothers  where he was Senior  Vice  President  of Sales.  Mr.  Romaine  was the
President  of Play Tech Inc.,  a Vtech  company for seven years  before  joining
Radica USA. His most recent  educational  credentials  include the completion of
the  Executive  Program for General  Managers at the  University  of  Michigan's
School of Business.

         Craig D. Storey has been Vice President and Chief Accounting Officer of
the Company since July of 1999.  Prior to that, he was the Financial  Controller
of Radica USA from 1995 to 1999.  From 1993 to 1995,  Mr. Storey was employed by
Kafoury,  Armstrong and Company in Reno,  Nevada. He has a BS from Arizona State
University  and is a  member  of the  American  Institute  of  Certified  Public
Accountants and the Nevada Society of CPA's.

         Kam Cheong Wong has been the Vice President of China Operations for the
Company since May 1998. Prior to that, he was the Director of Manufacturing  for
the Company from June 1994 to May 1998. Mr. Wong has over 20 years of experience
in product design, R&D,  production and sales in toys, consumer  electronics and
the  electrical  appliance  industry.   Mr.  Wong  has  a  B.Sc.  in  Mechanical
Engineering  from Taiwan  University,  a post graduate  diploma in Manufacturing
Technology  from City  University,  London and is a member of the  Institute  of
Management, UK.

         Milly M.L.  Chan has been an  Engineering  Director  since  April 1999,
having previously held the positions of Engineering Manager, Project Supervisor,
and Project  engineer  since joining in June 1993. She has a B.Eng in Electronic
Engineering  from  Hong Kong  Polytechnic  University,  an MBA from  Heriot-Watt
University  and is a  Chartered  Engineer  and a Member  of the  Institution  of
Electrical Engineers.

         Larry C.N. Cheng has been an Engineering Director since April 1999. Mr.
Cheng joined the Company in 1991 and was an Engineering  Manager from April 1993
to March 1999. Mr. Cheng has more than 15 years



                                       38
<PAGE>

experience  in ODM and the toy  industry.  He has a  Higher  Diploma  in  Marine
Electronics from the Hong Kong Polytechnic University.

         Rick C.K. Chu has been the International  Sales Director of the Company
since April 1996. Prior to that, Mr. Chu was International Sales  Administration
Manager of the Company from April 1994 to April 1996.  He has more than 17 years
experience in international trade and business management. From 1988 to 1994, he
was the Senior Manager managing the sales administration  function and marketing
of industrial materials for a leading trading company in Hong Kong.

         Tiki K.K. Ho has been an  Engineering  Director  of the  Company  since
April  1,  1999.  Prior  to  his  present  position,  he  was a  manager  in the
engineering  department  since joining the Company in 1994. Mr. Ho worked in STD
Company Limited and Management,  Investment and Technology  Company Limited.  He
has  had  over  15  years  experience  in  manufacturing,  product  design,  and
engineering  management and plastic mold shop management.  He has a B.Sc. Honors
in Mechanical  Engineering  from University of Manchester,  Institute of Science
and Technology.

         Louis  S.W.  Kwok has been the  Plant  Administration  Director  of the
Company from January 2, 2001.  Effective  from March 11, 2002,  Mr. Kwok will be
appointed the Materials and Logistics  Director of the Company.  He has had over
15 years  experience in manufacturing  plant  operations  throughout his career.
Major companies he has worked with are Pymetics (Hong Kong) Limited, Management,
Investment and Technology Company Limited, and Sunciti Manufacturers Limited. He
has  a  Higher  Diploma  in  Mechanical   Engineering,   Diploma  in  Mechanical
Engineering  (Manufacturing  Technology),  and  National  Diploma in  Mechanical
Engineering.

         Mark K. Liddle has been  Business  Development  Director  since January
2002,  having  previously  held the position of  Quality/Sourcing  Manager since
joining in September 1997. He personally  manages the Direct  Sourcing  business
within the UK and Europe and oversees all aspects of product  quality and safety
within Europe and the UK. Mr. Liddle has had 13 years  experience of quality and
manufacturing  having  previously  been  involved in  aerospace  and  automotive
industries.

         Lavinia K.W.  Wong was appointed as a Director of VGA & Sourcing of the
Company in April 2001.  Since  joining  the  Company in June 1999,  she has been
supervising the management of both the sourcing  business and out-sourced  video
game accessories.  Prior to that, she was a Director of LMP HK, where she set up
the Hong Kong  office of LMP UK and  managed the  day-to-day  operations,  which
included  sourcing,  finance  and  management.  Miss  Wong  has  over  10  years
experience  in the  electronics  and games  business  and has held an  executive
marketing position in a publicly listed electronics company in Hong Kong.

         Hermen H.L. Yau has been the MIS Director of the Company since March 1,
1994.  From 1982 to 1994, he worked in Outboard Marine  Corporation  Asia Ltd in
various positions in the Systems & Data Processing Department.  He has more than
18 years experience in Information  Technology and particular  experience in IBM
mid-range  computer  systems and solutions.  He has a Higher Diploma in Computer
Studies  from the  National  Computing  Center  UK and a Diploma  in  Management
Studies from the Hong Kong Polytechnic and Hong Kong Management Association.

COMPENSATION OF OFFICERS AND DIRECTORS

COMPENSATION

         In  fiscal  2001,  the  aggregate  amount of  compensation  paid to all
executive  officers and directors as a group for services in all  capacities was
approximately $2.2 million.



                                       39
<PAGE>

         Each outside (i.e.,  non-employee and  non-affiliated)  director of the
Company receives a $10,000 annual fee paid in quarterly installments.  Directors
may elect to receive half of this fee payable in shares of the Company's  Common
Stock  valued at the then current  market  price.  Each outside  director of the
Company also receives a fee of $600 for  attendance at each  Committee  meeting.
Directors  who are  employees or affiliates of the Company are not paid any fees
or additional  remuneration  for service as members of the Board of Directors or
its Committees.

         Upon each annual  re-election  to the Board of Directors,  each outside
director  receives  non-qualified  stock  options to purchase  2,500  shares per
quarter  (i.e.  10,000  shares per annum) of Common  Stock of the  Company at an
exercise  price equal to the then current  market price of the Company's  Common
Stock. The average exercise price was $3.28 per share in 2001. These options are
exercisable after one year from the date of grant.

         The Company also follows the practice that upon the initial election or
appointment of a new outside  director to the Board of Directors,  such director
receives a non-qualified stock option to purchase 30,000 shares of the Company's
Common Stock at an exercise price equal to the  then-current  market price,  and
these options are exercisable after one year from the date of grant.

EMPLOYMENT AGREEMENTS

         Messrs. Feely, Howell, Lam, Bengtson, Doughty and Ms. Jeanne Olson have
each entered  into  individual  employment  agreements  with the Company.  After
giving effect to the latest renewals,  the employment agreements are for periods
of two years each, from July 2001 for Mr. Feely,  from December 2001 for Messrs.
Howell,  Bengtson  and Ms.  Olson and from May 25,  2001 for Mr.  Doughty.  Each
employment  agreement  is  terminable  by  the  Company  for  cause.  Mr.  Lam's
employment agreement was not renewed and with effect from March 2002, he will be
no longer an  executive  officer  but will  remain an  outside  director  of the
Company.  Messrs.  Feely,  Howell,  Bengtson,  Doughty and Ms.  Olson shall each
receive minimum annual base salaries of $282,600,  $225,000,  $43,200,  $116,000
and  $200,000  (the  amount  for  Mr.  Doughty  is  stated  in  UK  currency  as
(pound)80,000), respectively. From 2000, Messrs. Feely and Howell took voluntary
pay cuts and do not receive the minimum annual base salaries. The agreement with
Mr. Bengtson,  in operation since December 1995, is for part-time services.  The
employment agreements for Messrs.  Feely, Howell,  Doughty and Ms. Olson contain
certain  restrictions on their  involvement in businesses other than the Company
during the course of their  employment and certain  provisions  applicable after
termination of employment which prohibit the solicitation of customers and other
employees of the Company,  employment or engagement with competing entities,  or
the disclosure of proprietary information of the Company. The Company provides a
residence for Mr. Howell and  previously  provided a residence for Mr. Storey in
Hong Kong. In the agreement for Mr. Feely,  he was granted 300,000 stock options
of the Company common stock at $3.625 per share, another 60,000 stock options at
$14.125 per share in November  1998 and a further  60,000 stock options at $3.00
per share in May 2000,  subject to the terms and conditions of the agreement and
the 1994 Stock Option Plan. Additionally, in May 2001, Mr. Feely would have been
granted  60,000  stock  options at market  price  provided he  achieved  certain
conditions as stated in the agreements, however, these were not achieved. In the
agreements  for Mr.  Howell and Mr. Lam,  they were  granted  each 25,000  stock
options of the Company common stock at $3.00 and $2.90 per share in May 2000 and
2001 respectively. In June 2002, Mr. Howell will be granted 25,000 stock options
(up to 25,000 shares in the aggregate) at market price, subject to the terms and
conditions of the agreement and the 1994 Stock Option Plan, and provided certain
conditions  are achieved as stated in the  agreement.  In the  agreement for Ms.
Olson, she had been granted 60,000 stock options upon initial employment and was
granted an additional 40,000 stock options at $3.45



                                       40
<PAGE>

per share in January 2002 subject to the terms and  conditions  of the agreement
and the 1994 Stock Option Plan. In the agreement  for Mr.  Doughty,  he had been
granted 26,400 stock options of the Company common stock at $3.00 and $1.625 per
share in May 2000 and January 2001, respectively upon initial employment and was
granted an additional 6,000 stock options at $3.00 per share in May 2001 subject
to the terms and  conditions  of the  agreement  and the 1994 Stock Option Plan.
Additionally,  Messrs.  Feely, Howell and Ms. Olson were granted 60,000,  25,000
and 25,000,  respectively  in Feb 2001 and Mr. Doughty was granted 25,000 in May
2001 under the Performance Driver Incentive Plan.

CONSULTING AGREEMENT

         In 2001, Mr. Henry Hu, one of the Company's outside directors, acted as
an   independent   contractor  to  review  and  advise  the  Company  on  social
accountability  standards and its R&D/manufacturing  operation.  Mr. Hu was paid
consulting fees of $15,000 and $8,974 in April and August 2001, respectively.

OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

         The Company's 1994 Stock Option Plan provides for the granting of stock
options to directors,  officers and  employees of the Company.  The Stock Option
Plan is administered by the Compensation,  Organization and Nominating Committee
of the Board of Directors.  Subject to the  provisions of the Stock Option Plan,
the  Compensation,   Organization  and  Nominating  Committee  shall  have  sole
authority to  determine  which of the eligible  directors  and  employees of the
Company shall receive stock options,  the terms,  including  applicable  vesting
periods, of such options,  and the number of shares for which such options shall
be granted.

         The total  number of shares of the  Company's  Common Stock that may be
purchased pursuant to stock options under the Stock Option Plan shall not exceed
in the aggregate 3.7 million shares.  The option price per share with respect to
each such option  shall be  determined  by the  Compensation,  Organization  and
Nominating Committee but shall be not less than 100% of the fair market value of
the  Company's  Common Stock on the date such option is granted as determined by
the  Compensation,  Organization and Nominating  Committee.  Ordinarily,  either
twenty percent or thirty-three and a third percent of the stock options vest and
become exercisable on each of the first five or three  anniversaries of the date
of grant,  respectively  and all of the options  expire in ten years.  The Stock
Option Plan terminates in 2004 unless terminated earlier.

         In fiscal year 1999, an aggregate of 235,000 options  (exclusive of the
outside  directors'  options and net of stock  options that were both issued and
canceled in the year) were granted to  directors,  officers and other  employees
under the Stock Option Plan to purchase the Company's  shares at exercise prices
ranging from $8.38 to $15 per share.

         In fiscal year 2000, an aggregate of 788,000 options  (exclusive of the
outside  directors'  options and net of stock  options that were both issued and
canceled in the year) were granted to  directors,  officers and other  employees
under the Stock Option Plan to purchase the Company's  shares at exercise prices
ranging from $1.63 to $3.25 per share.

         In fiscal year 2001, an aggregate of 432,600 options  (exclusive of the
outside  directors'  options and net of stock  options that were both issued and
canceled in the year) were granted to directors, officers



                                       41
<PAGE>

and other employees under the Stock Option Plan to purchase the Company's shares
at exercise prices ranging from $1.63 to $4.15 per share.

         As a result of the  foregoing,  at the end of fiscal  year 2001,  after
giving effect to all prior exercises and cancellations of options,  an aggregate
of  1,910,867  options  (exclusive  of  the  outside  directors'  options)  were
outstanding at exercise  prices  ranging from $1.09 to $19.63 per share,  and of
such amount a total of 1,156,000  options were held by directors  and  executive
officers  of the  Company as a group.  Also,  an  aggregate  of 280,000  outside
director's  options were  outstanding  at exercise  prices ranging from $1.50 to
$18.75 per share.  During  2001,  a total of 75,596  shares were issued upon the
exercise of options,  at exercise  prices  ranging from $1.38 to $3.0 per share.
Prior to 2001,  a total of 990,000  shares had been issued upon the  exercise of
options at exercise prices ranging from $0.57 to $11.0 per share.

         Additional  information  with respect to stock  options is contained in
Note 12 of the Notes to the Consolidated  Financial  Statements included in this
filing.

         Information with respect to employees is contained in Item 4 above.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

CONTROL OF REGISTRANT

(a)  The  registrant  is not  controlled by another  corporation  or any foreign
     government.

