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, 1998

                                       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)

<TABLE>
<CAPTION>
<S>                                                                          <C>                                            
          Delaware                                                           13-3626613                                     
         (State or Other Jurisdiction of                                     (IRS Employer Identification No.)
         Incorporation or Organization)
</TABLE>

               1410 Broadway, Suite 1602, 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 $.001 per
share: 4,550,236 shares outstanding as of February 19, 1999.

     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, 1998 (unaudited)                      3
and March 31, 1998.

Consolidated Statements of Operations (unaudited) for the Three 
Months and Nine Months Ended December 31, 1998 and 1997.                             4

Consolidated Statements of Cash Flows (unaudited) for the Nine 
Months Ended December 31, 1998 and 1997.                                             5

Notes to Consolidated Financial Statements (unaudited)                               6-9

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS                                                  10-15

PART II. OTHER INFORMATION                                                           16
Item 1. LEGAL PROCEEDINGS

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                    16

Item 3. DEFAULTS UPON SENIOR SECURITIES                                              16

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                          16

Item 5. OTHER INFORMATION                                                            16

Item 6. EXHIBITS AND REPORTS ON FORM 8-K                                             16

Signatures                                                                           17

</TABLE>




<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)



                           CONSOLIDATED BALANCE SHEETS
                   As of December 31, 1998 and March 31, 1998
<TABLE>
<CAPTION>

                                                                                       Dec. 31,            March 31,
                                                                                        1998                 1998
                                                                                      (Unaudited)          (Note 1)

                                     ASSETS


CURRENT ASSETS:
<S>                                                                                    <C>             <C>         
  Cash and cash equivalents ........................................................   $  1,219,624    $    659,378
  Accounts receivables-net .........................................................        130,976         136,413
  Inventories ......................................................................     10,824,770       7,872,804
  Prepaid expenses and other current assets ........................................      1,742,357         189,516
  Loans and advances-officer .......................................................        (37,061)        138,856
          Total current assets .....................................................     13,880,666       8,996,967
PROPERTY AND EQUIPMENT-NET .........................................................      4,343,203       2,782,386
OTHER ASSETS
  Deposits and other assets ........................................................      2,392,247       2,580,409
          Total other assets .......................................................      2,392,247       2,580,409
          Total assets .............................................................   $ 20,616,116    $ 14,359,762
                                                                                       ============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
  Accounts payable .................................................................   $ 11,938,359    $  6,882,665
  Accrued expenses and other current liabilities ...................................        822,417         817,788
  Due to affiliates ................................................................        806,158         719,174
  Current portion of notes payable .................................................        405,965         350,000
          Total current liabilities ................................................     13,972,899       8,769,627
LONG-TERM LIABILITIES:
  Borrowings under financing agreement .............................................      7,754,215       5,445,198
  Note payable, net of current portion .............................................        620,030       1,500,000
  Deferred rent liability ..........................................................        124,005         110,351
          Total long-term liabilities ..............................................      8,498,250       7,055,549
          Total liabilities ........................................................     22,471,149      15,825,176

MINORITY INTEREST IN SUBSIDIARY ....................................................      1,037,072       1,158,514

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value; 10,000,000 shares authorized, 4,550,236
     shares issued and outstanding .................................................          4,550           4,550
  Additional paid-in capital .......................................................      8,142,281       8,142,281
  Retained earnings (deficit) ......................................................    (11,038,936)    (10,770,759)
          Total stockholders' equity ...............................................     (2,892,105)     (2,623,928)
          Total liabilities and stockholders' equity ...............................   $ 20,616,116    $ 14,359,762
                                                                                       ============    ============



</TABLE>
                     The accompanying notes are an integral
                part of these consolidated financial statements


                                        3


<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                      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,
                                                  1998            1997            1998             1997

<S>                                            <C>            <C>             <C>             <C>         
REVENUES, net sales ........................   $ 14,717,729   $ 10,473,363    $ 27,177,972    $ 18,189,858

