U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
                                   (Mark One)

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

                For the quarterly period ended December 31, 1999

                                       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 0-21178

                          UNITED TEXTILES & TOYS CORP.

        (Exact Name of Small Business Issuer as Specified in its Charter)

    Delaware                                                  13-3626613
(State or Other Jurisdiction of                (IRS Employer Identification No.)
 Incorporation or Organization)

               1385 Broadway, Suite 814, New York, New York 10018
                    (Address of Principal Executive Offices)

                                 (212) 391-1111
                (Issuer's Telephone Number, Including Area Code)

                                       N/A
              -----------------------------------------------------
             (Former Name, Former Address, and Former Fiscal Year,
                         if Changed Since Last Report)

     Check  whether  the Issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such  shorter  period that  registrant  was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares of each of the issuer's classes of common equity
outstanding as of the latest  practicable  date:  Common Stock, par value $0.001
per share: 4,550,236 shares outstanding as of February 25, 2000.

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I.             FINANCIAL INFORMATION                                                                        Page
                                                                                                                Number

Item 1.             FINANCIAL STATEMENTS
<S>                                                                                                                      <C>
     Consolidated  Balance Sheets as of December 31, 1999  (unaudited) and March
31, 1999                                                                                                                  3

     Consolidated  Statement of  Operations  (unaudited)  for the three and nine
months ended December 31, 1999 and 1998                                                                                   4

     Consolidated  Statement of Cash Flows (unaudited) for the nine months ended
December 31, 1999 and 1998                                                                                                5

     Notes to Consolidated Financial Statements (unaudited)                                                             6-10

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PART II. OTHER INFORMATION

                                                                                                                         18

Item 1.             LEGAL PROCEEDINGS

Item 2.             CHANGES IN SECURITIES AND USE OF PROCEEDS                                                            18

Item 3.             DEFAULTS UPON SENIOR SECURITIES                                                                      18

Item 4.             SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                  18

Item 5.             OTHER INFORMATION                                                                                    18

Item 6.             EXHIBITS AND REPORTS ON FORM 8-K                                                                     18

                    Signatures                                                                                           19

</TABLE>


     The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>
                           CONSOLIDATED BALANCE SHEETS
                   As of December 31, 1999 and March 31, 1999
<TABLE>
<CAPTION>

                                                                              Dec. 31,       March 31,
                                                                                1999           1999
                                                                            (Unaudited)      (Note 1)
                                     ASSETS

CURRENT ASSETS:
<S>                                                                        <C>             <C>
  Cash and cash equivalents ............................................   $ 12,273,664    $    126,625
  Accounts receivables-net .............................................        985,422         118,518
  Inventories ..........................................................     14,175,841      11,506,284
  Note receivable - affiliate ..........................................        650,000            --
  Prepaid expenses and other current assets ............................        652,395       1,315,851
  Loans and advances-officer ...........................................        (76,518)        (37,061)
                                                                           ------------    ------------
          Total current assets .........................................     28,660,804      13,030,217

PROPERTY AND EQUIPMENT-NET .............................................      7,312,257       5,348,175
OTHER ASSETS:
  Deposits and other assets ............................................      4,454,710       2,768,647
                                                                           ------------    ------------
          Total other assets ...........................................      4,454,710       2,768,647
                                                                           ------------    ------------
          Total assets .................................................   $ 40,427,771    $ 21,147,039
                                                                           ============    ============

                                    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable .....................................................   $ 33,169,689    $ 14,498,578
  Accrued expenses and other current liabilities .......................      1,437,755         626,815
  Due to affiliates ....................................................        795,403         831,897
  Current portion of notes payable and capital lease obligation ........        848,774       1,352,197
                                                                           ------------    ------------
          Total current liabilities ....................................     36,251,621      17,309,487
LONG-TERM LIABILITIES:
  Borrowings under financing agreement .................................         54,170       7,814,666
  Note payable and capital leases, net of current portion ..............      1,257,091         585,681
  Deferred rent liability ..............................................        135,060         126,769
                                                                           ------------    ------------
          Total long-term liabilities ..................................      1,446,321       8,527,116
                                                                           ------------    ------------
          Total liabilities ............................................     37,697,942      25,836,603

MINORITY INTEREST IN SUBSIDIARY ........................................      9,585,439        (165,058)
                                                                           ------------    ------------

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value; 10,000,000 shares authorized, 4,550,236
  Additional paid-in capital ...........................................      8,142,281       8,142,281
  Retained earnings (deficit) ..........................................    (15,002,441)    (12,671,337)
                                                                           ------------    ------------
          Total stockholders' equity ...................................     (6,855,610)     (4,524,506)
                                                                           ------------    ------------
          Total liabilities and stockholders' equity ...................   $ 40,427,771    $ 21,147,039
                                                                           ============    ============
</TABLE>

