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 September 30, 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: 4,550,234 shares outstanding as of November 20, 1998.

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


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




                                    CONTENTS



<TABLE>
<CAPTION>

                                                                                                                     Page
                                                                                                                    Number


PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

<S>                                                                                                                    <C>
Consolidated Balance Sheets as of  September 30, 1998 (Unaudited) and March 31, 1998                                   3

Consolidated  statements of Operations  (Unaudited) for the three months and six
months ended September 30, 1998 and Sept4mber 30, 1997

Consolidated statements of Cash Flows (Unaudited) for the six months ended September 30, 1998 and September 30, 1997   5

Notes to Financial Statements (Unaudited)                                                                              6

ITEM 2 - MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                         8

PART II- OTHER INFORMATION                                                                                            14

ITEM 1 - LEGAL PROCEEDINGS                                                                                            14

ITEM 2 - CHANGES IN SECURITIES                                                                                        14

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES                                                                              14

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                          14

ITEM 5 - OTHER INFORMATION                                                                                            14

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                                                             14

SIGNATURES                                                                                                            15

</TABLE>
<PAGE>
                   UNITED TEXTILES & TOYS CORP. AND SUBSIDIARY
            (A Subsidiary of Multimedia Concepts International, Inc.)
                           CONSOLIDATED BALANCE SHEETS
                   As of September 30, 1998 and March 31, 1998
<TABLE>
<CAPTION>

                                                                       Sept 30,      March 31,
                                                                        1998           1998 
                                                                     (Unaudited)     (Note 1)

                                     ASSETS
CURRENT ASSETS:
<S>                                                                <C>             <C>         
 Cash and cash equivalents .....................................   $    427,925    $    659,378
 Accounts receivable-net .......................................         77,759         136,413
 Inventories ...................................................     12,185.130      7,872,804
 Prepaid expenses and other current assets .....................        939,759         189,516
 Loans and advances-officer ....................................         27,939         138,856
                                                                    ------------   ------------
         Total current assets ..................................     13,658,512       8,996,967
                                                                    ------------   ------------
PROPERTY AND EQUIPMENT-NET .....................................      3,558,297       2,782,386
                                                                    ------------   ------------
OTHER ASSETS:
  Deposits and other assets ....................................      2,497,257       2,580,409
                                                                    ------------   ------------          
         Total other assets ....................................      2,497,257       2,580,409    
         Total assets                                              $ 19,714,066    $ 14,359,762
                                                                    ------------    -----------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Accounts payable ..............................................   $ 10,225,241    $  6,882,665
 Accrued expenses and other current liabilities ................        295,614         817,788
 Due to affiliates .............................................        772,658         719,174
 Current portion of notes payable ..............................      1,340,250         350,000
                                                                   ------------   ------------
         Total current liabilities .............................     12,633,763       8,769,627
                                                                   ------------   ------------
LONG-TERM LIABILITIES:
 Borrowings under financing agreement ..........................      8,481,996       5,445,198
 Note payable, net of current portion ..........................        157,200       1,500,000
 Deferred rent liability .......................................        119,453         110,351              
         Total long-term liabilities ...........................      8,758,649       7,055,549
                                                                   ------------   ------------
         Total liabilities .....................................     21,392,412      15,825,176
                                                                   ------------   ------------

MINORITY INTEREST IN SUBSIDIARY ................................      1,358,144       1,158,514
                                                                   ------------   ------------

STOCKHOLDERS' EQUITY:
   Common stock, $.01 par value; 10,000,000
     shares authorized, 4,550,234 shares issued
    and outstanding ............................................          4,550           4,550
  Additional paid-in capital ...................................      8,142,281       8,142,281
 Retained earnings (Deficit) ...................................    (11,183,321)    (10,770,759)
                                                                    ------------   ------------
         Total stockholders' equity ............................     (3,036,490)     (2,623,928)   
         Total liabilities and stockholders' equity                $ 19,714,066    $ 14,359,762
                                                                    ------------   ------------
</TABLE>
<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 Six Months Ended
                                            Sept. 30,       Sept. 30,        Sept. 30,       Sept. 30,
                                            1998              1997             1998            1997
                                            ----              ----             ----            ----