COSTS AND EXPENSES:
  Cost of sales ............................      8,545,336      6,596,501      15,665,721      11,422,925
  Operating expenses .......................      4,425,177      2,948,174      10,075,293       7,501,813
  Interest and other income ................           --             --           (47,781)           --
  Interest expense .........................        294,892        254,586         644,606         685,205
  Amortization of debt issuance costs ......           --             --              --
  Effect on non-cash dividends paid by
     subsidiary ............................        477,973           --         1,229,752            --
                                                 13,743,378      9,799,261      27,567,591      19,609,943

INCOME (LOSS) BEFORE MINORITY INTERESTS
                                                    974,351        674,102        (389,619)     (1,420,085)

  Minority interest in net income (loss) of
     consolidated subsidiary (Note 3) ......        465,344        343,851        (121,442)       (338,878)

NET INCOME (LOSS) ..........................   $    509,007   $    330,251    $   (268,177)   $ (1,081,207)
                                               ============   ============    ============    ============

Basic earnings and diluted income (loss) per
     common share before  minority interest    $       .214   $       .069    $      (.086)   $       (.14)

Minority interest in net income (loss) of
   consolidated subsidiary .................           .102           .035           (.027)           (.03)

Basic and diluted earnings (loss) per common
   share ...................................   $       .112   $       .034    $      (.059)   $       (.11)
                                               ============   ============    ============    ============

Weighted average number of common shares
   outstanding .............................      4,550,236      9,788,050       4,550,236       9,788,050
                                               ============   ============    ============    ============
</TABLE>




                     The accompanying notes are an integral
                part of these consolidated financial statements


                                        4


<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)
                           Increase (Decrease) in Cash
<TABLE>
<CAPTION>

                                                                                         Nine Months Ended

                                                                                         Dec. 31,      Dec. 31,
                                                                                          1998           1997

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                   <C>            <C>         
Net income (loss) .................................................................   $  (268,177)   $(1,081,207)
Adjustments to reconcile net loss to cash (used) provided for operating activities:
   Depreciation and amortization ..................................................       707,186        441,172
   Deferred rent ..................................................................        13,654         29,073
   Minority interest in net loss of subsidiary ....................................      (121,442)      (338,878)
   Compensation options and stock issued by subsidiary ............................          --             --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable ........................................         5,437       (185,894)
(Increase) in merchandise inventories .............................................    (2,951,966)      (279,083)
(Increase) decrease in prepaid expenses and other current assets ..................    (1,552,841)        83,889
Decrease in deposits and other assets .............................................       188,162        146,135
Increase (decrease) in accounts payable ...........................................     5,055,694      3,252,621
Increase (decrease) in accrued expenses and other liabilities .....................         4,629        428,153
          Total adjustments .......................................................     1,348,513      3,577,188
          Net cash provided (used) by operating activities ........................     1,080,336      2,495,981

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment ............................................    (2,268,003)      (853,072)
   Advances from affiliates .......................................................        86,984        894,935
          Net cash from (used for) investing activities ...........................    (2,181,019)        41,863

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net borrowings under line of credit ............................................     2,309,017        307,432
   Loans and repayment - officer ..................................................       175,917        (47,198)
   Repayment of notes payable .....................................................      (824,005)      (116,666)
          Net cash provided by (used for) investing activities ....................     1,660,929        143,568

NET INCREASE (DECREASE) IN CASH ...................................................       560,246      2,681,412
Cash, beginning of period .........................................................       659,378        144,668
Cash, end of period ...............................................................     1,219,624      2,826,080
                                                                                      ===========    ===========

Supplemental disclosure of cash flow information:
Interest paid .....................................................................   $   644,606    $   685,205
Taxes paid ........................................................................   $      --      $      --


</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements


                                        5


<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (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 nine months ended December 31, 1998 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,  1998,  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.  The Company owns 2,489,910
               shares  or  45.2%  of  the  common  stock  of  Play  Co.  Toys  &
               Entertainment Corp. ("Play Co."). The Company still is considered
               to have a  controlling  influence  over Play Co.,  which is still
               consolidated into the Company. (See Note 3)

NOTE 3 -          MINORITY INTERESTS:

                    The minority  interest in Play Co.  represents  the minority
               shareholders'  interest  (54.8%) of Play Co.'s equity at December
               31, 1998. 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.