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                        For the Three Months Ended     For the Nine Months Ended
                                                             Dec. 31,       Dec 31,        Dec. 31,       Dec. 31,
                                                               1999          1998           1999            1998
                                                                           Restated                       Restated
                                                                           (Note 8)                       (Note 8)

<S>                                                      <C>             <C>             <C>             <C>
Net sales ............................................   $ 17,316,024    $ 14,717,729    $ 30,692,008    $ 27,177,972

Cost of sales ........................................     10,006,720       8,545,336      17,370,835      15,665,721
                                                         ------------    ------------    ------------    ------------

Gross profit .........................................      7,309,304       6,172,393      13,321,173      11,512,251

Operating expenses:
  Operating expenses .................................      6,044,595       4,100,202      13,810,986       9,368,107
  Litigation settlement ..............................        183,464            --           270,206            --
  Depreciation and amortization ......................        320,508         324,975         773,490         707,186
                                                         ------------    ------------    ------------    ------------

          Total operating expenses ...................      6,548,567       4,425,177      14,854,682      10,075,293

Operating income (loss) ..............................        760,737       1,747,216      (1,533,509)      1,436,958

Interest expense:
  Interest and finance charges .......................        307,870         221,860         823,453         517,172
  Amortization of debt issuance costs ................         58,097         174,889         127,434          73,032
                                                         ------------    ------------    ------------    ------------
          Total interest expense .....................        365,967         294,892         998,342         644,606
                                                         ------------    ------------    ------------    ------------
Interest Income ......................................              2           --                 12          47,781
                                                         ------------    ------------    ------------    ------------
(LOSS) BEFORE MINORITY INTEREST ......................        394,772       1,452,324      (2,531,839)        840,133

Minority interest in net income (loss) of consolidated
subsidiary (Note 3) ..................................        (54,939)       (468,406)      2,384,654          27,260
                                                         ------------    ------------    ------------    ------------

Net income (loss) ....................................        339,833         983,918        (147,185)        867,393

Effect of non-cash dividends on convertible preferred
stock ................................................        799,402         477,973       2,183,919       1,229,752
                                                         ------------    ------------    ------------    ------------

(Loss) applicable to common shares ...................   $   (459,569)   $    505,945    $ (2,331,104)   $   (362,359)
                                                         ============    ============    ============    ============

Basic and diluted loss per common share and share
equivalent ...........................................   $       (.10)   $        .11    $       (.51)   $       (.08)
                                                         ============    ============    ============    ============

Weighted average number of common shares outstanding
                                                            4,550,236       4,550,236       4,550,236       4,550,236
                                                         ============    ============    ============    ============
</TABLE>
<PAGE>
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)
                           Increase (Decrease) in Cash

<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                -----------------------------------------
                                                                                         Dec. 31,          Dec. 31,
                                                                                           1999              1998
                                                                                ------------------    -------------------
                                                                                                           Restated

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                   <C>             <C>
Net income (loss) .................................................................   $ (2,331,104)   $   (362,359)
Adjustments to reconcile net loss to cash (used) provided for operating activities:
   Amortization of issuance costs .................................................        174,889            --
   Depreciation and amortization ..................................................        773,490         707,891
   Deferred rent ..................................................................          8,291          13,654
   Minority interest in net loss of subsidiary ....................................     (2,384,654)        (27,260)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable ........................................       (886,904)        119,159
(Increase) in merchandise inventories .............................................     (2,669,557)     (2,984,709)
(Increase) decrease in prepaid expenses and other current assets ..................        663,456      (1,552,841)
(Increase) decrease in deposits and other assets ..................................     (1,686,063)        173,429
Increase (decrease) in accounts payable ...........................................      5,132,991       4,582,433
Increase (decrease) in accrued expenses and other liabilities .....................        810,950         822,417
                                                                                      ------------    ------------
          Total adjustments .......................................................        (63,111)      1,854,173
                                                                                      ------------    ------------
          Net cash provided (used) by operating activities ........................     (2,394,215)      1,491,814

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment ............................................     (2,737,572)     (2,300,169)
   Advances to affiliates .........................................................       (650,000)           --
                                                                                      ------------    ------------
          Net cash from (used for) investing activities ...........................     (3,387,572)     (2,300,169)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of preferred stock of subsidiary ........................     25,560,792            --
   Net borrowings under line of credit ............................................     (7,760,496)      2,309,017
   Loans and repayment - officer ..................................................        (39,457)        (94,797)
   Repayment of notes payable .....................................................        167,987        (824,005)
                                                                                      ------------    ------------
          Net cash provided by (used for) investing activities ....................     17,928,826       1,390,215

NET INCREASE (DECREASE) IN CASH ...................................................     12,147,039         581,860
Cash, beginning of period .........................................................        126,625       1,635,058
                                                                                      ------------    ------------
Cash, end of period ...............................................................   $ 12,273,664    $  2,216,918
                                                                                      ============    ============

Supplemental disclosure of cash flow information:
Interest paid .....................................................................   $    823,453    $    644,806
Taxes paid ........................................................................   $       --      $       --

</TABLE>
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1999
                                   (Unaudited)

NOTE 1 -          BASIS OF PRESENTATION:

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. Accordingly,  they do
not include all the  information  and footnotes  required by generally  accepted
accounting principles for more complete financial statements.  In the opinion of
management,  the interim financial statements include all adjustments considered
necessary for a fair  presentation of the Company's  financial  position and the
results of its  operations for the three and nine months ended December 31, 1999
and are not  necessarily  indicative  of the results to be expected for the full
fiscal year. For further  information,  refer to the Company's  annual report on
Form  10-KSB  for the  fiscal  year  ended  March 31,  1999,  as filed  with the
Securities and Exchange Commission.

