Monday May 15, 8:04 am Eastern Time

### Company Press Release

SOURCE: Grand Toys International, Inc.

## Grand Toys International Announces Financial Results For First Quarter

MONTREAL, May 15 /PRNewswire/ -- Grand Toys International, Inc. (Nasdaq: GRIN - news) today announced results for its first quarter ended March 31, 2000. Net sales for the first quarter of 2000 were $3.5 million compared to $8.6 million for the first quarter of 1999. The Company posted a net loss of $823,094, or $0.26 per basic share, for the first quarter of 2000. This compares to net income of $334,017, or $0.21 per basic share, in the first quarter of 1999.

Sales declined in the quarter primarily due to strong shipments of Furby last year. Since Grand Toys no longer has distribution rights for Furby after 1999, the Company liquidated its limited Furby inventory in the first quarter of 2000. This balance of Furby product was sold at reduced gross margins. In addition, partially as a result of lower than expected sales of certain products including Star Wars merchandise, the Company completed a review of its inventory and decided to take additional reserves for goods on hand. These factors contributed to the decline in the gross margin from 31% in the first quarter of 1999 to 14% in the current quarter.

Selling, general and administrative expenses declined by nearly $140,000 in the quarter to less than $1.6 million compared to over $1.7 million in the same period a year ago as the Company began a process of cost controls. While Grand increased its debt in 1999, total interest expense was significantly reduced in the current quarter as a result of the Company paying down its revolving bank debt last year. At the end of March 2000, Grand Toys had no revolving debt and subsequent to the end of the quarter paid off its term loan of nearly $400,000. Finally, Grand has undertaken a new hedging strategy to minimize the foreign exchange swings that occurred in previous periods. This is reflected in the current quarter's results.

Steve Altro, Chairman and President of Grand Toys, commented, ``The loss of the Furby product line significantly impacted our sales in the quarter and sales in the second quarter of 2000 are expected to decline further now that all remaining Furby inventory has been liquidated. Sales are expected to be significantly lower in fiscal 2000 compared to fiscal 1999 until we complete our purchase of Limited Treasures or make similar acquisitions.''

Mr. Altro continued, ``While we make the transition to owning more of the products we distribute, we are looking closely at our cost structure. We have begun to restructure our sales staff and are in the process of reviewing our administrative functions. This is expected to result in a reduction in headcount. We are also evaluating various royalties and licensing fees to determine where savings can be achieved without harming product availability. Other operating expenses are being evaluated on a case by case basis.''

Mr. Altro concluded, ``Although our sales are currently depressed, we are fortunate to have a strong balance sheet, reduced long term debt and available bank lines of credit. We continue to strive to transform the Company from its origins as a distributor to a vendor with a broader portfolio of proprietary product lines. We are also aggressively working to complete the acquisition of Limited Treasures, Inc., a privately held creator of proprietary plush beanbag bears.''

Founded in 1960, Grand Toys International, Inc. is a premier licensee and distributor of a wide variety of toys and ancillary items in Canada and since January 1999, a supplier of proprietary products in the United States.

This news release contains certain forward-looking statements, including estimates for sales and potential benefits from the Company's acquisition strategy, which are within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to risk and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to, those related to business conditions and the financial strength of the retail industry, particularly for toy and toy-related products; the level of consumer spending for such products; the effect of currency translations; the ability of the Company to successfully obtain its products from suppliers; the completion of the Company's acquisition of Limited Treasures; and the success of advertising, marketing and promotional campaigns.

Note: Further information on Grand Toys International, Inc. is available through the Company's website on the World Wide Web at http://www.grand.com .

To receive additional information on Grand Toys International, Inc., via fax, at no charge, dial 1-800-PRO-INFO and enter code GRIN.

                            Grand Toys International, Inc.
                                 Financial Highlights
                                       (in US$)

                                                          Three Months Ended
                                                              March 31,
                                                         2000           1999
                                                       unaudited      unaudited

        Net sales                                     $3,491,867     $8,626,916
        Cost of goods sold                             3,013,320      5,990,128
        Gross profit                                     478,547      2,636,787

        Selling, general and admin. expenses           1,588,599      1,728,390
        Loss (gain) on foreign exchange                   18,209      (137,041)

        EBITDA                                        (1,128,261)     1,045,439

        Interest expense                                  61,825        127,679
        Bad debt expense                                  28,069         37,902
        Depreciation and amortization                    143,389         67,990

        Earnings (loss) before taxes                 (1,361,544)        811,867
        Income tax recovery (expense)                    538,450      (477,850)

        Net income (loss)                             $(823,094)       $334,017

        Earnings (loss) per share, basic                 $(0.26)          $0.21
        Earnings (loss) per share, diluted               $(0.26)          $0.21

        Weighted average common shares
         outstanding, basic                            3,184,906      1,577,634

                                                       March 31,    December 31,
                                                         2000           1999
        Balance Sheet Data:                            unaudited      audited

        Total assets                                 $15,796,038    $19,118,517
        Working capital                               $9,685,819    $10,788,948
        Total stockholders' equity                   $11,423,290    $12,003,783

SOURCE: Grand Toys International, Inc.

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