<S>                                        <C>             <C>             <C>             <C>         
REVENUES, net sales ....................   $  6,098,315    $  4,347,013    $ 12,460,021    $  7,716,495
                                           ------------    ------------    ------------    ------------

COSTS AND EXPENSES:
 Cost of sales .........................      3,414,054       2,665,830       7,120,385       4,826,424
 Operating expenses ....................      2,620,444       1,967,776       5,219,903       4,274,946
          Depreciation and amortization         193,794         139,344         382,211         278,690
          Interest and other income ....           --              --              --              --
          Interest expense .............        156,860         217,545         295,312         430,619
Amortization of debt issuance costs ....         27,202            --            54,402            --   
                                           ------------    ------------    ------------    ------------
                                              6,412,354       4,990,495      13,072,213       9,810,679
                                           ------------    ------------    ------------    ------------
INCOME (LOSS) BEFORE
   MINORITY INTERESTS ..................       (314,039)       (643,482)       (612,192)     (2,094,184)
  Minority interest in net income (loss)
    of consolidated subsidiary (Note 2)         122,251         211,021         199,630         682,727
                                           ------------    ------------    ------------    ------------


NET (LOSS) .............................   $   (191,788)   $   (432,461)   $   (412,562)     (1,411,457)
                                           ============    ============    ============    ============

Basic earnings and diluted(loss)
  per common share before
  minority interest ....................   $      (.069)   $      (.066)   $       (.13)   $       (.21)

Minority interest in net income (loss)
  of consolidated subsidiary ...........           .027            .022             .04             .07
                                           ------------    ------------    ------------    ------------

Basic and diluted earnings (loss)
  per common share .....................   $      (.042)   $      (.044)   $       (.09)   $       (.14)
                                           ============    ============    ============    ============

Weighted average number
  of common shares outstanding .........      4,550,234       9,788,050        ,550,234       9,788,050
                                           ============    ============    ============    ============

</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 CASH FLOWS
                                   (Unaudited)
                           Increase (Decrease) in Cash

<TABLE>
<CAPTION>
                                                                         Six Months Ended                                           
                                                                     Sept 30,      Sept 30,
                                                                      1998           1997
                                                                      -----         ------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                              <C>            <C>         
Net loss .....................................................   $  (412,562)   $(1,411,457)
                                                                 -----------    -----------
Adjustments to reconcile net loss to cash (used)
  provided for operating activities:
  Depreciation and amortization ..............................       382,211        278,690
  Deferred rent ..............................................         9,102          8,747
  Minority interest in net loss of subsidiary ................      (199,630)      (682,727)
  Compensatory options and stock issued by subsidiary ........        21,876           --
Changes in assets and liabilities:
(Increase) decrease in Accounts receivable ...................        58,654       (306,708)
(Increase) in Merchandise inventories                             (4,312,326)    (1,113,705)
(Increase) decrease in prepaid expenses and
     other current assets ....................................      (750,243)        13,418
 Decrease in deposits and other assets .......................        83,152       (106,677)
 Increase (decrease)  in accounts payable ....................     3,342,576      2,476,781
 Increase (decrease) in accrued expenses and other liabilities      (522,174)      (283,003)
                                                                  -----------    -----------
         Total adjustments ...................................    (1,886,802)       284,816
                                                                  -----------    -----------
         Net cash provided (used) by operating activities ....    (2,299,364)    (1,126,641)
                                                                  -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment .........................    (1,149,757)      (366,259)
 Advances from affiliates ....................................        53,484        472,235
                                                                  -----------    -----------
         Net cash from (used for) investing activities .......    (1,096,273)       105,976
                                                                  -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Net borrowings under line of credit .........................     3,036,798      1,195,359
 Loans and advances -officer .................................       110,917        (47,199)
 Repayment of notes payable ..................................        16,469        (91,666)
                                                                  -----------    -----------
         Net cash provided by (used for) investing activities      3,164,184      1,056,494
                                                                  -----------    -----------

NET INCREASE (DECREASE) IN CASH ..............................      (231,453)        35,829
Cash, beginning of period ....................................       659,378        144,668
                                                                  -----------    -----------
Cash, end of period ..........................................   $   427,925    $   180,497
                                                                  ===========    ===========

Supplemental disclosure of cash flow information:
Interest paid ................................................   $   295,312    $   430,619
Taxes paid ...................................................   $      --      $      --

</TABLE>


     The accompanying notes are an integral part of these consolidates financial
statements.