NOTE 2 -          DESCRIPTION OF COMPANY:

     United  Textiles & Toys Corp.  (the  "Company")  is a Delaware  corporation
which was organized in March 1991 and commenced  operations in October 1991. The
Company formerly designed,  manufactured, and marketed a variety of lower priced
women's dresses, gowns, and separates (blouses,  camisoles, jackets, skirts, and
pants) for special  occasions  and formal  events.  In April  1998,  the Company
ceased all operating activities; it now operates solely as a holding company. In
September  1999, the Company sold 55,000 shares of Play Co. Toys & Entertainment
Corp.  ("Play  Co.") common  stock on the open  market,  reducing its  ownership
percentage  to 43.9%.  (See Note 6). As a result of this sale,  at December  31,
1999 the Company owned 2,434,910 shares of the common stock of Play Co. Although
the  percentage  of ownership at December 31, 1999 was 43.9%,  the Company still
exercises prerogative of control over Play Co., which is still consolidated into
the  Company.  (See Note 3).  Currently,  UTTC owns 32.4% of the common stock of
Play  Co.  and  given  its  relationships   with  other  Play  Co.   affiliates,
significantly influences Play Co.'s operations

NOTE 3 -          MINORITY INTERESTS:

     The minority  interest in Play Co.  represents  the minority  shareholders'
interest  (56.1%) of Play Co.'s  equity at  December  31, 1999 and 41.6% of Toys
International.COM,  Inc. The minority interest, as reflected in the accompanying
consolidated  balance  sheet,  consists of Play Co.'s  Series E preferred  stock
only. Due to operating losses of Play Co., the minority interest in common stock
has been written down to zero.


<PAGE>
NOTE 3 -          MINORITY INTERESTS (continued):

     On November 24,  1998,  pursuant to a sales  agreement  entered into by and
between Play Co. and Breaking Waves, Inc. ("BWI"),  a wholly owned subsidiary of
Shopnet.com,  Inc.  ("Shopnet"),  a related  party,  BWI  purchased  1.4 million
unregistered  shares of Play Co.'s  common stock in a private  transaction.  The
President  of BWI and  Shopnet  is also  the  Chairman  of Play  Co.'s  Board of
Directors.  Shopnet is a publicly  traded company.  The shares  purchased by BWI
represented approximately 25.4% of the total common stock issued and outstanding
at the time of the transaction.

     The  consideration  for  the  stock  was  $665,000,  which  represented  an
approximate  price of $0.475 per share.  This price was  discounted 33% from the
then current  market price  reflecting  a discount  for the  illiquidity  of the
shares,   which  do  not  carry  any  registration   rights.   $300,000  of  the
consideration  remitted was in cash and the  remaining  $365,000 was provided in
BWI  product,  primarily  girls'  swimsuits.  Play Co.  had  previously  carried
swimsuits  from  BWI in its  stores  on a trial  basis.  Pursuant  to the  sales
agreement (which has a term of one year and  automatically  extends for one year
terms unless terminated by either of the parties), Play Co. agreed to purchase a
minimum of 250 pieces of  merchandise  for each of its retail  locations  and to
provide advertising  promotional  materials and ads of the merchandise in all of
its brochures,  advertisements,  catalogs,  and all other promotional materials,
merchandising programs, and sales promotion methods.

     As a result of this  transaction,  the  Company saw its  majority  interest
change  from  60.6%  to  45.2%.  The  Company  still  is  considered  to  have a
controlling  influence  over  Play  Co.,  which is still  consolidated  into the
Company.

     In May  1999,  Play Co.  issued  45,333  shares  of its  common  stock to a
consultant  as  compensation  for site  selections  and  negotiation  of  retail
location leases, thereby diluting the Company's ownership to 44.9%.


<PAGE>
NOTE 4 -          INVESTMENT BY MULTIMEDIA CONCEPTS INTERNATIONAL, INC.:

     In January 1998, the Company issued 3,571,429 shares of its common stock to
Multimedia Concepts International,  Inc. ("Multimedia"),  a company of which the
Company's President is also President,  Chief Executive Officer, and a Director.
The issuance of these  common  shares at a price of $0.28 per share ($0.01 above
the closing price on December 31, 1997)  represented a conversion into equity of
a  $1,000,000  loan  owed by the  Company  to  Multimedia.  As a result  of this
transaction,  Multimedia owns 78.5% of the outstanding shares of common stock of
the Company,  effectively making the Company a subsidiary of Multimedia.  As the
Company  owns  43.9% of the  outstanding  shares  of  common  stock of Play Co.,
Multimedia and its management  have obtained  beneficial  voting control of Play
Co.