(b)  The following  table is based on  information  available to the Company and
     identifies  the owners of more than five percent  (5%) of the  registrant's
     common  stock and the  amount of common  stock  owned by the  officers  and
     directors as a group, as of January 31, 2002:

                  Identity of
Title of Class  Person or Group                  Amount Owned   Percent of Class
--------------  ---------------                  ------------   ----------------

Common stock    Dito Devcar Corporation, et al.     7,191,638         40.7%
Common stock    RAD Partners 1999 LLC, et al.       1,686,200          9.6%
Common stock    Robert E. Davids                    1,499,500          8.5%
Common stock    Officers & Directors as a Group     2,012,114         11.4%

     Over the last three years, the identity of the foregoing major shareholders
     has not changed but the  relative  percentages  owned by them have  changed
     somewhat.  Since  December  1,  1998,  the amount  owned by Mr.  Davids has
     decreased by  approximately 8 percentage  points,  and the amounts owned by
     Dito  Devcar  Corporation  and RAD  Partners  1999  LLC have  increased  by
     approximately  9  percentage  points  and  less  than 1  percentage  point,
     respectively.

(c)  There are no arrangements known to the registrant which may at a subsequent
     date result in a change of control of the registrant.

(d)  As of December 31, 2001, the Company had  approximately  120 record holders
     of its Common  Stock,  and  approximately  80% of such stock was held by US
     holders.

INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS



                                       42
<PAGE>

         Robert E. Davids, the Hansen Trust,  certain other former  stockholders
and the Company  were parties to a  shareholders  agreement  (the  "Shareholders
Agreement") which provided for certain matters relating to the management of the
Company and ownership of its Common Stock.  In January  1998,  the  Shareholders
Agreement  was amended to  eliminate  provisions  respecting  the  election  and
removal of directors, restrictions on transfer and a right of first refusal. The
registration rights provisions of the Shareholders Agreement remain operative.

         Pursuant to the Shareholders Agreement, the Company agreed, at any time
after February 16, 1996 and subject to certain specified conditions,  to use its
reasonable  efforts to prepare and file one registration  statement on behalf of
each shareholder that is a party to the  Shareholders  Agreement  (collectively,
the "Shareholders")  under the Securities Act of 1933, and to use its reasonable
efforts to qualify the shares for offer and sale under any  applicable  US state
securities laws. The Shareholders Agreement also grants each Shareholder certain
"piggyback"  registration  rights entitling each Shareholder,  at any time after
February  16,  1996,  to sell Common  Stock in certain  registered  offerings of
equity  securities of the Company.  These  "piggyback"  registration  rights are
exercisable by each Shareholder only twice.  The foregoing  registration  rights
are subject to other  limitations set forth in the  Shareholders  Agreement.  In
1997, the Company  effected a demand  registration  at the request of Mr. Davids
and also  included  certain  shares at the  request  of the Hansen  Trust.  Such
registration  covered an aggregate of 1,855,000  million  shares.  In 1999,  the
Company effected a further  registration  for Mr. Davids that covered  2,815,800
shares.

         Albert J. Crosson, one of the Company's directors, owns no Radica Games
Limited stock shares ("shares") directly.  However, he owns 1% of the beneficial
interest in Crossfire,  LLC ("Crossfire") which beneficially owns 200,000 shares
through its class A membership  interest in RAD Partners 2001, LLC ("RAD 2001").
RAD 2001 is  controlled  by RAD Partners  1999 LLC which is one of the Company's
major stockholders.  Mr. Crosson's 1% ownership of Crossfire  constitutes voting
control of Crossfire and Crossfire has the right to withdraw such 200,000 shares
from  RAD  2001.  Additionally,  under an  economic  arrangement  involving  its
membership interest in RAD 2001,  Crossfire may acquire beneficial  ownership in
an additional 400,000 shares over time from RAD 2001; however,  Crossfire cannot
vote or dispose of such  shares  without  the  consent of all the members of RAD
2001. Crossfire is owned beneficially by Mr. Crosson and his four children.

         Additional  information on management  transactions  is contained under
Item 6 above.

ITEM 8.  FINANCIAL INFORMATION

FINANCIAL STATEMENTS

         The Company's Consolidated Financial Statements are included herein.

LEGAL PROCEEDINGS

         The company is subject to pending  claims and  litigation.  Management,
after review and  consultation  with counsel,  considers that any liability from
the disposition of such lawsuits would not have a material adverse effect on the
consolidated financial condition and results of operations of the Company.

ITEM 9.  THE OFFER AND LISTING



                                       43
<PAGE>

         The  Company's  common  stock is traded on the NASDAQ  National  Market
under the symbol RADA.  The Company's  common stock is not traded on any foreign
trading  market.  The following table lists the high and low closing stock price
for each quarter of fiscal 2001 and fiscal 2000:

                      Fiscal year ended            Fiscal year ended
                      December 31, 2001            December 31, 2000
                      -----------------            -----------------
                      High        Low               High         Low
                      ----        ---               ----         ---
First Quarter         3  3/8       1  5/8           10           6  3/4
Second Quarter        3  1/2       2  1/2           7 1/16       2 11/16
Third Quarter         4  1/4       2  2/5           3 1/2        2  5/8
Fourth Quarter        4 9/10       2 17/32          2 3/4        1  5/8

         The annual  high and low closing  stock  prices in fiscal 1999 were $16
and $7 1/4,  in fiscal  1998 were $21 and $10 7/16;  and in fiscal 1997 were $15
3/16 and $1 1/16.

         The monthly high and low closing  stock prices over the last six months
in  fiscal  2001  were $4 1/4 and $3 11/20 in July  2001;  $4 1/4 and $3 9/17 in
August  2001;  $4 2/25 and $2 2/5 in  September  2001;  $3 23/50 and $2 17/32 in
October 2001; $4 9/10 and $3 9/53 in November  2001;  and $4 7/10 and $4 1/33 in
December 2001.

         Radica  Games  Limited was formed in 1994 as a holding  company and has
not paid any  dividends.  Except to the  extent  set forth  below,  the  Company
intends to retain its earnings for  operations and expansion of its business for
the  foreseeable  future.  The  payment of any future  dividends  will be at the
discretion of the Board of Directors and will depend upon,  among other factors,
the Company's earnings,  financial  condition,  capital requirements and general
business  outlook at the time the payment is considered.  The Company intends to
make cash  distributions at the end of its taxable year at least equal to 50% of
its  foreign  personal  holding  company  income  for any  year in which it is a
personal  foreign  holding  company  (see  Item  10.  Additional  Information  -
Taxation).

ITEM 10.  ADDITIONAL INFORMATION

MEMORANDUM AND BYE-LAWS

         A summary of the Company's memorandum and bye-laws and other provisions
pertaining  to its  common  stock is  contained  in the  Company's  registration
statement on Form F-3 filed with the Securities  and Exchange  Commission on May
21, 1999 (file no.  33-79005).  Such summary in that  registration  statement is
incorporated herein by reference.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

         The  Company  has been  designated  as a  non-resident  of Bermuda  for
exchange control purposes by the Bermuda Monetary Authority.

         The  transfer  of shares of the  Company  between  persons  regarded as
non-resident  of Bermuda for exchange  control  purposes and the issue of shares
within the authorized share capital of the Company of US$1,000,000 to or by such
persons may be effected  without specific consent under the Exchange Control Act
1972 and  regulations  thereunder  subject to such  shares  being  listed on the
National  Association of Securities Dealers Automated  Quotation System.  Issues
and transfers of shares involving any person



                                       44
<PAGE>

regarded as resident in Bermuda for exchange  control  purposes require specific
prior approval under the Exchange Control Act 1972.

         There are no limitations on the rights of non-Bermuda  resident holders
of the Common Stock to hold or vote their  shares.  Because the Company has been
designated as non-resident for Bermuda exchange control  purposes,  there are no
restrictions  on its ability to  transfer  funds in and out of Bermuda or to pay
dividends to United States residents who are holders of the Common Stock,  other
than in respect of local Bermuda currency.

         In accordance with Bermuda law, share  certificates  are only issued in
the names of corporations or individuals.  In the case of an applicant acting in
a special capacity (for example,  as an executor or trustee),  certificates may,
at the request of the  applicant,  record the capacity in which the applicant is
acting.  Notwithstanding the recording of any such special capacity, the Company
is not bound to investigate or incur any responsibility in respect of the proper
administration of any such estate or trust.

         The Company will take no notice of any trust  applicable  to any of its
shares whether or not it had notice of such trust.

         As an exempted  company,  the Company is exempt from the usual  Bermuda
requirement  which restricts the percentage of share capital that may be held by
non-Bermudians,  but  as  an  exempted  company  the  Company  may  not,  unless
authorized by its memorandum of association and with the consent of the Minister
of Finance,  participate in certain business  transactions,  including:  (1) the
acquisition  and  holding  of land in  Bermuda  (except  that  required  for its
business and held by way of lease or tenancy for terms of not more than 50 years
or with the Minister's consent,  land by way of lease or tenancy agreement for a
term not exceeding 21 years in order to provide  accommodation  or  recreational
facilities for its officers and employees);  (2) the taking of mortgages on land
in Bermuda to secure an amount in excess of $50,000;  (3) the acquisition of any
bonds or  debentures  secured on any land in Bermuda  except bonds or debentures
issued by the Bermuda  Government or a public authority;  or (4) the carrying on
of  business  of any kind or type  whatsoever  in  Bermuda,  either  alone or in
partnership,  except the  carrying on of business  of the Company  with  persons
outside  Bermuda  or under a license  granted  by the  Minister  of  Finance  of
Bermuda.

TAXATION

         The  following  discussion  is a summary  of  certain  anticipated  tax
consequences  of the ownership of Common Stock under Bermuda tax laws, Hong Kong
income tax laws and United States Federal  income tax laws. The discussion  does
not deal with all possible tax consequences relating to the Company's operations
or to the ownership of Common Stock.  In  particular,  the  discussion  does not
address the tax consequences  under State,  local and other (e.g.,  non-Bermuda,
non-Hong Kong and non-United States Federal) tax laws.  Accordingly,  each owner
should consult his tax advisor  regarding the tax  consequences of the ownership
of Common Stock. The discussion is based upon laws and relevant  interpretations
thereof  in effect as of the date of this  report,  all of which are  subject to
change.

BERMUDA TAXATION

         The Company is incorporated in Bermuda.  At date of this filing,  there
is no Bermuda income, corporation or profits tax, withholding tax, capital gains
tax,   capital   transfer  tax,  estate  duty  or  inheritance  tax  payable  by
shareholders  of the  Company  other than  shareholders  ordinarily  resident in
Bermuda. The



                                       45
<PAGE>

Company is not subject to stamp or other similar duty on the issue,  transfer or
redemption of its shares of Common Stock. Furthermore,  the Company has received
from the  Minister of Finance of Bermuda  under The  Exempted  Undertakings  Tax
Protection  Act 1966, an assurance  that,  in the event that Bermuda  enacts any
legislation  imposing any tax computed on profits or income,  or computed on any
capital assets, gain or appreciation, or any tax in the nature of estate duty or
inheritance  tax,  the  imposition  of such tax shall not be  applicable  to the
Company  or  any of  its  operations,  or to the  shares,  debentures  or  other
obligations  of the Company,  until March 28,  2016.  This  assurance  does not,
however,  prevent the  imposition of any such tax or duty on such persons as are
ordinarily   resident  in  Bermuda  and  holding  such  shares,   debentures  or
obligations of the Company or on land in Bermuda leased or let to the Company.

         The United States does not have a comprehensive  income tax treaty with
Bermuda.

HONG KONG TAXATION

         Under the laws of Hong Kong, as currently in effect, a holder of Common
Stock is not  subject to Hong Kong tax on  dividends  paid with  respect to such
shares  and no  holder  of  Common  Stock is  liable  for Hong Kong tax on gains
realized on sale or other disposition of such Common Stock except that Hong Kong
profits tax may be  chargeable on  assessable  profits,  to the extent that they
arise in or derive from Hong Kong, arising on the sale or disposal of the Common
Stock  where  such  transactions  are or form  part of a  trade,  profession  or
business carried on in Hong Kong. Hong Kong does not impose a withholding tax on
dividends paid by the Company or its subsidiaries. In addition, the Company will
not be subject to Hong Kong taxes as a result of its receipt of  dividends  from
any of its subsidiaries.

         Hong Kong stamp duty is levied on the  transfer of Common Stock of Hong
Kong companies at the rate of 0.03% on the fair  consideration  of the transfer.
For companies not  incorporated in Hong Kong, no stamp duty is chargeable on the
transfer so long as the shareholders' registers are kept outside of Hong Kong.

         Hong Kong also  levies an  estate  duty on the  estate of a person  who
holds Common Stock in a Hong Kong company at the time of his death. No such duty
is levied where the company is not incorporated in Hong Kong and where its share
register is kept outside of Hong Kong.

UNITED STATES FEDERAL INCOME TAXATION

         General.  The  following  is a general  discussion  of the  material US
federal  income  tax  consequences  to a US  Holder  (as  defined  below) of the
ownership of Common  Stock and does not address the US tax  treatment of certain
types of investors (e.g., individual retirement and other tax-deferred accounts,
life  insurance  companies,  tax-exempt  organizations,  dealers in  securities,
traders  in  securities  that  elect  to  mark to  market,  persons  liable  for
alternative minimum tax, persons that hold common stock as part of a straddle or
a hedging or conversion  transaction,  persons whose functional  currency is not
the US dollar and persons  owning  directly or  indirectly  (under  constructive
ownership rules) 10% or more of the Common Stock), all of whom may be subject to
tax rules that differ significantly from those summarized below.