                                        4


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (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 six months ended  September 30, 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. 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  60.6%  of the  common  stock  of  Play  Co.  Toys &
Entertainment Corp. ("Play Co.").


 Note 3.          MINORITY INTERESTS:

     The minority interest in Play Co. Toys & Entertainment Corp. represents the
minority  shareholders  portion  (39.4%) of Play Co.?s equity at  September  30,
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.



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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)




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 the  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 of
a $1,000,000 loan into equity in the Company by 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  60.6%  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
shares of Multimedia?s  common stock.  U.S. Stores was  incorporated on November
10, 1997. The Company?s president is also President and 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 62.2% of the outstanding shares, effectively making
Multimedia a subsidiary of U.S. Stores.


Note 5. SUBSEQUENT EVENTS:

     On November 9, 1998, Play Co. borrowed  $250,000 from Amir Overseas Capital
Corp. ("Amir") under a Promissory Note. The note bears interest at 12% and calls
for repayment on January 29, 1998.

     Play Co.  had  previously  borrowed  $1,000,000  from Amir  under a Secured
Subordinated Promissory Note. The Note bears interest at 12% and calls for three
installment payments ending December 23, 1998.



                                       6


<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.  It now operates solely
as a holding  company,  holding  60.6% of the  common  stock of Play Co.  Toys &
Entertainment  Corp.  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  results of the  Company's  operations  for the three and six month  periods
ending September 30, 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 projected.

     Three months ended  September  30, 1998  compared to the three months ended
September 30, 1997

     Consolidated  sales for the three  months  ended  September  30,  1998 were
$6,098,315  as compared to $4,347,013  for the three months ended  September 30,
1997.  This  increase  of  $1,751,302  (or 40.3%) is  directly  attributable  to
increased sales contributions from Play Co.?s same store retail sales as well as
approximately $1.1 million coming from sales at Play Co.?s new retail stores.

     Consolidated  cost of sales for the three months ended  September  30, 1998
were  $3,414,054  or 56% of sales,  as compared to the three month  period ended
September  30, 1997 in which cost of sales were  $2,665,830,  or 61.3% of sales.
This increase of $748,224 (or 28%) is primarily due to costs associated with the
opening of new retail outlets.

     Consolidated  operating  expenses  were  $2,620,444,  or 43% of  sales,  as
compared to $1,967,776,  or 45.3% of sales,  in the three months ended September
30, 1997. This increase of $652,668,  representing  15% of sales,  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 September 30, 1998, non-cash depreciation and
amortization  were  $193,794 as compared to $139,344 in the three  months  ended
September 30, 1997. This increase of $54,450 is due primarily to depreciation on
assets and new assets acquired by Play Co. in this quarter.

     Consolidated  interest  expense was  $184,062 or 3.0% of sales in the three
months  ended  September  30, 1998 as compared to $217,545 or 5% of sales in the
three months ended September 30, 1997.

     The primary reason for the decreased level of interest expense was a higher
level of  amortization  of debt  issuance  costs by Play Co. in the three  month
period ended September 30, 1998.

     For the three  months  ended  September  30,  1998 the  Company  reported a
consolidated  net loss of $191,788  (after  reflecting  the  adjustment  for the
minority interest in Play Co.) or basic loss per share of $.042 as compared to a
net loss of $432,461 or a basic loss per share of $.044  (after  reflecting  the
minority  interest in Play Co.) for the three months ended  September  30, 1997.
The weighted  average  number of common shares used in the  computation of basic
earnings per share was 4,550,234  for the three months ended  September 30, 1998
and 9,788,050 for the three months ended September 30, 1997.


<PAGE>
     Six months  ended  September  30,  1998  compared  to the six months  ended
September 30, 1997

     Consolidated  sales were $12,460,021 for the six months ended September 30,
1998 as compared to $7,716,495 for the six months ended September 30, 1997. This
increase of $4,743,526 (or 61.5%) was primarily due to Play Co.'s increased same
store sales as well as  approximately  $2.4  million  from Play Co.?s new retail
stores.