     On January 20, 1998, U.S. Stores Corp. ("U.S.  Stores") acquired  1,465,000
shares of Multimedia's  common stock.  U.S. Stores was  incorporated on November
10,  1997.  The  Company's  President is also  President  and a Director of U.S.
Stores.

     After this  transaction,  U.S. Stores held an aggregate of 1,868,000 shares
of  Multimedia's  common stock, or 63% of the  outstanding  shares,  effectively
making Multimedia a subsidiary of U.S. Stores.

     On February 28, 1998,  American Telecom  Corporation  ("American  Telecom")
acquired 100% of the outstanding common shares of U.S. Stores.  American Telecom
was incorporated on July 18, 1997. The Company's President is also President and
a Director  of  American  Telecom.  After  this  transaction,  American  Telecom
effectively   obtained   beneficial  voting  control  of  the  Company  and  its
subsidiary, Play Co.

     In April 1998,  American  Telecom  exchanged all of its outstanding  common
shares with American  Telecom,  PLC, a publicly traded company in Great Britain.
After this  transaction,  American  Telecom  effectively  became a subsidiary of
American  Telecom,  PLC.  Additionally,  as part of this  transaction,  American
Telecom,  PLC acquired 100% of the  outstanding  common  shares of U.S.  Stores,
thereby  effectively making U.S. Stores a direct subsidiary of American Telecom,
PLC and the Company and Play Co. indirect subsidiaries.


<PAGE>
NOTE 5 - SALE OF SHARES BY PLAY CO.'S SUBSIDIARY - TOYS INTERNATIONAL.COM, INC.

     On November 19, 1999, Toys  International.COM,  Inc. ("Toys"), a subsidiary
of Play Co.,  completed an initial public offering (the  "Offering") on the SMAX
segment  of  the  Frankfurt   Stock  Exchange  in  Germany.   The  Offering  was
underwritten by Concord Effekten AG ("Concord") of Frankfurt, Germany. Toys sold
2 million  shares,  or a 16.7%  interest,  in the  Offering  for net proceeds of
approximately  $23.3 million.  The Offering was priced at 13 Euros per share, or
approximately US $13.52 per share. Play Co. retained majority  ownership of Toys
(58.4%) and, as a result,  will continue to consolidate  Toys' operations in its
financial statements.  No gain or loss was recorded on the sales of Toys' shares
in the public  offering or in earlier  private  placements per Staff  Accounting
Bulletin No. 84.

NOTE 6 - CREDIT FACILITY:

     On December 31, 1999, Play Co. had $54,170  outstanding under its revolving
credit  facility  with FINOVA  Capital  Corporation  ("FINOVA")  and  $6,990,395
available under the credit  facility.  During  December,  at Play Co.'s request,
FINOVA agreed to reduce the maximum  borrowing level of the credit facility from
$11.3  million to $9.3 million and to terminate a $2 million  standby  letter of
credit  ("L/C")  that  previously  helped  support  the  credit  facility.   The
termination  of the L/C allowed the Play Co. access to a $2 million  certificate
of deposit which  previously  was  restricted and was used as collateral for the
L/C by the issuing bank. The amount outstanding at December 31, 1999 represented
the interest accrued during the month of December 1999 as the principal  balance
was paid down to zero during the December quarter.

     As of December  31,  1999,  the FINOVA  credit line is presented as a short
term liability since the credit facility  expires August 3, 2000, or within less
than one year of the December 31, 1999 balance sheet date.

NOTE 7 -          YEAR 2000 UPDATE:

     Subject to continued  monitoring of Play Co.'s third party  suppliers,  the
Company's year 2000 program  ("Program") is complete;  no material problems have
arisen since the end of calendar year 1999.  The Program  addressed the issue of
computer  programs  and  embedded  computer  chips being  unable to  distinguish
between the year 1900 and the year 2000. All of the Company's  business computer
systems are year 2000 ready.