         A "US  Holder"  is a  beneficial  owner of  Common  Stock  that is a US
citizen or resident,  a domestic  corporation,  an estate  subject to US federal
income taxation on a net income basis in respect of the Common Stock, or a trust
if a court within the United States is able to exercise primary supervision over


                                       46
<PAGE>

the  administration  of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.

         Dividends.  Subject to the FPHC, PFIC, and CFC discussions  below, a US
Holder receiving a distribution on Common Stock will be required to include such
distribution  in gross income as a dividend to the extent such  distribution  is
paid from  current  or  accumulated  earnings  and  profits  of the  Company  as
determined  under US  federal  income  tax law.  Distributions  in excess of the
earnings and profits of the Company will be treated,  for US federal  income tax
purposes,  as a  nontaxable  return of capital to the extent of the US  Holder's
basis in the  Common  Stock  and then as gain  from  the sale or  exchange  of a
capital asset.  Dividend  income with respect to the Common Stock generally will
constitute  foreign  source  "passive"  income,  or in the  case of  certain  US
Holders,  "financial  services"  income for  purposes  of the foreign tax credit
limitation.   A   corporate   shareholder   will   not  be   eligible   for  the
dividends-received deduction.

         Sale or Exchange of Common Stock.  Subject to the FPHC,  PFIC,  and CFC
discussions below, gain or loss on the sale or exchange of the Common Stock by a
US  Holder  generally  will be  treated  as  capital  gain or loss  and  will be
long-term  capital  gain or loss if the US Holder has held the Common  Stock for
more than one year at the time of the sale or exchange.  Gain, if any,  realized
by a US Holder will  generally  be US source gain.  Long-term  capital gain of a
non-corporate  US Holder is generally  subject to a maximum tax rate of 20%. The
gain or loss will  generally  be income or loss  transactions  within the United
States for foreign tax credit limitation purposes.

         FPHC  Rules.  A foreign  corporation  will be  classified  as a foreign
personal  holding company  ("FPHC") if (i) five or fewer  individuals who are US
citizens  or  residents  directly  or  indirectly  own  more  than  50%  of  the
corporation's stock (measured either by voting power or value) (the "shareholder
test") and (ii) more than 50% (or 60%, in certain years) of its gross income, as
specially adjusted, consists of foreign personal holding company income (defined
generally to include dividends,  interest, royalties, rents, gains from the sale
of stock or securities  and certain other types of passive  income) (the "income
test"). US citizens or residents,  domestic corporations,  domestic partnerships
and estates or trusts other than foreign estates or trusts who are  shareholders
of FPHCs ("US shareholders") are required to include in income the undistributed
income of a FPHC.

         The Company believes that it is not currently a FPHC because the income
test was not met in 2001.  However,  this conclusion is a factual  determination
that is made  annually  and thus is subject to change.  The  Company  intends to
manage its  business  such that it will not meet the income test until such time
that it begins to receive significant dividends from its subsidiaries,  which is
not expected to occur in the  foreseeable  future.  The Company  would then be a
FPHC only if, in the same taxable year, it also met the shareholder test.

         If the Company is a FPHC for any year,  each US  shareholder  who holds
Common Stock on the last day of the  Company's  taxable year or, if earlier,  on
the last day on which the ownership test is met, would be required to include in
income as a dividend its pro rata share of the Company's  undistributed  foreign
personal holding company income. The shareholder's tax basis in the Common Stock
would be  increased  by the amount  included  in income.  Such  income  would be
taxable to any such US shareholder as a dividend  whether or not  distributed in
cash.  For any  year in  which  the  Company  is a FPHC,  any 5% or  greater  US
shareholder  would be  required  to report on its tax return  the gross  income,
deductions  and credits,  taxable  income,  FPHC income and  undistributed  FPHC
income of a FPHC. The Company will furnish any shareholder required so to report
the information required to be reported. In addition, any


                                       47
<PAGE>

holder who  acquires  Common  Stock from a decedent  would be denied the date of
death value as the tax basis for such  Common  Stock  (which  would have a basis
equal to the lower of fair market value or the decedent's  basis) if the Company
was a FPHC with  respect  to its  taxable  year next  preceding  the date of the
decedent's death.

         For any year in which it is a FPHC,  the  Company  intends to make cash
distributions  to  shareholders of record on the last day of its taxable year in
an amount at least equal to 50% of its foreign  personal  holding company income
(which amount should be sufficient for  shareholders to pay US federal and state
income  taxes  on such  distributions  and any  undistributed  foreign  personal
holding company income taxable as a dividend).

         PHC Rules. A corporation (including a foreign corporation that is not a
FPHC) will be classified as a personal  holding  company  ("PHC") if (i) five or
fewer individuals (without regard to their citizenship or residence) directly or
indirectly  own  more  than  50%  in  value  of  the  corporation's  stock  (the
"shareholder  test")  and (ii) at least 60% of its  ordinary  gross  income,  as
specially  adjusted,  consists  of  personal  holding  company  income  (defined
generally to include  dividends,  interest,  royalties,  rents and certain other
types of passive income) (the "income  test").  A PHC is subject to a US federal
income tax on its  undistributed  personal  holding  company  income  (generally
limited, in the case of a foreign corporation, to US source income).

         The Company  believes that it is not currently a PHC because the income
test was not met in 2001. The Company  intends to cause any subsidiary that is a
PHC to make  distributions  on a basis such that it will not have  undistributed
personal holding company income.

         CFC Rules. A foreign  corporation  generally is treated as a controlled
foreign  corporation ("CFC") for US federal income tax purposes if more than 50%
of its stock is owned by certain 10% shareholders.  The Company believes that it
is not currently a CFC because such  shareholder  test is not met. The treatment
of the Company as a CFC would not in any event  adversely  affect any person who
owns  (directly or  indirectly  or by  attribution)  less than 10% of the Common
Stock.

         PFIC Rules.  The Company  believes  that the Common Stock should not be
treated as stock of a passive foreign  investment  company (a "PFIC") for United
States  federal  income  tax  purposes,   but  this   conclusion  is  a  factual
determination  made  annually and thus may be subject to change.  If the Company
were to be treated as a PFIC, a gain  realized on the sale or other  disposition
of Common  Stock  would in general  not be treated as a capital  gain,  and a US
Holder would be treated as if such holder had  realized  such a gain and certain
"excess  distributions"  ratably over the holder's holding period for the Common
Stock and would be taxed at the highest tax rate in effect for each such year to
which the gain was allocated, together with an interest charge in respect of the
tax attributable to each such year.

         In general,  the Company will be a PFIC with respect to a US Holder if,
for any taxable  year in which the US Holder held the  Company's  Common  Stock,
either (i) at least 75% of the gross  income of the Company for the taxable year
is passive income or (ii) at least 50% of the value  (determined on the basis of
a quarterly  average) of the  Company's  assets is  attributable  to assets that
produce or are held for the  production  of passive  income.  For this  purpose,
passive income generally includes dividends,  interests, royalties, rents (other
than certain  rents and  royalties  derived in the active  conduct of a trade or
business), annuities and gains from assets that produce passive income.

DOCUMENTS ON DISPLAY



                                       48
<PAGE>

         The  documents  concerning  the Company  which are  referred to in this
report may be inspected  on-line at websites  maintained by the  Securities  and
Exchange  Commission  and by  private  companies  offering  access  to  the  SEC
database. See, e.g., www.sec.gov.
                     -----------

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISK DISCLOSURES

         The following  discussion  about the Company's  market risk disclosures
contains forward-looking  statements.  Forward-looking statements are subject to
risks and  uncertainties.  Actual  results  could differ  materially  from those
discussed in the  forward-looking  statements.  The Company is exposed to market
risk related to changes in interest rates and foreign  currency  exchange rates.
The  Company  does  not  have  derivative  financial  instruments  for  hedging,
speculative, or trading purposes.

INTEREST RATE SENSITIVITY

         The Company's  long-term loan agreement is based upon the US$ Singapore
Interbank  Offered  Rate  ("SIBOR")  and, as such,  is  sensitive  to changes in
interest rates. The Company has not used derivative financial instruments in its
indebtedness.  At December 31, 2001, the result of a hypothetical one percentage
change in the  underlying  US$ SIBOR rates would have resulted in an approximate
$0.1 million change in the annual amount of interest payable on such debt.

FOREIGN CURRENCY RISK

         The Company has net monetary  asset and  liability  balances in foreign
currencies  other  than the U.S.  dollar,  including  the  Pound  Sterling,  the
Canadian  dollar,   the  Hong  Kong  dollar  and  the  Renminbi.   International
distribution and sales revenues  usually are made by the Company's  subsidiaries
in the United States,  United Kingdom and Canada, and are denominated  typically
in their local currency.  However,  the expenses incurred by these  subsidiaries
are also denominated in the local currency.  As a result,  the operating results
of the  Company  are  exposed to changes in  exchange  rates  between the United
States Dollar and the Pound  Sterling or the Canadian  dollar.  The Company does
not currently hedge its foreign  exchange risk, which is not significant at this
time.   The  Company   will   continue  to  monitor  its  exposure  to  currency
fluctuations,  and, where  appropriate,  may use financial hedging techniques in
the  future  to  minimize  the  effect  of these  fluctuations.  There can be no
assurance  that  exchange  rate  fluctuations  will not harm the business in the
future.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not Applicable


                                     PART II

ITEM 13.  DEFAULTS, DIVIDEND AVERAGES AND DELINQUENCIES

         None



                                       49
<PAGE>

ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
          USE OF PROCEEDS

         None or Not Applicable

ITEM 15.  RESERVED

ITEM 16.  RESERVED


                                    PART III

ITEM 17.  FINANCIAL STATEMENTS

         Not Applicable

ITEM 18.  FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS                                             PAGE

         Independent Auditors' Reports                                    F-1, 2

         Consolidated Balance Sheets                                      F-3

         Consolidated Statements of Operations                            F-4

         Consolidated Statements of Shareholders' Equity                  F-5

         Consolidated Statements of Cash Flows                            F-6

         Notes to the Consolidated Financial Statements                   F-7

ITEM 19.  EXHIBITS

                 *     3.1     Memorandum of Association

                 *     3.2     Bye-Laws

                 *     3.3     Certificate of Incorporation on Change of Name

                 *     4.1     Specimen Certificate for the Shares of Common
                               Stock

                 *    10.1     Processing  Agreement,  dated December 4, 1991,
                               between Radica HK and foreign Economic
                               Development Co. of Humen Town, Dongguan,
                               relating to the Tai Ping Factory

                 *    10.2     Processing Agreement, dated December 27, 1993,
                               between Radica HK and Foreign Economic
                               Development Co. of Humen Town, Dongguan



                                       50
<PAGE>

                 @    10.3     Cooperative Joint Venture Contract of D.G. Radica
                               Games Manufacturing Co., Ltd., dated June 24,
                               1994 (see exhibit 10.16 to 20-F for year ended
                               October 31, 1994)

                 *    10.4     Shareholders Agreement, dated January 12, 1994,
                               among the Company and the shareholders parties
                               thereto

                 *    10.5     Amendment to Shareholders Agreement, dated as of
                               February 16, 1994, among the Company and the
                               shareholders party thereto.

                 **   10.5(a)  Amendment to Shareholders Agreement, dated as of
                               September 5, 1997, among the Company and the
                               shareholders party thereto.

                      10.6     Employment Agreement, dated as of December 15,
                               2001, between Radica USA and Jeanne Olson

                 *    10.8     Employment Agreement, dated as of November 28,
                               1993, among Radica HK, Radica USA and Jon N.
                               Bengtson

                 *    10.8(a)  Form of Amendment to Employment Agreement among
                               Radica Games Limited, Radica HK, Radica USA and
                               Jon N. Bengtson.

                 #    10.8(b)  December 1995 Amendment to such Employment
                               Agreement.

                 ~    10.8(c)  December 1997 Amendment to such Employment
                               Agreement.

                 >    10.9     1994 Stock Option Plan, as most recently
                               amendment restated in May 2000 to increase
                               options

                 >    10.11    Amendment and Restatement to Employment Agreement
                               among Radica USA, Radica Games Limited and
                               Patrick Feely dated September 27, 2000

                 >    10.13    Amendment and Restatement to Employment Agreement
                               between Radica Games Limited and David C.W.
                               Howell dated September 29, 2000

                 >    10.14    Amendment and Restatement to Employment Agreement
                               between Radica Games Limited and Siu Wing Lam
                               dated October 4, 2000

                      10.15    Employment Agreement, dated as of May 25, 2001,
                               between Radica UK Limited and John Doughty

                 ##   10.16    Share Purchase Agreement dated as of June 24,
                               1999, relating to the acquisition of the entire
                               issued share capital of Leda Media Products
                               Limited (now Radica UK Limited).

                      11.1     Statement re Computation of Per Share Earnings

                      12.1     Statement re Selected Quarterly Financial Data




                                       51
<PAGE>

                      21.1     List of subsidiaries

                      23.1     Consent of KPMG

                      23.2     Consent of Deloitte Touche Tohmatsu

*        Incorporated by reference to Registration Statement on Form F-1, File
         No. 33-75794 filed by the Registrant.

@        Incorporated by reference to Form 20-F for the year ended October 31,
         1994.

#        Incorporated by reference to Form 20-F for the year ended October 31,
         1996.

~        Incorporated by reference to Form 20-F for the year ended October 31,
         1997.