                    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   Hollywood   Productions,    Inc.
               ("Hollywood"),   a  related  party,  BWI  purchased  1.4  million
               unregistered  shares  of Play  Co.'s  common  stock in a  private
               transaction.  The  President of Hollywood is also the Chairman of
               Play Co.'s Board of  Directors.  Hollywood  is a publicly  traded
               company. The shares purchased by

NOTE 3 -          MINORITY INTERESTS (continued):

                    BWI represent  approximately 25.4% of the total common stock
               issued and outstanding after the transaction.

                                       6
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)

                   The  consideration   for  the  stock  was  $505,000,   which
               represented  an approximate  price of $.36 per share.  This price
               was discounted 50% from the then current market price  reflecting
               a discount for the illiquidity of the shares,  which do not carry
               any  registration   rights.   $301,973.50  of  the  consideration
               remitted was in cash and the remaining  $203,026.50  was provided
               in  BWI  product,   primarily  girls'  swimsuits.  Play  Co.  had
               previously  carried  swimsuits  from BWI in its stores on a trial
               basis.

                    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.

                    The  Company's  President is President  and sole Director of
               European Ventures Corp. ("EVC") which is the majority shareholder
               of Hollywood.  Accordingly,  it is  considered  that the Company,
               through  commonality  of control,  still  exercises a controlling
               influence over Play Co.'s operations.

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 $.28 per  share
               ($.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 45.2% of the  outstanding  shares of common stock of
               Play Co.,  Multimedia and its management have obtained beneficial
               vesting control of Play Co.

                    On January 20,  1998,  U.S.  Stores  Corp.  ("U.S.  Stores")
               acquired 1,465,000 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.



                                       7
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)



NOTE 5 -          FINANCING AGREEMENTS:

                    In  November  1998,  Play Co.  borrowed  $250,000  from Amir
               Overseas  Capital  Corporation  under a Promissory Note. The Note
               bore interest at 12% and was repaid in January 1999.

                    Also in November 1998, Play Co. entered into agreements with
               ZD  Group,   L.L.C.   ("ZD"),   a  related  party,  and  Frampton
               Industries,  Ltd.  ("Frampton"),  an unaffiliated  British Virgin
               Islands company, to secure additional financing. ZD is a New York
               limited liability  company,  the beneficiary of which is a member
               of the family of Play Co.'s Chairman.

                    Pursuant  to  the  ZD   agreement,   ZD  issued  a  $700,000
               irrevocable  standby  letter of credit ("L/C") in favor of FINOVA
               Capital  Corp.  ("FINOVA"),  Play Co.'s working  capital  lender.
               FINOVA then lent a matching $700,000 to Play Co. in the form of a
               term loan,  pursuant to a Third  Amendment  to Loan and  Security
               Agreement  executed on February  11, 1999 by and between Play Co.
               and FINOVA.  The term loan from FINOVA  expires on August 3, 2000
               and bears  interest at prime plus one percent.  As  consideration
               for its issuance of the L/C, ZD will receive a profit  percentage
               after application of corporate  overhead from three of Play Co.'s
               stores.

                    Under the Frampton agreement, Frampton will loan $500,000 in
               the form of a  convertible,  subordinated  debenture due December
               31, 1999.  The debenture will bear a 5% interest rate and will be
               convertible  into Play Co.'s Series E preferred  stock at a price
               of $.10 per share at Frampton's  option.  This price represents a
               50%  discount  from the then current  (November  13, 1998) market
               price  reflecting a discount for the  illiquidity  of the shares,
               which do not carry any registration  rights.  Play Co. expects to
               receive the proceeds of this loan in the near future.

NOTE 6 -          SUBSEQUENT EVENTS:

                    In January  1999,  Play Co. and  Frampton  executed a letter
               agreement  pursuant  to which  Frampton  has agreed to act as the
               exclusive  placement agent and financial  advisor for Play Co. in
               connection with a contemplated  proposed  offering of convertible
               debentures.  The  agreement  is for a term of six months  (with a
               potential two month extension at Frampton's  option) and provides
               that Frampton  shall be provided an investment  banking fee of 8%
               of the face amount of each debenture funded.