<PAGE>
NOTE 8 -          RESTATEMENT OF FINANCIAL STATEMENTS - DECEMBER 31, 1998

     The consolidated  financial  statements for the three and nine months ended
December 31, 1998 have been restated to reflect a restatement by Play Co. of its
dividend  attributable  to the  beneficial  conversion  feature  of its Series E
preferred  stock.  This  restatement  resulted  in a decrease  of $34,790 in the
profits for the three months ended December 31, 1998 and an increase in the loss
for the nine  months  ended  December  31,  1998 of  $94,182  from its  original
reported net loss.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS


Results of Operations

     United  Textiles & Toys Corp.  (the  "Company")  is a Delaware  corporation
which was organized in March 1991 and  commenced  operations in October 1991. In
April 1998, the Company ceased all operating  activities and now operates solely
as a holding  company for its ownership in Play Co. Toys &  Entertainment  Corp.
("Play Co.")  Historically,  the Company's  results of  operations  have related
primarily to its  majority  ownership  of Play Co., as its own  operations  were
substantially  less than those of its  subsidiary.  Accordingly,  the  Company's
results of operations for the  three-month  period ending  December 31, 1999 are
primarily those of Play Co.

     Statements  contained in this report which are not historical  facts may be
considered forward looking  information with respect to plans,  projections,  or
future  performance  of the  Company as  defined  under the  Private  Securities
Litigation Reform Act of 1995. These  forward-looking  statements are subject to
risks and  uncertainties  which could cause actual results to differ  materially
from those now projected.

Three months ended December 31, 1999 compared to three months ended
December 31, 1998

     Consolidated  sales for the  three  months  ended  December  31,  1999 were
$17,316,024,  as compared to $14,717,729 for the three months ended December 31,
1998.  This  increase  of  $2,598,295,  or 17.7%,  is directly  attributable  to
increased sales contributions from Play Co.'s new stores and Play Co.'s Internet
operations  in the United  States and Germany,  as same store sales  declined by
17.6% for the period.

     Consolidated cost of sales for the three months ended December 31, 1999 was
$10,006,720,  or 57.8% of sales,  as compared to the three  month  period  ended
December 31, 1998 in which cost of sales was $8,545,336,  or 58% of sales.  This
increase of $1,461,384,  or 17.1%, is primarily due to costs associated with the
opening of new retail outlets.

     Consolidated  operating expenses (excluding  litigation settlement expenses
and depreciation and amortization  expenses) were $6,044,595,  or 34.9% of sales
for the three months ended December 31, 1999, as compared to $4,100,202,  or 28%
of sales,  for the three  months  ended  December  31,  1998.  This  increase of
$1,944,393,  or 47.4%, was due to an increase in payroll and related expenses as
well as an increase in rent  expense  associated  with the opening of new retail
stores.

     During the three months ended December 31, 1999, Play Co. settled its final
store closing related litigation. Under this settlement, Play Co. agreed to make
a cash payment of $35,000,  to issue 100,000 shares of its common stock,  and to
pay an aggregate of $186,138 over a 36-month  period.  Play Co. accrued $183,464
during the three months ended December 31, 1999 to cover the estimated  value of
the settlement.

     During the three months ended December 31, 1999, non-cash  depreciation and
amortization  amounted to $320,508,  as compared to $324,975 in the three months
ended December 31, 1998.  This amount was lower in the December 1999 period than
in the December  1998 period  because in the 1998 period,  Play Co.  amortized a
portion  of its  store  opening  expenses.  All such  expenses  were  considered
operating expenses in 1999.


<PAGE>
     Consolidated  interest expense was $365,967, or 2.1% of sales, in the three
months ended  December 31, 1999, as compared to $294,892,  or 2.0% of sales,  in
the three months ended  December 31, 1998.  The primary reason for the increased
level of interest  expense was a higher  average level of borrowings by Play Co.
in the three-month period ended December 31, 1999.

     For the three  months  ended  December  31,  1999,  the Company  reported a
consolidated  net loss of $459,569  (after  reflecting  the  adjustment  for the
minority interest in Play Co.), or basic earnings deficit per share of $0.10, as
compared to a restated net income of $505,945,  or a basic earnings  deficit per
share of $0.11 (after  reflecting  the minority  interest in Play Co.),  for the
three months ended  December 31,  1998.  The weighted  average  number of common
shares used in the computation of basic earnings per share was 4,550,236 for the
three months ended December 31, 1999 and 1998.

Nine months ended December 31, 1999 compared to nine months ended December
31, 1998

     Consolidated  sales  for the nine  months  ended  December  31,  1999  were
$30,692,008,  as compared to $27,177,972  for the nine months ended December 31,
1998.  This  increase  of  $3,514,036,  or 12.9%,  is directly  attributable  to
increased sales contributions from Play Co.'s new stores and Play Co.'s Internet
operations  in the United  States and Germany,  as same store sales  declined by
22.5% for the period.

     Consolidated  cost of sales for the nine months ended December 31, 1999 was
$17,370,835,  or 56.6% of sales,  as  compared  to the nine month  period  ended
December  31,  1998 in which cost of sales was  $15,665,721,  or 57.6% of sales.
This increase of $1,705,114, or 10.9%, is primarily due to costs associated with
the opening of new retail outlets.

     Consolidated  operating expenses (excluding litigation settlement expenses,
depreciation and amortization expenses) were $13,810,986,  or 45.0% of sales for
the nine months ended December 31, 1999, as compared to $9,368,107,  or 34.5% of
sales, for the nine months ended December 31, 1998. This increase of $4,442,879,
or 47.4%,  was due to an increase in payroll and related  expenses as well as an
increase in rent expense associated with the opening of new retail stores.