**       Incorporated by reference to Form 20-F for the year ended October 31,
         1998.

##       Incorporated by reference to Form 20-F for the year ended December 31,
         1999.

>        Incorporated by reference to Form 20-F for the year ended December 31,
         2000.

The other exhibits not footnoted are included as part of this filing.




                                       52
<PAGE>
                              RADICA GAMES LIMITED

                        CONSOLIDATED FINANCIAL STATEMENTS







                                                                            Page
                                                                            ----

    Independent Auditors' Reports ....................................... F-1, 2


    Consolidated Balance Sheets ............................................ F-3


    Consolidated Statements of Operations .................................. F-4


    Consolidated Statements of Shareholders' Equity and Comprehensive
    Income ................................................................. F-5


    Consolidated Statements of Cash Flows .................................. F-6


    Notes to the Consolidated Financial Statements ......................... F-7



<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
Radica Games Limited


We have  audited the  accompanying  consolidated  balance  sheet of Radica Games
Limited and  subsidiaries as of December 31, 2001, and the related  consolidated
statements of operations,  shareholders'  equity and comprehensive  income,  and
cash flows for the year then ended.  The consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on the consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Radica Games Limited
and  subsidiaries  as of December 31, 2001, and the results of their  operations
and their  cash  flows for the year then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.



(signed) KPMG

HONG KONG
February 8, 2002



                                      F - 1

<PAGE>


                          INDEPENDENT AUDITORS' REPORT



To the Shareholders and Directors of Radica Games Limited


     We have audited the accompanying consolidated balance sheet of Radica Games
Limited and  subsidiaries  as of December 31, 2000 and the related  consolidated
statements of operations, shareholders' equity and comprehensive income and cash
flows for the years ended December 31, 2000 and 1999. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

     In our opinion,  such financial  statements present fairly, in all material
respects,  the financial position of Radica Games Limited and subsidiaries as of
December 31, 2000, and the results of their  operations and their cash flows for
the years  ended  December  31, 2000 and 1999,  in  conformity  with  accounting
principles generally accepted in the United States of America.




/S/ Deloitte Touche Tohmatsu

HONG KONG
February 12, 2001




                                      F - 2

<PAGE>

<TABLE>
<CAPTION>
                                       RADICA GAMES LIMITED
                                   CONSOLIDATED BALANCE SHEETS
                                    DECEMBER 31, 2001 AND 2000


                                              ASSETS
(US dollars in thousands, except share data)                                  2001         2000
                                                                           --------      --------

<S>                                                                        <C>           <C>
Current assets:
Cash and cash equivalents
  (Pledged deposits of $8,955 in 2001 and $11,139 in 2000)                 $ 25,810      $ 23,097
Accounts receivable, net of allowances for doubtful accounts
  of $2,207 ($2,073 in 2000)                                                 17,290        25,931
Inventories, net of provision of $3,997 ($5,788 in 2000)                     17,179        13,971
Prepaid expenses and other current assets                                     2,283         1,574
Income taxes receivable                                                         931         4,277
Deferred income taxes                                                           168           223
                                                                           --------      --------

     Total current assets                                                    63,661        69,073
                                                                           --------      --------

Property, plant and equipment, net                                           16,310        17,975

Goodwill, net of accumulated amortization of $2,518 ($1,722 in 2000)          9,551        10,347

Purchased intangible assets, net of accumulated amortization of $5,840
  ($5,254 in 2000)                                                              420         1,006

Deferred income taxes, noncurrent                                             1,887           914
                                                                           --------      --------

     Total assets                                                          $ 91,829      $ 99,315
                                                                           ========      ========

                               LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Short-term borrowings                                                      $    846      $  3,780
Current portion of long-term debt                                             3,648         3,648
Accounts payable                                                              9,201         7,077
Accrued warranty expenses                                                       900           950
Accrued payroll and employee benefits                                           943           950
Other accrued liabilities                                                    10,907         9,834
Income taxes payable                                                            507           215
                                                                           --------      --------

     Total current liabilities                                               26,952        26,454
                                                                           --------      --------

Long-term debt                                                                1,825         5,473
                                                                           --------      --------

     Total liabilities                                                       28,777        31,927
                                                                           --------      --------

Shareholders' equity:
Common stock
  par value $0.01 each, 100,000,000 shares authorized,
  17,646,740 shares issued and outstanding (17,564,297 in 2000)                 176           176
Additional paid-in capital                                                    1,549         1,188
Warrants to acquire common stock                                                445           667
Retained earnings                                                            61,012        65,386
Accumulated other comprehensive loss                                           (130)          (29)
                                                                           --------      --------

     Total shareholders' equity                                              63,052        67,388
                                                                           --------      --------

     Total liabilities and shareholders' equity                            $ 91,829      $ 99,315
                                                                           ========      ========
<FN>
                 See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>

                                      F-3
<PAGE>


<TABLE>
<CAPTION>
                                        RADICA GAMES LIMITED
                               CONSOLIDATED STATEMENTS OF OPERATIONS
                            YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

(US dollars in thousands,                              2001               2000             1999
 except per share data)                            ------------      ------------      ------------


<S>                                                <C>               <C>               <C>
Revenues:
Net sales                                          $     98,554      $    106,696      $    136,716
Cost of goods sold (exclusive of items
  shown separately below)                               (64,698)          (83,041)          (80,910)
                                                   ------------      ------------      ------------
Gross profit                                             33,856            23,655            55,806
                                                   ------------      ------------      ------------

Operating expenses:
Selling, general and administrative expenses            (26,498)          (32,273)          (28,049)
Research and development                                 (5,775)           (5,210)           (6,036)
Depreciation                                             (2,631)           (2,601)           (2,389)
Amortization of goodwill and intangible assets           (1,382)           (2,826)           (2,567)
Restructuring charge                                     (1,551)           (1,190)             --
                                                   ------------      ------------      ------------
  Total operating expenses                              (37,837)          (44,100)          (39,041)
                                                   ------------      ------------      ------------

Operating (loss) income                                  (3,981)          (20,445)           16,765

Other income                                                 24               781               718

Share of loss of affiliated company                        --                --              (1,748)

Interest income                                             733             1,472             1,800

Interest expense                                           (597)             (808)             (331)
                                                   ------------      ------------      ------------

(Loss) income before income taxes                        (3,821)          (19,000)           17,204

(Provision) credit for income taxes                        (553)              901              (149)
                                                   ------------      ------------      ------------

Net (loss) income                                  $     (4,374)     $    (18,099)     $     17,055
                                                   ============      ============      ============

Net (loss) income per share:

     Basic                                         $      (0.25)     $      (1.03)     $       0.94
                                                   ============      ============      ============

     Diluted                                       $      (0.25)     $      (1.03)     $       0.90
                                                   ============      ============      ============

Weighted average number of common and
common equivalent shares

     Basic                                           17,611,886        17,608,167        18,144,179
                                                   ============      ============      ============

     Diluted                                         17,611,886        17,608,167        18,979,349
                                                   ============      ============      ============

<FN>
                  See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>


                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                                       RADICA GAMES LIMITED
                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                     AND COMPREHENSIVE INCOME
                                           YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


(US dollars in thousands)                 Common stock                                                   Accumulated
                                          ------------         Additional    Warrants to                   other          Total
                                      Number                    paid-in        acquire      Retained    comprehensive  shareholders'
                                    of shares      Amount       capital      common stock   earnings    income (loss)    equity
                                   -----------   -----------   -----------   -----------   -----------   -----------   -----------

<S>                                 <C>          <C>           <C>           <C>           <C>           <C>           <C>
Balance at December 31, 1998        18,896,694   $       189   $     9,382   $      --     $    76,215   $       (51)  $    85,735
Cancellation of repurchased stock   (1,538,500)          (16)       (8,821)         --          (9,170)         --         (18,007)
Stock options exercised                281,400             3           529          --            --            --             532
Issue of stock warrants                   --            --            --             667          --            --             667
Net income                                --            --            --            --          17,055          --          17,055
Foreign currency translation              --            --            --            --            --              80            80
                                   -----------   -----------   -----------   -----------   -----------   -----------   -----------

Balance at December 31, 1999        17,639,594   $       176   $     1,090   $       667   $    84,100   $        29   $    86,062
Issuance of stock                        9,158          --              23          --            --            --              23
Cancellation of repurchased stock     (156,055)           (1)          (25)         --            (615)         --            (641)
Stock options exercised                 71,600             1           100          --            --            --             101
Net loss                                  --            --            --            --         (18,099)         --         (18,099)
Foreign currency translation              --            --            --            --            --             (58)          (58)
                                   -----------   -----------   -----------   -----------   -----------   -----------   -----------

Balance at December 31, 2000        17,564,297   $       176   $     1,188   $       667   $    65,386   $       (29)  $    67,388
Issuance of stock                        6,847          --              22          --            --            --              22
Stock options exercised                 75,596          --             117          --            --            --             117
Expiration of stock warrants              --            --             222          (222)         --            --            --
Net loss                                  --            --            --            --          (4,374)         --          (4,374)
Foreign currency translation              --            --            --            --            --            (101)         (101)
                                   -----------   -----------   -----------   -----------   -----------   -----------   -----------

Balance at December 31, 2001        17,646,740   $       176   $     1,549   $       445   $    61,012   $      (130)  $    63,052
                                   ===========   ===========   ===========   ===========   ===========   ===========   ===========

<FN>
The  comprehensive  (loss) income of the Company,  which represents the aggregate of the net (loss) income and the foreign currency
translation adjustments, was $(4,475), $(18,157) and $17,135 for the years ended December 31, 2001, 2000 and 1999, respectively.
</FN>

<FN>
                                 See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>


                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                                   RADICA GAMES LIMITED
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                       YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

(US dollars in thousands)                                    2001       2000        1999
                                                          --------    --------    --------

<S>                                                       <C>         <C>         <C>
Cash flow from operating activities:
Net (loss) income                                         $ (4,374)   $(18,099)   $ 17,055
Adjustments to reconcile net (loss) income to net cash
  provided by (used in) operating activities:
  Deferred income taxes                                       (918)      2,541          82
  Depreciation                                               2,631       2,601       2,389
  Amortization                                               1,382       2,826       2,567
  Share of loss of affiliated company                         --          --         1,748
  Loss on disposal and write off of property, plant and
    equipment                                                   73          10          62
  Changes in current assets and liabilities:
    Decrease (increase) in accounts receivable               8,641      (2,181)     (7,601)
    (Increase) decrease in inventories                      (3,208)     10,654      (2,986)
    (Increase) decrease in prepaid expenses and other
       current assets                                         (709)      3,178      (3,572)
    Increase (decrease) in accounts payable                  2,124      (3,852)      3,365
    (Decrease) increase in accrued payroll and employee
       benefits                                                 (7)     (1,561)       (177)
    (Decrease) increase in accrued warranty expenses           (50)       (150)     (1,400)
    Increase (decrease) in other accrued liabilities         1,073       2,220        (753)
    Decrease (increase) income taxes                         3,638      (2,875)     (2,286)
                                                          --------    --------    --------

Net cash provided by (used in) operating activities         10,296      (4,688)      8,493
                                                          --------    --------    --------

Cash flow from investing activities:
Proceeds from sale of property, plant and equipment             64          75          47
Purchase of property, plant and equipment                   (1,103)     (3,138)     (3,306)
Purchase of Radica UK, net of cash acquired                   --          --        (2,511)
Purchase of intangible assets                                 --        (1,260)       --
Investment in affiliated company                              --          --        (1,045)
                                                          --------    --------    --------

Net cash used in investing activities                       (1,039)     (4,323)     (6,815)
                                                          --------    --------    --------

Cash flow from financing activities:
Funds from issuance of stock                              $     22          23        --
Funds from stock options exercised                             117         101         532
(Decrease) increase in short-term borrowings                (2,934)      2,316         349
Proceeds from bank loan                                       --        10,945        --
Repayment of long-term debt                                 (3,648)    (12,737)       --
Repurchase of common stock                                    --          (641)    (18,007)
                                                          --------    --------    --------

Net cash (used in) provided by financing activities         (6,443)          7     (17,126)
                                                          --------    --------    --------

Effect of currency exchange rate change                       (101)        (58)         80
                                                          --------    --------    --------

Net increase (decrease) in cash and cash equivalents         2,713      (9,062)    (15,368)

Cash and cash equivalents:
Beginning of year                                           23,097      32,159      47,527
                                                          --------    --------    --------

End of year                                               $ 25,810    $ 23,097    $ 32,159
                                                          ========    ========    ========

Supplementary disclosures of cash flow information:
  Interest paid                                           $    594    $    797    $    331
  Income taxes paid                                            433         109       1,983

Non-cash investing and financing activities:
  Loan notes forfeited                                    $   --      $  1,399    $   --
  Inventory exchanged for advertising and development
    of Internet arcade game                                   --           177        --
  Loan notes for purchase of Radica UK                        --          --        12,345
  Grant of warrants                                           --          --           667

<FN>
              See accompanying notes to the consolidated financial statements.
</FN>
</TABLE>


                                      F-6

<PAGE>

                              RADICA GAMES LIMITED
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)


1.   ORGANIZATION AND BASIS OF FINANCIAL STATEMENTS

     The Company designs,  develops,  manufactures and markets a diverse line of
     electronic  entertainment  devices  including  handheld and tabletop games,
     high-tech toys and video game accessories.  The Company is headquartered in
     Hong Kong, has subsidiaries in the USA, Canada and the UK, and a factory in
     Dongguan, Southern China.

