FORM 10-Q
Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2004
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________.
Commission File No. 0-22372.
GRAND TOYS INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada
98-0163743
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization
Identification No.)
1710 Route Transcanadienne, Dorval, Quebec, Canada, H9P 1H7
(Address of principal executive offices)
(514) 685-2180
(Registrant’s telephone number, including Area Code)
(Former name, former address and former fiscal year,
if changed since last report)
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 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 the number of shares outstanding of each of the Issuer’s classes of common equity, as of May 14, 2004: 5,355,244
GRAND TOYS INTERNATIONAL, INC.
Index to Quarterly Report on Form 10 – Q | |
Filed with the Securities and Exchange Commission | |
Period ended March 31, 2004 | |
ITEMS IN FORM 10 – Q | PAGE |
Part I – Financial Information Item 1. Consolidated Financial Statements: | |||
Consolidated Balance Sheets At March 31, 2004 (unaudited) and December 31, 2003 | 2-3 | ||
Consolidated Statements of Operations (unaudited) For The Three Month Periods ended March 31, 2004 and 2003 | 4 | ||
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (unaudited) For the Three Month Period ended March 31, 2004 | 5 | ||
Consolidated Statements of Cash Flows(unaudited) For The Three Month Periods ended March 31, 2004 and 2003 | 6 | ||
Notes to unaudited Consolidated Financial Statements | 7-19 | ||
Item 2. Management’s Discussion and Analysis | 20 | ||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 30 | ||
Item 4. Controls and Procedures | 31 | ||
Part II - Other Information | |||
Item 1. Legal proceedings | 31 | ||
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 32 | ||
Item 3. Defaults Upon Senior Securities | 32 | ||
Item 4. Submission of Matters to a Vote of Security Holders | 32 | ||
Item 5. Other Information | 32 | ||
Item 6. Exhibits and Reports on Form 8-K | 33 | ||
Signatures | 34-35 | ||
Certifications | 36-39 | ||
GRAND TOYS INTERNATIONAL, INC.
Part I. – Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
March 31, 2004 | December 31, 2003 | |||
(Unaudited) | ||||
Assets | ||||
Current assets: | ||||
Cash | $ | 1,064,628 | $ | 1,487,318 |
Short-term deposit (note 14(c)) | 500,000 | 500,000 | ||
Accounts receivable (net of allowance for | ||||
doubtful accounts of $9,603; 2003 - $9,712) | 1,984,671 | 1,598,907 | ||
Due from Playwell International Limited | 1,052,897 | 804,252 | ||
Due from employees | 3,127 | 771 | ||
Current portion of loan receivable (note 2) | 163,881 | 161,447 | ||
Inventory | 1,726,062 | 1,682,298 | ||
Prepaid expenses (note 3) | 456,909 | 367,288 | ||
Total current assets | 6,952,175 | 6,602,281 | ||
Note receivable (note 9) | 183,528 | 286,896 | ||
Loan receivable (note 2) | 179,069 | 220,963 | ||
Equipment and leasehold improvements, net (note 4) | 211,348 | 219,988 | ||
Other assets (note 5) | 11,003 | 13,331 | ||
Total assets | $ | 7,537,123 | $ | 7,343,459 |
GRAND TOYS INTERNATIONAL, INC.
Consolidated Balance Sheets
March 31, 2004 | December 31, 2003 | |||
(Unaudited) | ||||
Liabilities and Stockholders' Equity | ||||
Current liabilities: | ||||
Bank indebtedness (note 6) | $ | 1,800,050 | $ | 1,579,458 |
Trade accounts payable | 978,945 | 1,047,390 | ||
Other accounts payable and accrued liabilities | 207,499 | 217,567 | ||
Accrued compensation | 59,417 | 111,085 | ||
Accrued legal expenses | 55,163 | 151,711 | ||
Total current liabilities | 3,101,074 | 3,107,211 | ||
Minority interest | 100 | 100 | ||
Stockholders' equity: | ||||
Capital stock (note 7): | ||||
Voting common stock, $0.001 par value: | ||||
12,500,000 shares authorized, | ||||
5,355,244 shares issued and outstanding | 5,355 | 5,355 | ||
Additional paid-in capital | 22,750,942 | 22,750,518 | ||
Deficit | (17,731,951) | (17,968,179) | ||
Accumulated other comprehensive income- | ||||
cumulative currency translation adjustment | (588,397) | (551,546) | ||
4,435,949 | 4,236,148 | |||
Commitments and contingencies (notes 13 and 14) | ||||
Total liabilities and stockholders' equity | $ | 7,537,123 | $ | 7,343,459 |
See accompanying notes to unaudited consolidated financial statements.
GRAND TOYS INTERNATIONAL, INC.
Consolidated Statements of Operations (Unaudited)
For the three months ended March 31,
2004 | 2003 | |||
Net sales | $ | 2,853,615 | $ | 2,951,095 |
Cost of goods sold | 1,674,605 | 1,689,518 | ||
Gross profit | 1,179,010 | 1,261,577 | ||
Other costs and expenses: | ||||
General and administrative | 539,338 | 572,856 | ||
Salaries and fringe benefits | 337,889 | 294,702 | ||
Royalties | 22,874 | 69,895 | ||
Bad debt expense | 12,939 | 10,601 | ||
Depreciation and amortization | 13,427 | 16,419 | ||
Interest expense | 19,446 | 20,737 | ||
Interest revenue | (14,130) | (14,894) | ||
Foreign exchange loss (gain) | 10,999 | (59,144) | ||
942,782 | 911,172 | |||
Earnings before income taxes | 236,228 | 350,405 | ||
Income tax expense | - | 325 | ||
Earnings from continuing operations | 236,228 | 350,080 | ||
Gain on sale of discontinued operations | - | 103,002 | ||
Net earnings applicable to common stockholders | $ | 236,228 | $ | 453,082 |
Earnings per share (note 10): |
Continuing operations: | ||||
Basic | $ | 0.04 | $ | 0.13 |
Diluted | 0.04 | 0.06 | ||
Discontinued operations: | ||||
Basic | - | 0.03 | ||
Diluted | - | 0.02 | ||
Net earnings: | ||||
Basic | 0.04 | 0.16 | ||
Diluted | $ | 0.04 | $ | 0.08 |
See accompanying notes to unaudited consolidated financial statements.
GRAND TOYS INTERNATIONAL, INC.
Consolidated Statements of Stockholders' Equity and Comprehensive Income (Unaudited)
Capital Stock | Additional Paid in Capital | Deficit | Accumulated other comprehensive income | Total | ||||||
January 1, 2004 | $ | 5,355 | $ | 22,750,518 | $ | (17,968,179) | $ | (551,546) | $ | 4,236,148 |
Net earnings for the period | - | - | 236,228 | - | 236,228 | |||||
Foreign currency adjustment | - | - | - | (36,851) | (36,851) | |||||
Total comprehensive income | 199,377 | |||||||||
Compensation expense | - | 424 | - | - | 424 | |||||