     During the nine months ended December 31, 1999,  Play Co. settled its final
store closing related litigation. Play Co. estimated the total net present value
of the settlement to be $233,905,  consequently, Play Co accrued $270,206 in the
nine  months  ended  December  31,  1999 to  cover  the  estimated  value of the
settlement and other litigation related expenses.

     During the nine months ended December 31, 1999,  non-cash  depreciation and
amortization  amounted to  $773,490,  as compared to $707,186 in the nine months
ended  December  31,  1998.  This  increase  of  $66,304  is  due  primarily  to
depreciation on new assets acquired by Play Co. in this period.


<PAGE>
     Consolidated  interest expense was $998,342,  or 3.3% of sales, in the nine
months ended  December 31, 1999, as compared to $644,606,  or 2.4% of sales,  in
the nine months ended  December 31, 1998.  The primary  reason for the increased
level of interest  expense was a higher level of  borrowings  by Play Co. in the
nine-month period ended December 31, 1999.

     For the nine  months  ended  December  31,  1999,  the  Company  reported a
consolidated  net loss of $2,331,104  (after  reflecting  the adjustment for the
minority interest in Play Co.), or basic earnings deficit per share of $0.51, as
compared to a restated net loss of  $362,359,  or a basic  earnings  deficit per
share of $0.08 (after  reflecting  the minority  interest in Play Co.),  for the
nine months  ended  December 31, 1998.  The  weighted  average  number of common
shares used in the computation of basic earnings per share was 4,550,236 for the
nine months ended December 31, 1999 and 1998.

Liquidity and Capital Resources

     At December 31, 1999,  the Company  reported cash and cash  equivalents  of
$12,273,664,  working capital deficit of $7,590,817, and stockholders' equity of
$(6,855,610),  reflecting  the net loss of $2,331,104  for the nine months ended
December 31, 1999.

     At March 31,  1999,  the  Company  reported  cash and cash  equivalents  of
$126,625,  working capital deficit of $4,279,270,  and  stockholders'  equity of
$(4,524,506).

     During the  nine-month  period ending  December 31, 1999,  the Company used
$2,394,215  in cash from its  operating  activities,  as compared to  $1,491,814
provided by operating  activities  in the nine month  period ended  December 31,
1998.

     The Company used $3,387,572 of cash in investing activities during the nine
months ended December 31, 1999,  compared to an outflow of cash of $2,300,169 in
the nine months ended  December 31, 1998. The primary  investing  activities was
the purchase of equipment and fixtures by Play Co. for its new stores.

     The Company  generated  $17,928,826  from its  financing  activities in the
nine-month  period ended December 31, 1999, as compared to providing  $1,390,215
in the nine months  ended  December 31, 1998.  The primary  contributors  to the
Company's  financing  activities  were  borrowings by Play Co. under a financing
agreement  and the sale of Play Co.'s  Series F preferred  stock and the sale of
common stock of Play Co.'s subsidiary, Toys. These proceeds were used to finance
Play Co.'s capital  requirements,  capital  expenditures,  and operating  losses
during the nine months ended December 31, 1999.

     As a result of the above factors, the Company has a net increase in cash of
$12,147,039  in the nine  months  ended  December  31,  1999,  compared to a net
increase in cash of $581,860 in the nine months ended December 31, 1998.

     Prior to its most  recent  fiscal  year  ended  March  31,  1999,  Play Co.
generated  operating  losses  in  the  past  several  years  as  well  as in the
nine-month  period ended December 31, 1999. Play Co. has  historically  financed
those losses and its working  capital  requirements  through  loans and sales of
Play Co.'s equity securities,  primarily through the sale of Play Co.'s Series E
preferred  stock.  There  can be no  assurances  that  Play Co.  will be able to
generate sufficient revenues or have sufficient controls over expenses and other
charges to achieve profitability.


<PAGE>
     During the three month period ended December 31, 1999, Play Co. opened five
new stores located in Concord,  North Carolina (two stores), near Houston, Texas
(two stores) and in Mission Viejo, California.  These stores are located in high
traffic  shopping  malls.  These five stores  represented  an aggregate  capital
investment of approximately $1.3 million,  net of landlord  contributions.  Play
Co. postponed the construction of its planned new store in Schaumburg,  Illinois
until the spring of 2000. Play Co. now has 32 stores located in seven states.

     Play Co. had  planned to finance the above store  opening  costs  through a
combination of capital lease financing,  use of Play Co.'s working capital,  and
the sale of additional equity. Play Co. has obtained  approximately  $806,000 in
capital lease financing this fiscal year.