     The consolidated  financial  statements include the accounts of the Company
     and  its  subsidiaries.   All  significant  intercompany  transactions  and
     balances have been  eliminated.  The  accompanying  consolidated  financial
     statements  have been prepared in  accordance  with  accounting  principles
     generally  accepted in the United States of America and are presented in US
     dollars.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (a)  Cash and cash equivalents - Cash and cash equivalents  include cash on
          hand, cash in bank accounts,  interest-bearing  savings accounts,  and
          time certificates of deposit with a maturity at purchase date of three
          months or less.

     (b)  Inventories - Inventories are stated at the lower of cost,  determined
          by the weighted average method,  or market.  Provision for potentially
          obsolete  or  slow-moving  inventory  is made  based  on  management's
          analysis of inventory levels and future expected sales.

     (c)  Depreciation  and  amortization  of  property,  plant and  equipment -
          Property,  plant and  equipment  are stated at cost.  Depreciation  is
          provided on the straight-line method at rates based upon the estimated
          useful  lives of the  property,  generally  not more than seven  years
          except for leasehold  land and  buildings  which are 50 years or where
          shorter,   the   remaining   term  of  the  lease,   by  equal  annual
          installments.  Costs of leasehold  improvements  and leased assets are
          amortized over the useful life of the related asset or the term of the
          lease,  whichever is shorter.  The Company  expenses all mold costs in
          the year of purchase or, for internally produced molds, in the year of
          construction.

          Upon  sale  or   retirement,   the  costs  and   related   accumulated
          depreciation  or  amortization  are  eliminated  from  the  respective
          accounts and any resulting gain or loss is included in income.

                                      F-7

<PAGE>

                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          The Company  accounts for  long-lived  assets in  accordance  with the
          provisions  of  SFAS  No.  121,   Accounting  for  the  Impairment  of
          Long-Lived  Assets  and  for  Long-Lived  Assets  to be  Disposed  Of.
          Long-lived  assets and certain  identifiable  intangibles are reviewed
          for impairment  whenever events or changes in  circumstances  indicate
          that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
          Recoverability  of  assets  to be  held  and  used  is  measured  by a
          comparison of the carrying amount of an asset to future net cash flows
          expected to be generated by the asset.  If such assets are  considered
          to be impaired,  the  impairment  to be  recognized is measured by the
          amount by which the  carrying  amount of the assets  exceeds  the fair
          value of the  assets.  Assets to be  disposed  of are  reported at the
          lower of the carrying amount or fair value less costs to sell.

     (d)  Goodwill and other intangibles - Goodwill represents the excess of the
          purchase price of acquisition of a business over the fair value of the
          net assets acquired. Goodwill and other intangibles are amortized on a
          straight-line  basis over the  estimated  benefit  period,  but not to
          exceed 20 years. The Company assesses the  recoverability  of goodwill
          by determining  whether the  amortization of the goodwill balance over
          its  remaining  life  can be  recovered  through  undiscounted  future
          operating cash flows of the acquired operation. The amount of goodwill
          impairment,  if any, is measured based on projected  discounted future
          operating  cash flows using a discount rate  reflecting  the Company's
          average  cost  of  funds.  The  assessment  of the  recoverability  of
          goodwill will be impacted if estimated future operating cash flows are
          not achieved.

     (e)  Revenue recognition - Revenues are generally  recognized as sales when
          merchandise is shipped,  which is in accordance  with the terms of the
          sale which are FOB shipping point.  This represents the point at which
          the customer  takes  ownership  and assumes risk of loss.  The Company
          does have consignment  agreements with certain  European  distributors
          and records these shipments as sales upon confirmation of sell-through
          by the  distributor.  The  Company  permits  the  return of damaged or
          defective products.  Accordingly,  the Company provides allowances for
          the  estimated  amounts  of  these  returns  at the  time  of  revenue
          recognition,  based on historical experience adjusted for known trends
          and issues,  such as  warranty  allowances  that are accrued  based on
          historical data about product reliability.

          The Company also provides certain  customers with discounts and credit
          for return of non-defective products. These credits are accrued by the
          Company at the time of revenue recognition.

          Shipping and handling  costs are  classified as costs of goods sold in
          the  statement of  operations  and totaled  $5,514,  $5,912 and $6,973
          during 2001, 2000 and 1999 respectively.

                                      F-8

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      (f) Investments - The Company has no trading  securities.  Debt securities
          which the Company has both the positive  intent and ability to hold to
          maturity are classified as  held-to-maturity  and carried at amortized
          cost adjusted for  accretion of premiums or discounts.  All other debt
          securities are classified as  available-for-sale  and recorded at fair
          value.  The  Company  determines  the  appropriate  classification  of
          securities at the time of purchase and evaluates  such  classification
          as of each  balance  sheet date.  Any  material  unrealized  gains and
          losses related to  available-for-sale  investments,  net of applicable
          taxes,   are  excluded   from  earnings  and  are  included  in  other
          comprehensive income. Dividend and interest income are recognized when
          earned.

     (g)  Income  taxes - Income  taxes  are  accounted  for under the asset and
          liability  method for  financial  accounting  and  reporting of income
          taxes.  Deferred  income tax  liabilities  and assets are  recorded to
          reflect the tax  consequences  in future years of differences  between
          the  taxable  basis  of  assets  and  liabilities  and  the  financial
          statement  carrying amounts at each period end using enacted tax rates
          expected to apply in the year  temporary  differences  are expected to
          reverse.  A valuation  allowance is recognized  for any portion of the
          deferred  tax  asset for which  realization  is not  deemed to be more
          likely than not. The effect on deferred tax assets and  liabilities of
          a change in tax rates is  recognized  in  income  in the  period  that
          includes the enactment date.

     (h)  Advertising - Advertising costs are expensed as incurred.  The cost of
          communicating  advertising  is  expensed by the Company the first time
          that the  advertising  takes place.  In addition,  the Company  offers
          discounts to customers  who  advertise  Radica  products.  These Co-op
          advertising  costs  associated  with  customer  benefit  programs  are
          accrued as the related  revenues are recognized.  Advertising  expense
          was approximately $6,600, $11,100, $8,900 for the years ended December
          31, 2001, 2000 and 1999, respectively.

     (i)  Research and development - Research and development costs are expensed
          as incurred. Research and development costs amounted to $5,775, $5,210
          and $6,036 in 2001, 2000 and 1999, respectively.

     (j)  Foreign currency translation - Foreign currency assets and liabilities
          are translated  into US dollars using the exchange rate on the balance
          sheet date.  Revenues  and expenses are  translated  at average  rates
          prevailing  during each  reporting  period.  Current  earnings  (loss)
          include gains or losses resulting from foreign currency  transactions.
          Other  gains  and  losses  resulting  from  translation  of  financial
          statements  are  accumulated  as a separate  component of  accumulated
          other comprehensive income (loss) in shareholders' equity.

                                      F-9

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     (k)  Post-retirement  and  post-employment  benefits - The Company does not
          provide any material post-retirement or post-employment  benefits. The
          Company  does  provide  a  pension  that  includes   certain   defined
          contribution  arrangements  with groups of  employees.  The  Company's
          contributions and any related costs are immaterial and are expensed as
          incurred.

     (l)  Warranty  - Future  warranty  costs  are  provided  for at the time of
          revenue  recognition  based on  management's  estimate by reference to
          historical experience adjusted for known trends.

     (m)  Stock-based   compensation   -  The  Company   applies  the  intrinsic
          value-based method of accounting  prescribed by Accounting  Principles
          Board Opinion No. 25,  Accounting  for Stock Issued to Employees;  and
          related  interpretations in accounting for its employee stock options.
          Under this  method,  compensation  expense is  recorded on the date of
          grant  only  if the  current  market  price  of the  underlying  stock
          exceeded the exercise price. SFAS No. 123,  Accounting for Stock Based
          Compensation  (SFAS No. 123),  established  accounting  and disclosure
          requirements  using a fair value-based  method of accounting for stock
          based  employee  compensation  plans.  As allowed by SFAS No. 123, the
          Company has elected to  continue  to apply the  intrinsic  value-based
          method of accounting  described  above,  and has adopted the pro forma
          information  regarding  net income  (loss)  and net income  (loss) per
          share and other disclosure requirements of SFAS No. 123.

     (n)  Earnings  (loss) per share - Basic earnings  (loss) per share is based
          on the weighted  average  number of shares of common  stock,  and with
          respect to diluted earnings (loss) per share, also includes the effect
          of all dilutive potential common stock outstanding. Dilutive potential
          common stock  results from dilutive  stock  options and warrants.  The
          effect of such dilutive potential common stock on net income per share
          is computed using the treasury stock method. All potentially  dilutive
          securities  were excluded from the  computation in loss making periods
          as their inclusion would have been anti-dilutive.

     (o)  Comprehensive income (loss) - Other comprehensive income (loss) refers
          to  revenues,   expenses,  gains  and  losses  that  under  accounting
          principles  generally  accepted  in the United  States of America  are
          included in  comprehensive  income  (loss) but are  excluded  from net
          income  (loss)  as  these  amounts  are  recorded  as a  component  of
          shareholders'  equity. The Company's other comprehensive income (loss)
          represented foreign currency translation adjustments.  The related tax
          benefit of other comprehensive  earnings items was $4, $14 and $54 for
          the years ended December 31, 2001, 2000 and 1999, respectively.

                                      F-10

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     (p)  Use  of  estimates  -  The  preparation  of  financial  statements  in
          conformity with accounting principles generally accepted in the United
          States  of  America   requires   management  to  make   estimates  and
          assumptions   that  affect   reported   amounts  of  certain   assets,
          liabilities,  revenues  and  expenses  as of  and  for  the  reporting
          periods.  Actual results may differ from such  estimates.  Differences
          from those estimates are recorded in the period they become known.

     (q)  Recently issued  accounting  standards - In June 2001, the FASB issued
          SFAS No. 141, Business Combinations,  (SFAS No. 141) and SFAS No. 142,
          Goodwill and Other  Intangible  Assets  (SFAS No.  142).  SFAS No. 141
          requires  that  the  purchase  method  of  accounting  be used for all
          business combinations. SFAS No. 141 specifies criteria that intangible
          assets acquired in a business  combination  must meet to be recognized
          and reported separately from goodwill.  SFAS No. 142 will require that
          goodwill and intangible  assets with indefinite useful lives no longer
          be amortized,  but instead be tested for  impairment at least annually
          in accordance  with the  provisions of SFAS No. 142. SFAS No. 142 also
          requires  that  intangible  assets  with  estimable  useful  lives  be
          amortized  over  their  respective  estimated  useful  lives  to their
          estimated  residual values,  and reviewed for impairment in accordance
          with SFAS No. 121 and subsequently, SFAS No. 144 after its adoption.

          The Company adopted the provisions of SFAS No. 141 as of July 1, 2001,
          and SFAS No. 142 is effective January 1, 2002. Goodwill and intangible
          assets  determined  to have an  indefinite  useful life  acquired in a
          purchase  business  combination  completed  after June 30,  2001,  but
          before SFAS No. 142 is adopted in full,  are not  amortized.  Goodwill
          and  intangible  assets  acquired in business  combinations  completed
          before  July  1,  2001  continued  to  be  amortized  and  tested  for
          impairment prior to the full adoption of SFAS No. 142.

          Upon adoption of SFAS No. 142, the Company is required to evaluate its
          existing intangible assets and goodwill that were acquired in purchase
          business combinations,  and to make any necessary reclassifications in
          order to conform with the new classification  criteria in SFAS No. 141
          for recognition  separate from goodwill.  The Company will be required
          to reassess  the useful lives and  residual  values of all  intangible
          assets   acquired,   and  make  any  necessary   amortization   period
          adjustments by the end of the first interim period after adoption.  If
          an intangible asset is identified as having an indefinite useful life,
          the  Company  will  be  required  to test  the  intangible  asset  for
          impairment  in accordance  with the  provisions of SFAS No. 142 within
          the first  interim  period.  Impairment  is  measured as the excess of
          carrying  value  over the fair  value of an  intangible  asset with an
          indefinite  life. Any impairment  loss will be measured as of the date
          of adoption and  recognized  as the  cumulative  effect of a change in
          accounting principle in the first interim period.

                                      F-11

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          In connection  with SFAS No. 142's  transitional  goodwill  impairment
          evaluation,   the  Statement   requires  the  Company  to  perform  an
          assessment of whether there is an indication that goodwill is impaired
          as of the date of  adoption.  To  accomplish  this,  the Company  must
          identify its reporting  units and determine the carrying value of each
          reporting unit by assigning the assets and liabilities,  including the
          existing  goodwill and intangible  assets, to those reporting units as
          of January 1, 2002.  The Company  will then have up to six months from
          January 1, 2002 to determine the fair value of each reporting unit and
          compare it to the carrying amount of the reporting unit. To the extent
          the carrying  amount of a reporting unit exceeds the fair value of the
          reporting unit, an indication  exists that the reporting unit goodwill
          may be impaired  and the Company  must  perform the second step of the
          transitional  impairment  test.  The  second  step is  required  to be
          completed as soon as  possible,  but no later than the end of the year
          of adoption.  In the second step, the Company must compare the implied
          fair value of the reporting unit goodwill with the carrying  amount of
          the reporting unit goodwill, both of which would be measured as of the
          date of adoption.  The implied fair value of goodwill is determined by
          allocating  the fair value of the reporting  unit to all of the assets
          (recognized and unrecognized) and liabilities of the reporting unit in
          a manner similar to a purchase price  allocation,  in accordance  with
          SFAS No. 141. The  residual  fair value after this  allocation  is the
          implied fair value of the reporting  unit goodwill.  Any  transitional
          impairment  loss  will be  recognized  as the  cumulative  effect of a
          change in accounting principle in the Company's statement of income.