     Consolidated cost of sales were $7,120,385,  or 57.1% of sales, for the six
months ended  September 30, 1998 as compared to  $4,826,424,  or 62.5% of sales,
for the six months ended  September 30, 1997.  This increase of  $2,293,961,  or
47.5%, was due to increased costs associated with new store openings.

     Consolidated operating expenses were $5,219,903, or 41.9% of sales, for the
six months  ended  September  30, 1998 as compared  to  $4,272,946,  or 55.4% of
sales,  for the six months ended  September 30, 1997.  This increase of $944,957
(or 22.1%) 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 six months ended  September  30, 1998,  non-cash  depreciation  and
amortization  were  $382,211 as compared  to $278,690  for the six months  ended
September  30, 1997.  This increase of $103,521 was due to  depreciation  on new
assets acquired by Play Co. in the six months ended September 30, 1998.

     Consolidated  interest expense was $349,714,  or 2.8% of sales, for the six
months ended September 30, 1998 as compared to $430,619,  or 5.6% of sales,  for
the six months ended September 30, 1997. This decrease of $80,905 (or 18.8%) was
due to a higher level of  amortization of debt issuance costs by Play Co. in the
six month period ended September 30, 1998.

     For the six  months  ended  September  30,  1998,  the  Company  reported a
consolidated  net loss of $412,562  (after  reflecting  the  adjustment  for the
minority interest in Play Co.) or basic loss per share of $.09, as compared to a
net loss of  $1,411,457  or basic loss per share of $.14 (after  reflecting  the
minority  interest in Play Co.) for the six months ended September 30, 1997. The
weighted  average  number  of common  shares  used in the  computation  of basic
earnings  (loss) per share was 4,550,234 for the six months ended  September 30,
1998 and 9,788,050 for the six months ended September 30, 1997.

Liquidity and Capital Resources

     At September 30, 1998,  the Company  reported cash and cash  equivalents of
$427,925, working capital of $1,024,749 and stockholders? equity of $(3,036,490)
reflecting a net loss of $412,562 for the six months ended September 30, 1998.

     At March 31,  1998,  the  Company  reported  cash and cash  equivalents  of
$659,378  and  working  capital  of  $227,340,   and  stockholders?   equity  of
$(2,623,928)  refecting a new loss of  1,411,457  for the six months ended March
31, 1998.

     During the six month period  ending  September  30, 1998,  the Company used
$2,299,364 in cash in its operating activities as compared to $1,126,641 used in
operating  activities  in the six month period ending  September  30, 1997.  The
Consolidated  net loss  was  $412,562  and  $1,411,457,  respectively,  in those
periods.  The primary reason the cash used for operating  activities was so much
larger than the net loss in the six month  period ended  September  30, 1998 was
net investment  (increase in merchandise  inventories  less increase in accounts
payable) in inventories of $969,750.

     The Company used $1,096,273 of cash in investing  activities during the six
months ended September 30, 1998 compared to an inflow of cash of $105,976 in the
six months ended  September  30, 1997.  The primary  investing  activity was the
purchase of equipment and fixtures by Play Co. for its new stores.


<PAGE>
     The Company generated  $3,164,184 from its financing  activities in the six
month  period  ended  September  30,  1998  as  compared  to the  generation  of
$1,056,494 in the six months ended September 30, 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 six
months ended September 30, 1998.

     As a result of the above factors, the Company has a net decrease in cash of
$231,for the six months ended  September  30, 1998 compared to a net increase in
cash of $35,829 for the six months ended September 30, 1997.

     During the three month period ended September 30, 1998, Play Co. opened two
new stores. These stores, and all stores Play Co. intends to open in the future,
are  considered  by  management  to be  high-end  retail  toy  and  educational,
electronic interactive stores, in presentation,  which offer items comparable in
quality  and choice to those  offered by FAO  Schwarz  and Warner  Brothers  and
Disney Stores and which  attract  clientele  similar to those  attracted by such
stores. The first store opened in Primm, Nevada near Las Vegas in July 1998. The
second store opened in September in  Grapevine,  Texas near Dallas.  Both stores
are located in high traffic shopping malls. The capital  investment for building
each of those stores was approximately $300,000.