     In May 1999,  pursuant to ss.506 of  Regulation  D, Play Co.  sold  750,000
shares of Series F  preferred  stock,  at a  purchase  price of $1.00 per share,
through Robb Peck McCooey  Clearing  Corporation  as placement  agent.  Play Co.
received  $657,500  in net  proceeds  from the  sale.  Each  share  of  Series F
preferred stock is convertible,  at the holder's option, into two fully paid and
non-assessable  shares of common stock,  at any time  commencing on the date the
registration  statement registering the common stock underlying same is declared
effective  by the  Securities  and Exchange  Commission.  Each share of Series F
preferred stock shall convert  automatically on the occurrence of the earlier of
either  of the  following  events,  without  action  on the  part of the  holder
thereof:  (i) two years from issuance or (ii) in the event the closing price per
share of common stock has been at least $5.00 for a consecutive 30-day period.

     Due to the beneficial  conversion  feature of the Series F preferred stock,
the proceeds have initially been recorded as additional  paid-in capital,  which
is being  authorized over an 8-month period in the form of a non-cash  dividend.
Management  has used an  8-month  period to  correspond  to the  estimated  time
necessary to have a registration  statement declared effective by the Securities
and Exchange Commission.  Such registration  statement has not yet been declared
effective.

     In connection with the private  placement of the Series F preferred  stock,
Play Co. granted  options to the placement  agent to purchase  350,000 shares of
common stock at an exercise  price of $3.00 per share for a period of four years
from the date of closing of the  private  placement.  Play Co. has valued  these
options at  approximately  $507,000  using the  Black-Scholes  option  valuation
model. As the options were granted in connection with the private placement, the
compensation  effect of these was  effectively  offset against the proceeds into
additional paid-in capital with no net effect on Play Co.'s stockholders' equity
or result of operations.  The placement agent also received a 10% commission, or
$75,000, and a 1% allowance,  or $7,500, to cover administrative  expenses.  The
private placement closed on May 27, 1999.

     On July  15,  1999,  an  entity  of  which a  director  of  Play  Co.  is a
shareholder,  exercised  its right to  purchase a 25%  ownership  interest  in a
consolidated subsidiary of Play Co. This entity was the assignee of an option to
acquire 25% of the outstanding shares of the subsidiary at book value as of June
30, 1999.  The book value was determined to be $2,894,711 and 25% was determined
to be $723,678.  This amount was recorded on the  accompanying  balance sheet as
Stock Subscription Receivable. The amount was paid to Play Co. in October 1999.


<PAGE>
     This option arose out of the June 30, 1998  conversion,  by ABC Fund,  Inc.
("ABC",  an affiliate of Play Co.),  of a $1.5 million  debenture  into Series E
preferred stock as of June 30, 1998. Pursuant to the terms of the debenture,  in
September  1998, ABC assigned its right to purchase the Toys common stock to the
entity.

     On July 20, 1999,  Play Co. sold a 6.6% interest in this  subsidiary to two
investors  for $2.8  million in gross  proceeds  in a private  transaction.  The
investors were an unaffiliated  investment-banking  firm,  Concord of Frankfurt,
Germany  and CDMI,  a British  Virgin  Islands  corporation.  One of Play  Co.'s
directors is a  shareholder  of CDMI.  Each party  invested  $1.4 million in the
transaction.

     In early  October  1999,  Play Co.  loaned  $200,000 to  Shopnet.com,  Inc.
("Shopnet") and $50,000 to Breaking Waves, Inc. ("BWI"),  both of which entities
are affiliated with Play Co. The loans carry interest at 9% and are due in March
2000.

     On  October  25,  1999,  an  entity  of which a  director  of Play Co. is a
shareholder,  lent Play Co.  $127,922  under a Demand  Promissory  Note ("Demand
Note"). The Demand Note carries an interest rate of eight percent per annum. The
Demand Note was a bridge loan  designed to be paid off after the  completion  of
the then contemplated initial public offering of the subsidiary.

     On November 19, 1999,  Play Co.'s  subsidiary  completed an initial  public
offering (the "Offering") on the SMAX segment of the Frankfurt Stock Exchange in
Germany. The Offering was underwritten by Concord.

     This subsidiary sold 2 million shares, or a 16.7% interest, in the Offering
for gross proceeds of approximately  $27 million.  The Offering was priced at 13
Euro per share, or approximately  $13.52 per share.  Play Co. retained  majority
ownership of the  subsidiary  holding a 58.4% equity  interest in same and, as a
result,  will  continue to  consolidate  the  subsidiary's  operations  into its
financial statements.

     In addition to the 2 million shares sold by the subsidiary in the Offering,
Concord and CDMI each sold 200,000 shares in the form of a greenshoe  allotment.
Both Concord and CDMI invested in the subsidiary in a private  placement in July
1999.  The total  Offering  size,  including  the greenshoe  allotment,  was 2.4
million shares.