          As of the date of  adoption of SFAS No.  142,  the Company  expects to
          have  unamortized  goodwill  in the  amount of  $9,551,  which will be
          subject to the  transition  provisions  of SFAS No. 142.  Amortization
          expense  related  to  goodwill  was $796,  $822 and $900 for the years
          ended December 31, 2001, 2000 and 1999, respectively. Based on current
          amortization  amounts,  the  Company  estimates  that  the  impact  of
          adopting  SFAS No. 142 will be an annual  reduction  of  approximately
          $796 of amortization.

          In June 2001,  the FASB  issued  SFAS No.  143,  Accounting  for Asset
          Retirement  Obligations  (SFAS No.  143).  SFAS No. 143  requires  the
          Company to record the fair value of an asset retirement  obligation as
          a  liability  in the  period  in  which it  incurs a legal  obligation
          associated  with the  retirement  of tangible  long-lived  assets that
          result from the acquisition,  construction,  development and/or normal
          use of assets. The Company also records a corresponding asset which is
          depreciated  over the life of the  asset.  Subsequent  to the  initial
          measurement of the asset retirement obligation, the obligation will be
          adjusted  at the end of each period to reflect the passage of time and
          changes in the estimated  future cash flows underlying the obligation.
          The Company is required to adopt SFAS No. 143 on January 1, 2003.  The
          Company  expects  that the  adoption  of SFAS No.  143 will not have a
          material impact on the financial position and results of operations of
          the Company.

                                      F-12

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          In  August,  2001,  FASB  issued  SFAS  No.  144,  Accounting  for the
          Impairment or Disposal of Long-Lived  Assets (SFAS No. 144).  SFAS No.
          144 addresses financial accounting and reporting for the impairment or
          disposal of long-lived assets. This Statement requires that long-lived
          assets be  reviewed  for  impairment  whenever  events or  changes  in
          circumstances indicate that the carrying amount of an asset may not be
          recoverable.  Recoverability of assets to be held and used is measured
          by a comparison of the carrying  amount of an asset to future net cash
          flows expected to be generated by the asset. If the carrying amount of
          an asset exceeds its estimated future cash flows, an impairment charge
          is recognized by the amount by which the carrying  amount of the asset
          exceeds the fair value of the asset.  SFAS No. 144 requires  companies
          to  separately  report   discontinued   operations  and  extends  that
          reporting to a component of an entity that either has been disposed of
          (by  sale,  abandonment,  or  in  a  distribution  to  owners)  or  is
          classified as held for sale.  Assets to be disposed of are reported at
          the lower of the carrying amount or fair value less costs to sell. The
          Company has adopted SFAS No. 144 on January 1, 2002.  The Company does
          not expect the  adoption of SFAS No. 144 to have a material  impact on
          the financial position and results of operations at the Company.

     (r)  Reclassifications - Certain  reclassifications have been made to prior
          year amounts to conform to the current year's presentation.

3.   INVENTORIES

     Inventories by major categories are summarized as follows:

                                           2001               2000
                                  ---------------    ---------------

Raw materials                            $ 3,165            $ 2,643
Work in progress                           3,176              3,138
Finished goods                            10,137              8,190
Consigned finished goods                     701                  -
                                  ---------------    ---------------
                                        $ 17,179           $ 13,971
                                  ===============    ===============

                                  F-13

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

4.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consists of the following:

                                                      2001            2000
                                                    ------------    ------------

Land and buildings                                     $ 13,374        $ 12,296
Plant and machinery                                       7,274           6,853
Furniture and equipment                                   7,560           7,328
Leasehold improvements                                    2,803           2,727
Construction in progress                                      -           1,079
                                                    ------------    ------------
     Total                                             $ 31,011        $ 30,283
Less: Accumulated depreciation and amortization         (14,701)        (12,308)
                                                    ------------    ------------
     Total                                             $ 16,310        $ 17,975
                                                    ============    ============

5.   GOODWILL AND INTANGIBLE ASSETS

     Goodwill is related to the excess of purchase price over the estimated fair
     value of net assets  acquired  in respect of the 1999  acquisition  of Leda
     Media Products  Limited,  now called Radica U.K.  Limited ("Radica UK"). On
     June 24, 1999, the Company purchased Radica UK for  approximately  $15,970.
     During the quarter ended June 30, 2000, upon claiming  certain  breaches of
     warranty  at Radica UK, the Company  and the  ex-shareholders  of Radica UK
     mutually  agreed to cancel  certain loan notes such that the purchase price
     was reduced by $1,399.  The  Company  recorded  goodwill  of  approximately
     $12,100 resulting from the adjusted  aggregate purchase price. The goodwill
     is being  amortized  on a  straight-line  basis over a fifteen  year fiscal
     period.

     In 2000, the Company entered into a licensing agreement with Shinsedai Co.,
     Ltd. ("SSD") for the rights to use their patented XaviX(R)  technology.  As
     part  of  its  agreement   with  SSD,  the  Company   became  an  exclusive
     sublicensing  agent for the XaviX  technology in the North American  market
     for use in  entertainment  applications.  The fair  value of the  exclusive
     sublicensing right of $1,260, which is the Company's contractual obligation
     to SSD as defined in the  Sublicensing  Agreement  between the two parties,
     has been recorded as an  intangible  asset,  which is being  amortized on a
     straight-line basis over a three year period.

     Amortization of goodwill and other intangible assets totaled $1,382, $2,826
     and  $2,567  for  the  years  ended  December  31,  2001,  2000  and  1999,
     respectively.

                                      F-14

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

6.   SHORT-TERM BORROWINGS

     As of December 31, 2001,  the Company had  line-of-credit  agreements  with
     various banks that provided for borrowings of up to  approximately  $6,600,
     including amounts available for uncommitted credit facilities, the issuance
     of letters of credit and foreign currency exchange activity.  Substantially
     all of the short-term borrowings outstanding as of December 31, 2001 and as
     of December 31, 2000 represent borrowings made under these lines of credit.
     The  weighted  average  interest  rate  of the  outstanding  borrowing  was
     approximately  5.9,  6.0 and 6.0 percent for the years ended  December  31,
     2001, 2000 and 1999, respectively.

7.       OTHER ACCRUED LIABILITIES

     Other accrued liabilities consist of the following:

                                           2001               2000
                                      ---------------    ---------------

Accrued advertising expenses                 $ 1,105            $ 1,384
Accrued license and royalties                  2,346              2,397
Accrued sales expenses                         3,422              2,833
Commissions payable                              149                497
Other accrued liabilities                      3,885              2,723
                                      ---------------    ---------------
     Total                                  $ 10,907            $ 9,834
                                      ===============    ===============


8.   INCOME TAXES

     The components of (loss) income before income taxes are as follows:

                                2001               2000               1999
                           ---------------    ---------------    ---------------

United States                    $ (5,523)         $ (20,240)          $ (1,349)
International                       1,702              1,240             18,553
                           ---------------    ---------------    ---------------
                                 $ (3,821)         $ (19,000)          $ 17,204
                           ===============    ===============    ===============

     As the Company's  subsidiary in the People's Republic of China ("PRC") is a
     sino-foreign joint venture enterprise, it is eligible for an exemption from
     income  tax for two  years  starting  from  the  first  profitable  year of
     operations  and  thereafter  a 50 percent  relief  from  income tax for the
     following  three years under the Income Tax Law of the PRC. That subsidiary
     had its first  profitable year of operations in the year ended December 31,
     1997 and the 2001 effective tax rate was 12%.

                                      F-15

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

8.       INCOME TAXES (Continued)

     The (credit) provisions for income taxes consist of the following:

<TABLE>
<CAPTION>
                                                  2001         2000        1999
                                               -----------  -----------  ----------
<S>                                            <C>          <C>          <C>
Current:
US federal and state                                $ 644     $ (3,236)      $ 145
International                                         827         (206)        (78)
                                               -----------  -----------  ----------
Total current income tax provision (credit)       $ 1,471     $ (3,442)       $ 67
                                               -----------  -----------  ----------

Deferred:
US federal                                            $ -      $ 3,375        $ 39
International                                        (918)        (834)         43
                                               -----------  -----------  ----------
Total deferred income tax (credit) provision       $ (918)     $ 2,541        $ 82
                                               -----------  -----------  ----------

Total income taxes provision (credit)               $ 553       $ (901)      $ 149
                                               ===========  ===========  ==========
</TABLE>

     A  reconciliation   between  income  tax  (benefit)   expense  and  amounts
     calculated using the US statutory rate of 34 percent is as follows:

<TABLE>
<CAPTION>
                                                 2001             2000             1999
                                              -------------    -------------    -------------

<S>                                           <C>              <C>              <C>
Computed "expected" tax (benefit) expense
at the US statutory rate                          $ (1,299)        $ (6,460)         $ 5,849
State tax                                               13                9                8
International tax effect, net                         (647)          (1,646)          (6,016)
Accounting losses for which deferred
income tax cannot be recognized                          -                -              212
Change in valuation allowance                        2,163            7,052              226
Other, net                                             323              144             (130)
                                              -------------    -------------    -------------
Income tax expense (benefit)                         $ 553           $ (901)           $ 149
                                              =============    =============    =============
</TABLE>

     The  Company's US  subsidiary  had  approximately  $19,200 of net operating
     losses for  federal  income tax  purposes  at  December  31,  2001 of which
     $15,000 and $4,200 expire in 2020 and 2021,  respectively.  In addition, as
     of December 31, 2001, the Company's UK subsidiary had approximately  $6,000
     net operating loss carryforwards which will carryforward indefinitely.

                                      F-16

<PAGE>

                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

8.   INCOME TAXES (Continued)

     The tax effects of the Company's  temporary  differences  that give rise to
     significant  portions of the  deferred  tax assets and  liabilities  are as
     follows:

                                                          2001          2000
                                                       ----------    ----------
Deferred tax assets (liabilities):
Excess of tax over financial reporting depreciation         $ 97         $ (79)
Net operating loss                                         8,325         4,852
Bad debt allowance                                           337           561
Advertising allowances                                       348           435
Inventory obsolescence                                       345           903
Accrued sales adjustments and returns                      1,329           967
Other                                                        715           776
                                                       ----------    ----------
Total gross deferred tax assets                           11,496         8,415
Valuation allowance                                       (9,441)       (7,278)
                                                       ----------    ----------
Net deferred tax assets                                  $ 2,055       $ 1,137
                                                       ==========    ==========

     The following  table  represents  the  classification  of the Company's net
deferred tax assets:

                                             2001               2000
                                        ---------------    ---------------

Current deferred tax assets                      $ 168              $ 223
Long-term deferred tax assets                    1,887                914
                                        ---------------    ---------------
Total net deferred tax assets                  $ 2,055            $ 1,137
                                        ===============    ===============

     The Company records valuation  allowances  against its deferred tax assets.
     In determining the allowance,  management  considers all available evidence
     for certain tax credit,  net operating loss and capital loss  carryforwards
     that would likely expire prior to their  utilization.  The evidence used in
     assessing  the need for valuation  allowances  includes the use of business
     planning,  projections  of future  taxable  income and  corporate-wide  tax
     planning.   Differences  in  actual  results  from   projections   used  in
     determining the valuation  allowances could result in future adjustments to
     the allowance.

     Based on management's  assessment of the need for a valuation  allowance as
     at the balance sheet dates, the Company views the recoverability of the net
     deferred  tax assets as more  likely than not.  Movement  in the  valuation
     allowance  during 2001  reflected  the  increase in deferred  tax assets in
     respect of tax losses carried forward.

                                      F-17

<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

8.   INCOME TAXES (Continued)

     The Company's operations involve a significant amount of transactions which
     cross a  number  of  international  borders.  In  addition,  the  Company's
     manufacturing operations are in China, where the negotiation and settlement
     of tax obligations with the local tax authorities are a normal occurrence.

     The Company  establishes  provisions for its known and estimated income tax
     obligations.  However,  whether  through a challenge by one of the many tax
     authorities  in  international  jurisdictions  where  the  Company  and its
     subsidiaries operate of the Company's transfer pricing, the Company's claim
     regarding lack of permanent establishment, or other matters that may exist,
     the Company is exposed to possible  additional  taxation  that has not been
     accrued.

9.   LONG-TERM DEBT

     On June 24,  1999,  the  Company  entered  into a $12,345  guaranteed  loan
     agreement  with  the  vendors  as  part  of  financing  of  the  Radica  UK
     acquisition.  Interest  on the loan notes was based on US$ LIBOR  minus 130
     basis points.  In June 2000, the Company  entered into a new agreement with
     one of its banks. The new agreement  provided for converting the guaranteed
     loan into a three-year term US dollar loan, and used the proceeds to retire
     and pay back the outstanding guaranteed loan notes in full. The Company has
     $5,473  outstanding  under the new loan  agreement  as of December 31, 2001
     (2000: $9,121), which bears interest at the three month Singapore Interbank
     Offered Rate ("SIBOR") plus 2% (3.88% at December 31, 2001).  The agreement
     requires  quarterly  principal  and  interest  payments and matures in June
     2003.  Additionally,  the Company has a revolving loan with the bank, which
     permits  borrowings of up to $2,000.  This revolving loan bears interest at
     the three  month  SIBOR plus 2.5%.  At  December  31,  2001,  no amount was
     outstanding on this revolving loan.