                                       8
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)



NOTE 6 -          SUBSEQUENT EVENTS (continued):

                    In February 1999,  Play Co.  borrowed  $100,000 from BWI and
               issued an unsecured 9% promissory  note which calls for repayment
               of the  note  in  four  equal  monthly  installments,  comprising
               principal and interest, commencing March 15, 1999 and ending June
               15, 1999.

Results of Operations

     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.  Historically,  the Company's  results of operations  have
related  primarily  to the  Company's  majority  ownership  of Play Co.,  as its
operations were  substantially  less than those of its subsidiary.  Accordingly,
the Company's  results of operations for the three and nine month periods ending
December 31, 1998 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.

For the three months ended  December 31, 1998 compared to the three months ended
December 31, 1997:

     Consolidated  sales for the  three  months  ended  December  31,  1998 were
$14,717,729,  as compared to $10,473,363 for the three months ended December 31,
1997.  This  increase  of  $4,244,366,  or 40.5%,  is directly  attributable  to
increased sales contributions from Play Co.'s same store retail sales as well as
approximately $3.4 million coming from sales at Play Co.'s new retail stores.

     Consolidated cost of sales for the three months ended December 31, 1998 was
$8,545,336,  or 58% of sales,  as  compared  to the  three  month  period  ended
December 31, 1997 in which cost of sales was $6,596,501,  or 63% of sales.  This
increase of $1,948,835,  or 29.5%, is primarily due to costs associated with the
opening of new retail outlets.

     Consolidated  operating  expenses  were  $4,425,177,  or 30% of  sales,  as
compared to $2,948,174, or 28% of sales, for the three months ended December 31,
1997. This increase of $1,477,003, or 50%, 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, 1998, non-cash  depreciation and
amortization  amounted to $324,975,  as compared to $162,482 in the three months
ended  December  31,1997.   This  increase  of  $162,493  is  due  primarily  to
depreciation on new assets acquired by Play Co. in this quarter.

     Consolidated  interest expense was $294,892, or 2.0% of sales, in the three
months ended  December 31, 1998, as compared to $254,586,  or 2.4% of sales,  in
the three months ended  December 31, 1997.  The primary reason for the increased
level of interest  expense was a higher level of  borrowings  by Play Co. in the
three month period ended December 31, 1998.

                                       9
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)

     For the three  months  ended  December  31,  1998,  the Company  reported a
consolidated  net income of $509,007  (after  reflecting  the adjustment for the
minority  interest  in Play  Co.),  or basic  earnings  per share of  $.112,  as
compared to a net income of  $330,251,  or a basic  earnings  per share of $.034
(after reflecting the minority interest in Play Co.), for the three months ended
December 31,  1997.  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, 1998 and 9,788,050 for the three months ended December 31, 1997.

For the nine months ended  December  31, 1998  compared to the nine months ended
December 31, 1997:

     Consolidated  sales were $27,177,972 for the nine months ended December 31,
1998, as compared to  $18,189,858  for the nine months ended  December 31, 1997.
This increase of $8,988,114,  or 49.4%, was due to increased sales contributions
from Play Co.'s same store sales as well as approximately $2.4 million from Play
Co.'s new retail stores.

     Consolidated  cost of sales were  $15,665,721,  or 57.6% of sales,  for the
nine months ended  December 31, 1998,  as compared to  $11,422,925,  or 62.8% of
sales, for the nine months ended December 31, 1997. This increase of $4,242,796,
or 37.1%, was due to increased costs associated with new store openings.

     Consolidated  operating  expenses were $10,075,293,  or 37.1% of sales, for
the nine months ended December 31, 1998, as compared to $7,501,813,  or 41.2% of
sales, for the nine months ended December 31, 1997. This increase of $2,573,480,
or 34.3%, was due primarily to increases in payroll and related expenses as well
as an increase in rent expense associated with new store openings.

     For the nine months  ended  December 31, 1998,  non-cash  depreciation  and
amortization  amounted to $707,186,  as compared to $441,172 for the nine months
ended December 31, 1997. The increase of $266,014 was due to depreciation on new
assets acquired by Play Co. in the nine months ended December 31, 1998.