     On November 29,  1999,  Play Co.  loaned  Shopnet  $400,000  under a Demand
Promissory  Note  ("Demand  Note")  bearing an interest rate of nine percent per
annum.  The Demand Note required a principal  repayment of $100,000 plus accrued
interest on January 30, 2000 and requires  that the balance be paid on April 30,
2000. The January 30, 2000 payment was remitted as agreed.


<PAGE>
     The holders of Play Co.'s convertible subordinated debentures have informed
Play Co. that they plan to convert $650,000 of the  subordinated  debt into Play
Co.'s Series E Preferred Stock.  Play Co. expects this conversion to occur prior
to its March 31, 2000 fiscal year end.

     Play Co.  anticipates,  based on currently  proposed plans and  assumptions
relating to its operations, that the proceeds of the Offering will be sufficient
to satisfy its contemplated cash requirements for at least 12 months.

Year 2000 Update

     Subject to continued  monitoring  of third party  suppliers,  the Company's
year 2000 program  ("Program")  is complete;  no material  problems  have arisen
since the end of calendar year 1999. The Program addressed the issue of computer
programs and embedded  computer  chips being unable to  distinguish  between the
year 190 and the year 2000. All of the Company's  business  computer systems are
year 200 ready.

Trends Affecting Liquidity, Capital Resources and Operations:

     Play Co. believes that its same store sales showed a decline after a period
of two years of  continuous  increases (in the fiscal years ended March 31, 1998
and March 31, 1999)  because in the nine month  period ended  December 31, 1999,
the flow of allocated "hot" selling merchandise was spread over 25% more stores.
This  shortfall  in  allocated  or "hot"  selling  inventory  is a result of the
current  credit  lines that Play Co. has with some of its  vendors.  Play Co. is
working to  increase  its lines of credit  with its  vendors to more  adequately
address  not only the past growth but its  expected  future  growth as well.  As
noted above, Play Co. has recently significantly  strengthened its balance sheet
by raising  approximately $25 million in additional equity,  which should result
in expanded lines of credit with its trade vendors.

     Play  Co.  believes  that  its  growth  and the  availability  of  "hot" or
allocated  merchandise  within  certain  sectors of its core  business - such as
action  figures,  video  games,  and  collector  plush - could have an impact on
continuing store sales in the future.  It is working  diligently to address this
issue.

     Play Co.'s future  financial  performance will depend upon continued demand
for toys and its  ability  to  choose  locations  for new  stores  and  purchase
products  at  favorable  prices  and on  favorable  terms,  and the  effects  of
increased competition and changes in consumer preferences.

     The toy and hobby retail  industry  faces a number of  potentially  adverse
business  conditions  including  price and gross  margin  pressures  and  market
consolidation.   Play  Co.  competes  with  a  variety  of  mass  merchandisers,
superstores,  and  other  toy  retailers,  including  Toys R Us and  Kay Bee Toy
Stores. Competitors that emphasize specialty and educational toys include Disney
Stores,  Warner Bros.  Stores,  Learning Smith,  Lake Shore,  Zainy Brainy,  and
Noodle  Kidoodle.  Play Co. also competes both through its  electronic  commerce
operations and through its stores against  Internet  oriented toy retailers such
as eToys,  Inc. There can be no assurance that Play Co.'s business strategy will
enable it to compete effectively in the toy industry.


<PAGE>

Inflation and Seasonality:

     The impact of inflation on Play Co.'s  results of  operations  has not been
significant.  Play Co. attempts to pass on increased costs by increasing product
prices over time. Play Co.'s  operations are highly seasonal with  approximately
30-40% of its net sales  historically  falling within its third  quarter,  which
coincides  with the Christmas  selling  season.  Play Co. intends to open stores
throughout the year, but generally  before the Christmas  selling season,  which
will make its third quarter sales an even greater percentage of the total year's
sales.


<PAGE>
                                     PART II

Item 1. Legal Proceedings: The Company is not a party to any material litigation
and is not aware of any threatened litigation that would have a material adverse
effect on its business. Neither the Company's officers,  directors,  affiliates,
nor owners of record or  beneficially  of more than five percent of any class of
the Company's Common Stock is a party to any material  proceeding adverse to the
Company  or has a  material  interest  in any  such  proceeding  adverse  to the
Company.

Item 2. Changes in Securities and Use of Proceeds: None

Item 3. Defaults Upon Senior Securities: None

Item 4. Submission of Matters to a Vote of Security Holders: None

Item 5. Other Information: None

Item 6. Exhibits and Reports on Form 8-K

(a) The following exhibits are filed with this Form 10-QSB for the quarter ended
December 31, 1999:

        27.1           Financial Data Schedule

(b) During the quarter  ended  December  31,  1999,  no reports on Form 8-K were
filed with the Securities and Exchange Commission.


<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized, on this 28th day of February 2000.

                                    UNITED TEXTILES & TOYS CORP.



                                    By:     /s/  Ilan Arbel
                                            Ilan Arbel
                                            President

                                    By:     /s/ Allean Goode
                                            Allean Goode
                                            Treasurer