     The term loan and  revolving  loan are  secured by certain  properties  and
     deposits of the Company (see Note 16).  The  agreement  contains  covenants
     that,  among  other  things,  require  the  Company  to  maintain a minimum
     tangible net worth, gearing ratio, and other financial ratios.

     Long-term debt is as follows:

                                              2001               2000
                                        ---------------    ---------------

     Term loan payable                         $ 5,473            $ 9,121
     Less: Current portion                      (3,648)            (3,648)
                                        ---------------    ---------------
                                               $ 1,825            $ 5,473
                                        ===============    ===============



                                      F-18
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

9.   LONG-TERM DEBT (Continued)

     The annual principal maturities of the long-term debts are as follows:

     2002                                     3,648
     2003                                     1,825
                                         -----------
                                            $ 5,473
                                         ===========


10.  RESTRUCTURING CHARGE

     During  December  2001,  the Board of  Directors  approved  a company  wide
     restructuring  plan which includes the  consolidation of operations in Hong
     Kong and the China factory,  the closure of the Company's San Francisco R&D
     office, the consolidation of the Company's product  development  operations
     as well as other head count reductions in the US, UK and Hong Kong offices.
     The Company recorded an accrual of $1,551 of pre-tax  restructuring charge.
     Of the  $1,551 in  restructuring  charge,  $811,  $706 and $34  related  to
     restructuring activities within US, Asia Pacific and Europe, respectively.

     The  closure of the  Company's  San  Francisco  R&D office  resulted  in an
     accrual  of  approximately  $199  related  to lease  termination  costs and
     leasehold   improvements  and  asset  write-downs.   The  consolidation  of
     operations  in Hong Kong and China  consisted  of the  localization  in the
     China factory of a number of departments,  which previously operated out of
     Hong Kong. The  localization and  consolidation of product  development and
     manufacturing operations resulted in a workforce reduction of approximately
     170 employees worldwide. This workforce reduction resulted in an accrual of
     approximately  $1,352 for severance and contractual  termination  costs and
     benefits  payments.  The consolidation  and closing of facilities  occurred
     during  the first  quarter of 2002,  and the  remaining  components  of the
     restructuring  are  expected to be completed  during the second  quarter of
     2002.

     During 2000,  the Company  recorded a  restructuring  charge of $1,190 as a
     result of the  Company's  plan to change its  business  strategy to address
     changes in the market for handheld games and to allow the Company to adjust
     the overall cost structure given current revenue levels.  Specific  actions
     taken included reducing the Company's workforce,  consolidating facilities,
     and closing one office. The employee  separations  related to approximately
     150 employees worldwide, predominantly occurring in Asia and North America.
     Total  restructuring  costs  were  approximately   composed  of  $1,100  in
     connection with severance and benefits and $90 for the write-off of certain
     assets  associated with closing one office.  Total remaining  restructuring
     expenses  accrued at December 31, 2000 was  approximately  $200,  primarily
     related to the remaining amount of termination benefit payments.


                                      F-19
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
           (US dollars in thousands, except share and per share data)

10.  RESTRUCTURING CHARGE (Continued)

     The components of restructuring charges are as follows:

<TABLE>
<CAPTION>
                                               Balance                                          Balance
                                            at beginning                         Amount         at end
                                               of year          Charges         incurred        of year
                                           -------------     ------------     ------------     ----------
<S>                                            <C>              <C>               <C>            <C>
     2001
     Severance and other compensation          $   246          $ 1,352           $  (209)       $ 1,389
     Lease termination costs and
     related asset writedowns                     --                199              --              199
                                               -------          -------           -------        -------
                                               $   246          $ 1,551           $  (209)       $ 1,588
                                               =======          =======           =======        =======

     2000
     Severance and other compensation          $  --            $ 1,100           $  (854)       $   246
     Lease termination costs and
     related asset writedowns                     --                 90               (90)          --
                                               -------          -------           -------        -------
                                               $  --            $ 1,190           $  (944)       $   246
                                               =======          =======           =======        =======
</TABLE>

11.  EARNINGS PER SHARE

     The  following  table sets forth the  computation  of basic and diluted net
     (loss) income per share as of December 31:

<TABLE>
<CAPTION>
                                                  2001         2000        1999
                                               ----------   ----------   -----------
<S>                                            <C>          <C>          <C>
     Numerator for basic and diluted
       (loss) earnings per share:
       Net (loss) income                       $   (4,374)  $  (18,099)  $    17,055
                                               ==========   ==========   ===========
     Denominator:
     Basic weighted average shares             17,611,886   17,608,167    18,144,179
     Effect of dilutive options and warrants         --           --         835,170
                                               ----------   ----------   -----------
     Diluted weighted average shares           17,611,886   17,608,167    18,979,349
                                               ==========   ==========   ===========
     Basic net (loss) income per share:        $    (0.25)  $    (1.03)  $      0.94
                                               ==========   ==========   ===========
     Diluted net (loss) income per share:      $    (0.25)  $    (1.03)  $      0.90
                                               ==========   ==========   ===========
</TABLE>

     Options and warrants on 2,440,867, 2,728,800 and 1,286,000 shares of common
     stock for the years ended  December 31, 2001,  2000 and 1999,  respectively
     were not  included  in  computing  diluted  earnings  per share since their
     effects were antidilutive.


                                      F-20
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
           (US dollars in thousands, except share and per share data)

12.  STOCK OPTIONS

     The  Company's  1994 Stock Option Plan for  employees  and  directors  (the
     "Stock Option Plan") provided for options to be granted for the purchase of
     an aggregate  of  1,600,000  shares of common stock at per share prices not
     less than 100% of the fair market value at the date of grant as  determined
     by the Compensation Committee of the Board of Directors. Following approval
     at the annual shareholders  meetings in April 1997 and 1998, the meeting of
     the Board of Directors in June 1999 and the annual shareholders  meeting in
     May 2000,  the Stock Option  Plan's  aggregated  common stock  increased by
     400,000, 800,000, 60,000 and 840,000,  respectively.  At December 31, 2001,
     the Stock  Option  Plan's  aggregate  common  stock were  3,700,000  shares
     available for options.  Options to employees are generally exercisable over
     three to five years from the date of grant and vest, or are exercisable, in
     equal  installments,  the period beginning one year after the date of grant
     unless  otherwise  provided.  Options  granted to employees under the stock
     option  plan must be  exercised  no later  than ten years  from the date of
     grant. The Company also maintains plans under which it offers stock options
     to directors.  Pursuant to the terms of the plans under which directors are
     eligible to receive  options,  each director is entitled to receive options
     to purchase  common  stock upon  initial  election to the Board and at each
     subsequent  quarterly  Board meeting.  Options are  exercisable  during the
     period beginning one year after the date of grant.

     A summary of option activity is as follows:-

<TABLE>
<CAPTION>
                                                2001                       2000                       1999
                                     -------------------------  -------------------------  -------------------------

                                                     Weighted                   Weighted                   Weighted
                                                      average                    average                    average
                                                     exercise                   exercise                   exercise
     (Shares in thousands)            Shares           price     Shares          price      Shares           price
                                      ------        ---------    ------        ---------    ------        ----------

<S>                                    <C>          <C>           <C>          <C>           <C>          <C>
     Outstanding at
     beginning of year                 2,354        $    5.81     2,000        $    7.93     2,041        $    6.58
     Options granted                     521             2.64       853             2.79       307            11.48
     Options exercised                   (76)            1.56       (72)            1.41      (282)            1.89
     Options cancelled                  (608)           10.60      (427)           10.43       (66)            8.27
                                      ------                     ------                     ------
     Outstanding at end of year        2,191        $    3.88     2,354        $    5.81     2,000        $    7.93

     Options exercisable
     at year end                       1,151        $    4.54       910        $    7.52       492        $    8.26
</TABLE>


                                      F-21
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                (US dollars in thousands, except per share data)

12.  STOCK OPTIONS (Continued)

     The following is additional  information relating to options outstanding as
     of December 31, 2001:

<TABLE>
<CAPTION>
                                             Options outstanding                       Options exercisable
                        -------------------------------------------------------- -----------------------------
                                                                Weighted average
                                             Weighted average      remaining                  Weighted average
     Exercise                    Number       exercise price       contractual    Number       exercise price
     price range               of shares        per share         life (years)   of shares        per share
     -----------               ---------        ---------         ------------   ----------       ---------
     (Shares in thousands)

<S>                              <C>            <C>                    <C>          <C>          <C>
     $ 1.090 to 2.000              642          $       1.43           5.71         496          $       1.34
     $ 2.001 to 4.000            1,260                  3.04           7.96         429                  3.26
     $ 4.001 to 6.000               22                  4.36           9.00           2                  5.00
     $ 6.001 to 8.000               34                  6.74           5.53          26                  6.73
     $ 8.001 to 10.000              17                  8.94           7.00           9                  8.67
     $ 10.001 to 12.000             --                    --             --          --                    --
     $ 12.001 to 14.000             61                 12.62           7.28          60                 12.72
     $ 14.001 to 16.000             60                 14.13           6.85          36                 14.14
     $ 16.001 to 18.000             60                 16.82           6.70          60                 16.82
     $ 18.001 to 20.000             35                 18.66           6.20          33                 18.82
                               ---------                                          -----
                                 2,191          $       3.88           7.15       1,151          $       4.54
                               =========                                          =====
</TABLE>

     Pro forma  information  regarding  net  income  and  earnings  per share is
     required by SFAS No.  123,  and has been  determined  as if the Company had
     accounted  for its employee  stock  options  under the fair value method of
     SFAS No. 123. The weighted  average fair value of stock  options at date of
     grant of $1.24, $1.57 and $4.54 per option for the years ended December 31,
     2001,  2000 and 1999,  respectively.  The values were  estimated  using the
     Black-Scholes  option  pricing  model with the following  weighted  average
     assumptions:

                                                 2001       2000        1999
                                               -------     -------     -------

     Expected life of options                  4 years     5 years     5 years
     Risk-free interest rate                    4.5%         6.0%       5.1%
     Expected volatility of underlying stock     55%          58%        35%
     Dividends                                   0%           0%         0%

     The  Black-Scholes  option  pricing  models  require  the  input of  highly
     subjective  assumptions,  including the expected volatility of stock price.
     Because changes in subjective input  assumptions can materially  affect the
     fair value estimate,  in management's  opinion, the existing model does not
     necessarily  provide a  reliable  single  measure  of the fair value of the
     stock options.


                                      F-22
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                (US dollars in thousands, except per share data)

12.  STOCK OPTIONS (Continued)

     If the  Company  had  accounted  for its stock  option  plans by  recording
     compensation expenses based on the fair value at grant date for such awards
     consistent with the method of SFAS No. 123, the Company's net (loss) income
     and (loss)  earnings  per share  would have been  adjusted to the pro forma
     amounts as follows:

                                                 2001        2000         1999
                                              ---------   ----------   --------

     Reported net (loss) income               $ (4,374)   $ (18,099)   $ 17,055
     Pro forma net (loss) income                (5,167)     (19,306)     15,719

     Reported net (loss) income per share
          Basic                               $  (0.25)   $   (1.03)   $   0.94
          Diluted                                (0.25)       (1.03)       0.90

     Pro forma net (loss) income per share
          Basic                               $  (0.29)   $   (1.10)       0.87
          Diluted                                (0.29)       (1.10)       0.83

13.  WARRANTS

     During 1999, in connection with Electronic Arts ("EA") worldwide  licensing
     agreement,  the Company issued  warrants to purchase  375,000 shares of the
     Company's common stock at various exercise prices.  Using the Black-Scholes
     option pricing  model,  the fair value of the warrants of $667 was recorded
     as  intangible  asset.  As of  December  31,  2001,  the  asset  was  fully
     amortized.

     The first  125,000  warrants  expired on June 1, 2001,  with the  remaining
     warrants  expiring at January 1, 2002 and June 1, 2002.  As of December 31,
     2001, 250,000 of these warrants remained outstanding and were fully vested.

14.  RETIREMENT PLAN

     In Hong Kong,  the Company has both a mandatory  provident fund and defined
     contribution  retirement plans covering substantially all employees.  Under
     these  plans,   eligible  employees   contribute  amounts  through  payroll
     deductions  which  are 5% or more of  individual  salary,  supplemented  by
     employer  contributions  ranging  from  5%  to  10%  of  individual  salary
     depending on the years of service. The expenses related to these plans were
     $240,  $170 and $192 for the years ended December 31, 2001,  2000 and 1999,
     respectively.


                                      F-23
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

15.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  estimated  fair value of financial  instruments  is made in accordance
     with the  requirements  of SFAS No.  107,  Disclosures  about Fair Value of
     Financial   Instruments.   The  estimated  fair  value  amounts  have  been
     determined  by  the  Company,   using  available  market   information  and
     appropriate valuation methodologies. The estimates presented herein are not
     necessarily  indicative  of the amounts that the Company could realize in a
     current market exchange.

     The carrying  amounts of cash and cash  equivalents,  accounts  receivable,
     accounts payable and bank borrowings are reasonable estimates of their fair
     value.