     Consolidated  interest expense was $644,606, or 2.4% of sales, for the nine
months ended December 31, 1998, as compared to $685,205,  or 3.8% of sales,  for
the nine months ended December 31, 1997. This decrease of $40,599,  or 5.9%, was
due to a higher level of  amortization of debt issuance costs by Play Co. in the
nine month period ended December 31, 1997 than in the December 1998 period.

     For the nine  months  ended  December  31,  1998,  the  Company  reported a
consolidated  net loss of $268,177  (after  reflecting  the  adjustment  for the
minority interest in Play Co.), or basic loss per share of $.059, as compared to
a net loss of $1,081,207, or basic loss per share of $.11, (after reflecting the
minority  interest in Play Co.) for the nine months ended December 31, 1997. The
weighted  average  number  of common  shares  used in the  computation  of basic
earnings  (loss) per share was 4,550,236 for the nine months ended  December 31,
1998 and 9,788,050 for the nine months ended December 31, 1997.

Liquidity and Capital Resources

     At December 31, 1998,  the Company  reported cash and cash  equivalents  of
$1,219,624,   working  capital  of  $(92,233),   and  stockholders'   equity  of
$(2,892,105),  reflecting  the net loss of $268,177  for the nine  months  ended
December 31, 1998.

     At March 31,  1998,  the  Company  reported  cash and cash  equivalents  of
$659,378, working capital of $227,340, and stockholders' equity of $(2,623,928).

                                       10
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)

     During the nine month period ending December 31, 1998, the Company provided
$1,080,336  in cash from its  operating  activities,  as compared to  $2,495,981
provided by operating  activities  in the nine month  period ended  December 31,
1997. The  consolidated net loss was $268,177 and $1,081,207,  respectively,  in
those periods.  The primary reason the cash provided by operating activities was
so much larger in the nine month period ended  December 31, 1998 was a growth in
net investment in inventories (increase in merchandise inventories less increase
in accounts payable) of $2,103,728.

     The Company used $2,181,019 of cash in investing activities during the nine
months ended December 31, 1998,  compared to an inflow of cash of $41,863 in the
nine months ended  December 31, 1997. The primary  investing  activities was the
purchase of equipment and fixtures by Play Co. for its new stores.

     The Company generated  $1,660,929 from its financing activities in the nine
month period ended  December 31, 1998, as compared to the generation of $143,568
in the nine months  ended  December 31, 1997.  The primary  contributors  to the
Company's financing  activities were borrowings on Play Co.'s line of credit and
under notes  payable.  These  proceeds  were used to finance Play Co.'s  capital
requirements,  capital expenditures, and operating losses during the nine months
ended December 31, 1998.

         As a result of the above  factors,  the Company  has a net  increase in
cash of $560,246 in the nine months ended  December  31,1998,  compared to a net
increase in cash of $2,681,412 in the nine months ended December 31, 1997.

     During the three-month period ended December 31, 1998, Play Co. opened four
new stores.  Those stores were all located in high traffic  shopping malls.  The
stores were located in Thousand  Oaks and Orange (both  located in  California),
Auburn Hills, Michigan, and in Gurnee,  Illinois.  These four stores represented
an aggregate capital investment of approximately  $1.1 million,  net of landlord
tenant improvement ("Landlord TI") contributions.

     The Landlord TI contributions  related to those four stores equal $587,440.
Play Co. has not yet received those  contributions.  Play Co. expects to receive
those contributions before the end of its fiscal year.

     Play Co.  had  planned to  finance  the costs of  opening  those new stores
through a  combination  of capital  lease  financing,  use of Play Co.'s working
capital  and the sale of  additional  equity.  Play Co.  received  approximately
$420,000 in lease financing on December 30, 1998 and recently  received  another
$150,000  in  commitments  for  lease  financing.  Play  Co.  continues  to seek
additional capital lease financing.

