SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                   (Mark One)

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

                   For the fiscal year ended _________________

                                       OR

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

        For the transition period from October 1, 1997 to March 31, 1998

                         Commission File Number O-26676

                     MULTIMEDIA CONCEPTS INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

Delaware                                13-3835325
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
Incorporation or organization)

               1410 Broadway Suite 1602, New York, New York 10018
           -----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (212) 391-1111
              (Registrant's telephone number, including area code)

                 448 West 16th Street, New York, New York 10011
        (Former name, former address, and former fiscal year, if changed
                               since last report)

               Securities registered pursuant to Section 12(b) of
                                    the Act:

          Title of each class Name of each exchange on which registered
                                      NONE

               Securities registered pursuant to Section 12(g) of
                                    the Act:
                          Common Stock, $.001 par value
                                (Title of Class)

                         Common Stock Purchase Warrants
                                (Title of Class)

     Check whether the Issuer (1) has 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 [ ]

     Check  if no  disclosure  of  delinquent  filers  in  response  Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ].

     The Registrant's  consolidated revenues for its six month transition period
ended March 31, 1998 were $15,869,731.

     The  aggregate  market  value  of the  voting  stock  on  August  31,  1998
(consisting  of Common Stock,  par value $.01 per share) held by  non-affiliates
was approximately $295,620 based upon the closing price ($0.26), for such Common
Stock on August 29, 1998,  as reported by a market  maker.  On such date,  there
were 3,005,000 shares of Registrant's Common Stock outstanding.







<PAGE>
                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

General

     Multimedia  Concepts  International,  Inc.  (the  "Company")  is a Delaware
corporation  which  was  organized  in  June  1994  under  the  name  U.S.  Food
Corporation. The Company changed its name to American Eagle Holdings Corporation
in  April  1995 and then to its  present  name in June  1995.  The  Company  was
initially  formed as a holding  company for the purpose of forming an integrated
clothing  design,  manufacturing,  and  distribution  operation.  The Company is
currently,  in principle, a holding company for its two operating  subsidiaries;
(i) its  wholly  owned  subsidiary  U.S.  Apparel  Corp.  ("USAC")  and (ii) its
majority  owned  subsidiary  Play Co. Toys &  Entertainment  Corp.  ("Play Co.")
through its  ownership  of 78.5% of the  outstanding  shares of common  stock of
United  Textiles  and Toys  Corp.  ("UTTC"),  which  owns  59.1% of Play Co. All
references to the "Company" refer to USAC,  UTTC, and Play Co. unless  otherwise
required by the context.

     In February 1997, the Company formed a wholly-owned subsidiary, USAC, a New
York  corporation,  to design and  manufacture  a line of private  label  cotton
"T-shirts" and "polo" type tops predominantly for men.

     In January 1998,  UTTC issued  3,571,429  shares of its common stock to the
Company in full  repayment of certain loans  aggregating  $1,000,000  previously
made by the Company to UTTC.  This conversion of debt to equity was performed at
a price of $.28 per share. As a result of the transaction,  the Company acquired
78.5% ownership of UTTC. See " -United Textiles & Toys"

     Prior Operations - American Eagle Industries Corp. and Match II, Inc.

     In June 1994, the Company acquired 55% of the outstanding  shares of common
stock of American Eagle Industries Corp. ("American Eagle"), which acquired 100%
of the  outstanding  shares of Match  II,  Inc.  ("Match  II").  American  Eagle
designed and  manufactured a line of private label cotton  "T-shirts" and "polo"
type tops predominantly for men. Match II, a wholly owned subsidiary of American
Eagle,  sold its own  brand  name  ladies  knit tops and  coordinates  under the
trade-name "Match II". In June 1995, the Company acquired 34% of the outstanding
shares  of common  stock of Multi  Media  Publishing,  Inc.  ("MMP").  MMP was a
company which produced CD-ROM versions of medical clinical study books.

     In January 1997, the Company,  through vote of its  stockholders,  voted to
cease funding the operations of the subsidiaries,  American Eagle, Match II, and
MMP.  At such  time the  Company  formed a new  subsidiary,  USAC,  to  commence
operations as a designer and  manufacturer of similar product lines of its prior
subsidiaries.  The Company as 55% stockholder and sole financing arm of American
Eagle terminated its relationship with American Eagle due to continued losses.