     In early  November  1998,  Play Co.  opened  new stores in  Thousand  Oaks,
California  near Los Angeles and in Auburn Hills,  Michigan near Detroit.  These
stores  are also  located  in high  traffic  shopping  malls.  These two  stores
represented an aggregate capital  investment of approximately  $613,000,  net of
landlord tenant improvement ("Landlord TI") contributions.

     On November 19 and 20, 1998, Play Co. opened two additional  stores, one in
Orange County  California  and one in Gurnee,  Illinois  (near  Chicago).  These
stores represent the final two of the six stores Play Co. planned to open during
calendar year 1998. These two stores represented an aggregate capital investment
of approximately $500,000, net of Landlord TI contributions. Play Co. now has 25
stores located in six states.

     Play Co. had  planned  to  finance  the  costs,  now  estimated  to be $1.7
million, net of Landlord TI contributions,  of building the new stores described
above  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  $260,000 in lease  financing on the equipment and fixtures of the
Nevada and Century City stores. Play Co. is also in the documentation phase of a
five year term loan in the principal amount of approximately $500,000 with a new
lender.  That term loan will be secured by the equipment and fixed assets of the
new Texas store and three existing stores.

     Play  Co.  continues  to  seek  additional  lease  financing  based  on the
equipment  and fixtures of its new stores in  California  (two),  Michigan,  and
Illinois.  There  can be no  assurance  that  Play  Co.  will be able to  obtain
sufficient  financing  to offset  the new  store  opening  costs  that have been
incurred.

     On September  18, 1998,  Play Co.  borrowed  $1,000,000  from Amir Overseas
Capital Corp.  ("Amir") under a Secured  Subordinated  Promissory Note. The Note
bears interest at 12% and calls for three  installment  payments ending December
23, 1998. On November 9, 1998,  Play Co.  borrowed an  additional  $250,000 from
Amir  under a  Promissory  Note.  The Note bears  interest  at 12% and calls for
repayment on January 29, 1998.

     In September  1998,  Play Co. and FINOVA  Capital  Corporation,  Play Co.?s
working  capital  lender,  amended  Play Co.?s Loan and  Security  Agreement  to
increase the maximum  level of  borrowings  under same from $7.6 million to $8.6
million  through  December 31, 1998.  Beginning on January 1, 1999,  the maximum
level of borrowings  will return to the $7.6 million level.  Play Co. expects to
utilize this  additional  amount on its credit line to partially  finance either
its  working  capital,   particularly   inventory  purchases,   or  the  capital
expenditures noted above.
<PAGE>
Year 2000

     Earlier  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 MIS
hardware  upgrade  and plans to finish  the year 2000  compliance  work in early
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. Should Play Co. become aware of
any such situation, contingency plans will be developed.

Trends Affecting Liquidity, Capital Resources and Operations

     As a result of its current merchandise mix, which emphasizes  specialty and
educational  toys, Play Co. enjoyed  significant  sales and gross profits in the
six months ended September 30, 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 and other plush and many other  educational  toys.
While Play Co. believes that these  particular toys will remain popular with its
customer  base for the remainder of 1998,  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 highly popular toy every year.

     Play Co.?s  sales  efforts are focused  primarily  on a defined  geographic
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
choose 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,
Walmart,  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.


<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 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.




                                        8


<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 proposal elect to four
Directors to hold office for a period of one year or until their  successors are
duly elected and qualified were as follows:
<TABLE>
<CAPTION>

                                                     Votes Cast
                                                           For                                   Abstentions

<S>                                                           <C>                                   <C>  
Ilan Arbel                                                    3,725,562                             8,481
Rivka Arbel                                                   3,725,562                             8,481
Allean Goode                                                  3,725,562                             8,481
Moses Mika                                                    3,725,562                             8,481

</TABLE>

Item 5. Other Information: None

Item 6. Exhibits and Reports on Form 8-K:

(a) Exhibits: The following are the exhibits filed with this
Form 10-QSB:

27 - Financial Data Schedule

(b) Reports on Form 8-K: None


                                       9


<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 20th day of November 1998.


                                    UNITED TEXTILES & TOYS CORP.



                                    By:     /s/  Ilan Arbel             
                                            Ilan Arbel
                                            President


                                    By:     /s/ Allean Goode                    
                                            Allean Goode
                                            Treasurer



                                       10


<PAGE>