     On November 24, 1998,  BWI, a subsidiary  of  Hollywood,  a related  party,
purchased  1.4  million  unregistered  shares of Play  Co.'s  common  stock in a
private  transaction.  The  President  of  Hollywood is also the Chairman of the
Board of Play Co.  Hollywood is a publicly traded company.  The shares purchased
by BWI  represent  approximately  25.4% of the total  common  stock  issued  and
outstanding after the transaction.

     The consideration for the stock was $505,000,  which represented a price of
$.36 per share. This price was a 50% discount from the then current market price
reflecting a discount for the illiquidity of the shares,  which do not carry any
registration  rights.  $301,973.50  of the  consideration  was in  cash  and the
remaining $203,026.50 was in product from BWI, primarily girl's swimsuits.  Play
Co. had previously carried swimsuits from BWI in its stores on a trial basis.

     In November  1998,  Play Co.  entered  into  agreements  with ZD, a related
party, and Frampton,  respectively , to secure additional financing. ZD is a New
York  trust,  the  beneficiary  of which is a member of the family of Play Co.'s
Chairman of the Board.

                                       11
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)

     Pursuant to the ZD agreement,  ZD issued a $700,000 irrevocable standby L/C
in favor of FINOVA,  Play  Co.'s  working  capital  lender.  FINOVA  then lent a
matching  $700,000 to Play Co. in the form of a term loan. The term loan expires
on  August  3,  2000 and  bears  interest  at prime  plus  one  percent.  As its
consideration  of issuing the L/C,  ZD will  receive a profit  percentage  after
application of corporate overhead from Play Co.'s stores.

     Under the Frampton agreement,  Frampton will loan $500,000 in the form of a
convertible,  subordinated  debenture due December 31, 1999.  The debenture will
bear a 5%  interest  rate and  will be  convertible  into  Play  Co.'s  Series E
preferred  stock at a price of $.10 per share at Frampton's  option.  This price
was  discounted  50% from the then  current  (November  13,  1998)  market price
reflecting a discount for the illiquidity of the shares,  which do not carry any
registration rights.

     Play Co. has entered into leases to open eight new stores in calendar  year
1999.  Play Co.  anticipates  that the cost of opening  those new stores will be
approximately  $3,000,000,  net of Landlord TI contributions.  Play Co. plans to
finance the costs of opening those new stores  through a combination  of capital
lease financing,  use of Play Co.'s working capital,  and the sale of additional
equity.  In January  1999,  Play Co. and  Frampton  executed a letter  agreement
pursuant to which  Frampton has agreed to act as the exclusive  placement  agent
and financial  advisor for Play Co. in connection with a proposed offering of $5
million in convertible subordinated debentures on terms similar to the debenture
discussed above. The agreement is for a term of six months (with a potential two
month  extension at  Frampton's  option) and  provides  that  Frampton  shall be
provided an  investment  banking fee of 8% of the face amount of each  debenture
funded.  There  can be no  assurance  that  Play  Co.  will be  able  to  obtain
sufficient financing to successfully open the planned new stores.

Year 2000

     In 1998,  Play Co.  developed  a plan to upgrade  its  existing  management
information  system  ("MIS")  and  computer  hardware  and to  become  year 2000
compliant. Play Co. has now purchased the necessary hardware and software and is
in the process of installing  the software.  Play Co. has completed the hardware
upgrade  and has  installed  a year 2000  compliant  upgrade  to its  accounting
software.  Play Co. expects to finish the year 2000 compliance work in the first
half of 1999.

     To finance the cost of new hardware in the computer upgrade  project,  Play
Co. entered into a lease in the amount of $82,472 bearing  interest at a rate of
10.8%. The total cost of the hardware and software purchased for the project was
approximately $100,000.

     Beyond the above noted  internal  year 2000 system  issue,  Play Co. has no
current  knowledge of any outside third party year 2000 issues that would result
in a material  negative  impact on its  operations.  Management has reviewed its
significant  vendors' (i.e.,  Mattel, Inc. and Hasbro, Inc.) and financing arm's
(FINOVA) recent SEC filings vis-a-vis year 2000 risks and uncertainties  and, on
the basis thereof, is confident that the steps Play Co. has taken to become year
2000 compliant are sufficient.  In  continuation of this review,  Play Co. shall
continue to monitor or otherwise obtain confirmation from the aforesaid entities
- and  such  other  entities  as  management  deems  appropriate  - as to  their
respective  degrees of preparedness.  To date, nothing has come to the attention
of Play Co.  that  would  lead it to  believe  that its  significant  customers,
vendors, and/or service providers will not be year 2000 ready.