16.  PLEDGE OF ASSETS

     At December 31, 2001,  the Company's loan  agreements  and general  banking
     facilities  including overdraft and trade facilities were collateralized as
     follows:

     Leasehold land and buildings          $11,402
     Bank balances                           8,955
     Inventories                             8,289
                                           -------
                                           $28,646
                                           =======

17.  COMMITMENTS AND CONTINGENCIES

     Leases

     The Company leases certain offices,  warehouses and equipment under various
     operating lease arrangements. The rental expense under the operating leases
     was  approximately  $491,  $1,113 and $534 for the years ended December 31,
     2001, 2000 and 1999, respectively. In the normal course of business, leases
     that expire will be renewed or replaced by leases on other  properties.  As
     of December  31,  2001,  the Company was  obligated  under  non-cancellable
     operating leases requiring future minimum rental payments as follows:

                                          Operating leases
                                          ----------------

     2002                                    $      539
     2003                                           480
     2004                                           366
     2005                                           310
     2006                                           250
     Thereafter                                   1,235
                                             -----------
     Total minimum lease payments            $    3,180
                                             ===========


                                      F-24
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

17.  COMMITMENTS AND CONTINGENCIES (Continued)

     Licensing Commitments

     In the normal course of business, the Company enters into certain licensing
     agreements and commitments  with various third parties for the use of their
     inventor  concepts and intellectual  property.  Certain of these agreements
     and  commitments  contain  provisions  for  guaranteed  or minimum  royalty
     amounts  during the term of the  contracts.  Under the terms of  agreements
     which  contain  provisions  for future  minimum  payments,  the  Company is
     obligated to pay royalty amounts as follows:

                                         Minimum
                                         Payments
                                       ------------
     2002                               $    1,060
     2003                                      130
                                       ------------
                                        $    1,190
                                       ============

     Litigation

     The Company is a party to certain claims and legal actions that have arisen
     in the ordinary course of business. These matters are substantially covered
     by  insurance.  The  resolution  of these matters is not expected to have a
     material  impact on the Company.  The Company  currently  has no contingent
     obligations for which management views the  crystallization  to be probable
     or reasonably possible,  and has therefore made no disclosures over current
     or pending legal actions taken against the Company.

18.  CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

     Accounts receivable of the Company are subject to a concentration of credit
     risk with customers in the retail sector  primarily in North America.  This
     risk is somewhat limited due to the large number of customers composing the
     Company's  customer  base  and  their  geographic  dispersion,  though  the
     Company's  business  had  two  customers  which  accounted  for  more  than
     twenty-two  percent  and  eleven  percent  of net sales for the year  ended
     December 31, 2001,  two customers  which  accounted for more than seventeen
     percent and sixteen  percent of net sales for the year ended  December  31,
     2000 and two customers  which  accounted  for more than twenty  percent and
     eighteen percent for the year ended December 31, 1999. The Company performs
     ongoing  credit  evaluations  of its  customers'  financial  condition and,
     generally, requires no collateral from its customers.


                                      F-25
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

18.  CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS (Continued)

     On January 22, 2002 the Kmart  Corporation  filed for  protection  from its
     creditors  under  Chapter  11 of the United  States  Bankruptcy  Code.  The
     Company's  receivable exposure was entirely provided for during 2001 and no
     additional  write-downs or expenses  related to the bankruptcy are expected
     in 2002.  The  Company  has  decided to  continue  to sell to Kmart under a
     debtor-in-possession  agreement  during 2002 and will  closely  monitor its
     account with Kmart in order to minimize future exposure.

19.  SEGMENT INFORMATION

     The Company has adopted the SFAS No. 131,  Disclosures about Segments of an
     Enterprise and Related Information.  Prior to the acquisition of Radica UK,
     the Company  historically  operated in one principal industry segment:  the
     design,   development,   manufacture  and  distribution  of  a  variety  of
     electronic and mechanical  handheld and tabletop  games.  On June 24, 1999,
     the Company acquired Radica UK. Due to the distinct differences between the
     core  products of Radica UK and the  remainder of the Company,  the Company
     has decided to operate and report on these  product  lines as two different
     business segments:  Video Games Accessories  ("VGA"),  which includes video
     game  controllers,  steering wheels and other  accessories and VGA sourcing
     business;  and Games, which includes electronic and mechanical handheld and
     tabletop games.

     The  Company  evaluates  the  performance  of its  operating  segments  and
     allocates  resources based on segment  operating income before interest and
     income taxes, not including gains and losses  associated with the Company's
     investments.  The Company  does not  include  inter-segment  transfers  for
     management  reporting purposes.  Certain expenses which are managed outside
     of  the  operating  segments  are  excluded.  These  consist  primarily  of
     corporate  expenses,  other income and expense  items.  Corporate  expenses
     consist  primarily of certain  costs  related to business  integration  and
     other general and  administrative  expenses.  Assets  included in corporate
     principally  are cash and cash  equivalents  and certain raw  materials for
     both segments.  The accounting  policies of the reportable segments are the
     same as those described in the summary of significant accounting policies.


                                      F-26
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

19.  SEGMENT INFORMATION (Continued)

     A summary of the Company's two business segments is set forth below.

                                            2001         2000        1999
                                         ---------    ---------    ---------
Revenues from external customers
  Games                                  $  82,929    $  91,036    $ 123,116
  VGA                                       15,625       15,660       13,600
                                         ---------    ---------    ---------
Total revenues from external customers   $  98,554    $ 106,696    $ 136,716
                                         =========    =========    =========

Depreciation and amortization
  Games                                  $   3,120    $   4,449    $   3,981
  VGA                                          893          978          975
                                         ---------    ---------    ---------
Total depreciation and amortization      $   4,013    $   5,427    $   4,956
                                         =========    =========    =========

Segment (loss) income
  Games                                  $     795    $ (14,199)   $  18,547
  VGA                                       (4,752)      (5,465)      (1,064)
                                         ---------    ---------    ---------
Total segment (loss) income              $  (3,957)   $ (19,664)   $  17,483

Corporate
  Interest income                              733        1,472        1,800
  Interest expense                            (597)        (808)        (331)
  Equity in net loss of
    affiliated company                        --           --         (1,748)
  (Provision) credit for income taxes         (553)         901         (149)
                                         ---------    ---------    ---------
Total consolidated net (loss) income     $  (4,374)   $ (18,099)   $  17,055
                                         =========    =========    =========

Segment assets
  Games                                  $  45,370    $  54,652    $  67,426
  VGA                                       20,729       20,973       22,589
  Corporate                                 25,809       23,769       32,159
                                         ---------    ---------    ---------
Total consolidated assets                $  91,908    $  99,394    $ 122,174
                                         =========    =========    =========

Capital expenditures
  Games                                  $     999    $   2,920    $   3,177
  VGA                                          102          218          129
                                         ---------    ---------    ---------
Total capital expenditures               $   1,101    $   3,138    $   3,306
                                         =========    =========    =========


                                      F-27
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

19.  SEGMENT INFORMATION (Continued)

     Revenues  from  external  customers by product  category are  summarized as
     follows:

                                           2001        2000         1999
                                        --------     --------     --------

     Handheld                           $ 38,001     $ 49,307     $ 87,775
     Play TV                              14,315        8,561         --
     Girl Tech                            11,723       13,897        7,444
     ODM / OEM                            18,890       19,271       27,897
     VGA                                  15,625       15,660       13,600
                                        --------     --------     --------
     Total net revenues                 $ 98,554     $106,696     $136,716
                                        ========     ========     ========

     Information about the Company's operations in different geographic areas is
     set forth in the table below.  Net sales are attributed to countries  based
     on the location of customers, while long-lived assets are reported based on
     their location.  Long-lived assets principally include property,  plant and
     equipment, intangible assets and long-term investment:

                                               2001        2000          1999
                                            --------     --------     --------

     Net sales:
       United States and Canada             $ 67,414     $ 84,504     $118,779
       Asia Pacific and other countries       13,470        3,492        1,557
       Europe                                 17,670       18,700       16,380
                                            --------     --------     --------
                                            $ 98,554     $106,696     $136,716
                                            ========     ========     ========

     Long-lived assets:
       United States and Canada             $  1,662     $  2,689     $  2,944
       Asia Pacific and other countries       14,851       16,002       16,076
       Europe                                  9,768       10,637       12,854
                                            --------     --------     --------
                                            $ 26,281     $ 29,328     $ 31,874
                                            ========     ========     ========


                                      F-28
<PAGE>


                              RADICA GAMES LIMITED

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                 (YEARS ENDED DECEMBER 31, 2001, 2000 and 1999)
                            (US dollars in thousands)

20.  VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                               Balance at                                            Balance at
                                               beginning        Charged to       Utilization /        end of
                                                of year          expense          write-offs            year
                                                -------          -------          ----------            ----

<S>                                              <C>              <C>               <C>               <C>
     2001
       Allowances for doubtful accounts          $ 2,073          $ 1,056           $  (922)          $ 2,207
       Estimated customer returns                  1,494            1,528            (1,467)            1,555
       Provision for inventories                   5,788            1,764            (3,555)            3,997
                                                 -------          -------           -------           -------
                                                 $ 9,355          $ 4,348           $(5,944)          $ 7,759
                                                 =======          =======           =======           =======

     2000
       Allowances for doubtful accounts          $   389          $ 2,648           $  (964)          $ 2,073
       Estimated customer returns                    624            1,423              (553)            1,494
       Provision for inventories                   2,339            5,130            (1,681)            5,788
                                                 -------          -------           -------           -------
                                                 $ 3,352          $ 9,201           $(3,198)          $ 9,355
                                                 =======          =======           =======           =======

     1999
       Allowances for doubtful accounts          $   446          $     3           $   (60)          $   389
       Estimated customer returns                  1,077              705            (1,158)              624
       Provision for inventories                   2,437              407              (505)            2,339
                                                 -------          -------           -------           -------
                                                 $ 3,960          $ 1,115           $(1,723)          $ 3,352
                                                 =======          =======           =======           =======



-------------------------------------------------------------------------------------------------------------
</TABLE>


                                      F-29
<PAGE>



         Pursuant to the  requirements of Section 12 of the Securities  Exchange
Act of 1934, the registrant  certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused  this annual  report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                             RADICA GAMES LIMITED




Date:  June 11, 2002                         /S/ Craig D. Storey
      ---------------------                  --------------------------
                                             Craig D. Storey
                                             Chief Accounting Officer


                                      I-1
<PAGE>


EXHIBIT INDEX
-------------

     *     3.1     Memorandum of Association

     *     3.2     Bye-Laws

     *     3.3     Certificate of Incorporation on Change of Name

     *     4.1     Specimen Certificate for the Shares of Common Stock

     *    10.1     Processing Agreement,  dated December 4, 1991, between Radica
                   HK and  foreign  Economic  Development  Co.  of  Humen  Town,
                   Dongguan, relating to the Tai Ping Factory

     *    10.2     Processing Agreement, dated December 27, 1993, between Radica
                   HK and  Foreign  Economic  Development  Co.  of  Humen  Town,
                   Dongguan

     @    10.3     Cooperative  Joint  Venture  Contract  of D.G.  Radica  Games
                   Manufacturing  Co.,  Ltd.,  dated June 24, 1994 (see  exhibit
                   10.16 to 20-F for year ended October 31, 1994)

     *    10.4     Shareholders  Agreement,  dated  January 12, 1994,  among the
                   Company and the shareholders parties thereto

     *    10.5     Amendment to Shareholders Agreement, dated as of February 16,
                   1994, among the Company and the shareholders party thereto.

     **   10.5(a)  Amendment to Shareholders Agreement, dated as of September 5,
                   1997, among the Company and the shareholders party thereto.

          10.6     Employment Agreement,  dated as of December 15, 2001, between
                   Radica USA and Jeanne Olson

     *    10.8     Employment  Agreement,  dated as of November 28, 1993,  among
                   Radica HK, Radica USA and Jon N. Bengtson

     *    10.8(a)  Form of Amendment to Employment  Agreement among Radica Games
                   Limited, Radica HK, Radica USA and Jon N. Bengtson.

     #   10.8(b)   December 1995 Amendment to such Employment Agreement.

     ~   10.8(c)   December 1997 Amendment to such Employment Agreement.

     >   10.9      1994 Stock Option Plan, as most recently  amendment  restated
                   in May 2000 to increase options


                                      I-2
<PAGE>

     >   10.11     Amendment  and  Restatement  to  Employment  Agreement  among
                   Radica USA,  Radica  Games  Limited  and Patrick  Feely dated
                   September 27, 2000

     >   10.13     Amendment and  Restatement  to Employment  Agreement  between
                   Radica Games  Limited and David C.W.  Howell dated  September
                   29, 2000

     >   10.14     Amendment and  Restatement  to Employment  Agreement  between
                   Radica Games Limited and Siu Wing Lam dated October 4, 2000

         10.15     Employment  Agreement,  dated  as of May  25,  2001,  between
                   Radica UK Limited and John Doughty

     ##  10.16     Share Purchase Agreement dated as of June 24, 1999,  relating
                   to the acquisition of the entire issued share capital of Leda
                   Media Products Limited (now Radica UK Limited).

         11.1      Statement re Computation of Per Share Earnings

         12.1      Statement re Selected Quarterly Financial Data

         21.1      List of subsidiaries

         23.1      Consent of KPMG

         23.2      Consent of Deloitte Touche Tohmatsu

*    Incorporated by reference to  Registration  Statement on Form F-1, File No.
     33-75794 filed by the Registrant.

@    Incorporated by reference to Form 20-F for the year ended October 31, 1994.

#    Incorporated by reference to Form 20-F for the year ended October 31, 1996.

~    Incorporated by reference to Form 20-F for the year ended October 31, 1997.

**   Incorporated by reference to Form 20-F for the year ended October 31, 1998.

##   Incorporated  by  reference  to Form 20-F for the year ended  December  31,
     1999.

>    Incorporated by reference to Form 20-F for the year ended December 31, 2000

The other exhibits not footnoted are included as part of this filing.


                                      I-3