                                       12
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1998
                                   (Unaudited)

     Year 2000 readiness is a priority of Play Co. Play Co.  believes that it is
taking such  reasonable and prudent steps as are necessary to mitigate the risks
associated with potential year 2000 difficulties;  however,  the effect, if any,
of year 2000  problems on Play Co.'s  results of  operations  if Play Co. or its
customers,  vendors,  or service  providers  are not fully  compliant  cannot be
estimated with any degree of certainty.  Nonetheless,  the most likely impact on
Play Co.  would be a reduced  level of  activity  in the  fourth  quarter of the
fiscal  year  ended  March  31,  2000,  a time  at  which,  as a  result  of the
seasonality  of Play Co.'s  business,  its  activities  in sales and sourcing of
products, are at their low.

Trends Affecting Liquidity, Capital Resources and Operations

     As a  result  of its  current  merchandise  mix  emphasizes  specialty  and
educational  toys, Play Co. enjoyed  significant  sales and gross profits in the
nine months ended December 31, 1998. The mix of specialty and  educational  toys
includes  collectible die cast cars,  specialty  yo-yo's,  Rokenbok and Learning
Curve toys, and Beanie Babies(R)and other plush and many educational toys. There
can be no  assurance  that these  particular  specialty  toys will  continue  to
contribute  strongly to Play Co.'s sales and gross  profits.  The history of the
toy industry,  however,  indicates  that there is generally at least one or more
highly popular toy every year.

     Play Co.'s  sales  efforts are focused  primarily  on a defined  geographic
segment  consisting of the Southern  California  area and the  Southwestern  and
Midwestern  United States.  Play Co.'s future financial  performance will depend
upon (i) continued demand for high-end specialty,  educational,  and traditional
toys  and  management's  ability  to  adapt to  continuously  changing  consumer
preferences  and the market for such items,  (ii)  general  economic  conditions
within Play Co.'s  geographic  market area, as same may be expanded,  (iii) Play
Co.'s  ability to chose  locations  for new stores,  (iv) Play Co.'s  ability to
purchase  products  at  favorable  prices and on  favorable  terms,  and (v) the
effects of increased competition.

     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, Kay Bee Toy Stores,
Wal-Mart,  and K Mart. Competitors that emphasize specialty and educational toys
include Disney Stores, Warner Brothers Stores,  Learning Smith, Lake Shore, Zany
Brainy, and Noodle Kidoodle.  There can be no assurance that Play Co.'s business
strategy  will enable it to compete  effectively  in the retail toy  industry or
that Play Co. will be able to generate  sufficient  revenues or have  sufficient
control over expenses and other charges to increase profitability.

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 Play Co.'s 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 Play Co.'s third quarter sales an even greater percentage of the
total year's sales.



                                       13
<PAGE>
                           PART II - OTHER INFORMATION


Item 1. Legal Proceedings: None

Item 2. Changes in Securities: None

Item 3. Defaults Upon Senior Securities: None

Item 4. Submission of Matters to a Vote of Security Holders:

     On  November  10,  1998,   the  Company  held  an  annual  meeting  of  its
stockholders,  at which the Company's stockholders voted to elect four Directors
to the Company's Board of Directors.  The results of the election were disclosed
in the Company's Form 10-QSB for the quarter ended September 30, 1998.

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, 1998 except those  designated by an asterisk (*) which shall
be filed by amendment hereto:

    27.01       Financial Data Schedule


     (b) During the quarter ended December 31, 1998, no reports on Form 8-K were
filed with the Securities and Exchange Commission.




                                       14
<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 2nd day of March 1999.


                                    UNITED TEXTILES & TOYS CORP.



                                    By:     /s/  Ilan Arbel 
                                            Ilan Arbel
                                            President


                                    By:     /s/ Allean Goode                    
                                            Allean Goode
                                            Treasurer


                                       15