                                        2



<PAGE>
United Textiles & Toys Corp.

     On January 2, 1998, the Company was issued 3,571,429 shares of common stock
of UTTC, a company of which the  Company's  President  Ilan Arbel is  President,
Chief  Executive  Officer,  and a  Director,  at a price of $.28 per share ($.01
above the closing price on December 31, 1997) as payment for  $1,000,000  loaned
by the Company to UTTC. As a result of the  transaction,  the Company owns 78.5%
of the  outstanding  shares of common stock of UTTC,  effectively  making UTTC a
subsidiary of the Company.  UTTC owns 59.1% of the outstanding  shares of common
stock of Play Co.,  thus the  Company  and its  management  obtained  beneficial
voting control of Play Co.

     UTTC owns  2,486,247 of the  outstanding  shares,  or 59.1%,  of Play Co.'s
common stock. All of the UTTC's holdings of Play Co. securities are subject to a
two-year lock up on transfer commencing December 1997, in accordance with a lock
up agreement  executed in  connection  with Play Co.'s Series E Preferred  Stock
offering.

     UTTC  (formerly  Mister  Jay  Fashions  International,  Inc.) is a Delaware
corporation which was organized in March 1991 and which commenced  operations in
October  1991.  Until April 1998,  when it ceased its textile  operations,  UTTC
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. UTTC currently acts as a holding company.

U.S. Apparel Corp.

          USAC currently  designs and  manufactures a line of private label knit
cotton tops  predominantly  for men,  consisting  of T-shirts  and polo  shirts.
USAC's  garments  consist of original  designs and  modifications  and copies of
existing designs.  In designing USAC's garments,  USAC first creates the pattern
of the new  garment  and  sews  samples  of the new  garments,  which  are  then
delivered to the Company's  sales  personnel for  introduction  to the Company's
existing  customers and the trade. The Company is continually  seeking to design
and market new products.

     USAC  purchases  approximately  50% of its  fabric,  or piece  goods,  from
suppliers located in South America and approximately 50% of its piece goods from
suppliers in the United States.  The piece goods purchased in both South America
and the United  States are shipped to  Honduras,  where they are dyed,  cut, and
assembled  by  subcontractors  and then  shipped  to and  warehoused  in Florida
pending delivery to USAC's customers. The goods are then shipped to customers by
air or truck common  carriers,  depending upon customers'  needs with respect to
cost and time considerations, although all goods purchased by K-Mart, USAC's 82%
customer  for the six months  ended  March 31,  1998,  are picked up by K-Mart's
carriers at USAC's public warehouse in Florida.

                                        3



<PAGE>
Supplies and Inventory

     USAC  purchases its fabrics from both the United States and South  America.
Most of USAC=s non-fabric  sub-materials  (zippers,  buttons, and trimmings) are
purchased from New York City-based  manufacturers and suppliers.  USAC generally
pays for fabrics and non-fabric  sub-materials upon receipt.  As is customary in
the industry,  USAC does not have long-term formal  arrangements with any of its
suppliers  and  purchases  its  supplies  based upon  specific  design and order
requirements. USAC has not experienced difficulty in satisfying their fabric and
non-fabric  requirements and considers their sources of supply adequate.  USAC's
inventory of garments  varies  depending upon its backlog of purchase orders and
its financial position.

Quality Control

     USAC conducts  limited  quality control in Honduras to ensure that finished
goods meet USAC's  standards.  The quality  control person  inspects  samples of
garments on a random basis to ensure compliance with USAC's specifications.

Marketing and Sales

     Most of USAC's  private label  garments are sold through  major  department
stores in the United  States such as K-Mart and J.C.  Penny  Department  Stores.
Sales  to  K-Mart  accounted  for  approximately  95% and  85% of the  Company's
revenues for the years ended September 30, 1996 and 1997, respectively,  and 82%
for the six months ended March 31, 1998.  USAC bills its clients on a net 30-day
basis. There is a lag time between the time the raw materials are purchased, the
final products are produced and shipped and receipt of payment is received. Late
or  non-payment  could cause  material  adverse  effects on USAC's cash flow and
operations,  especially  since a large  portion of the  USAC's  sales are to one
customer.

     USAC does not sell on  consignment  and do not  accept  return of  products
other  than  imperfect  goods or goods  shipped  in error.  Imperfect  goods are
generally replaced with new conforming goods.

     USAC  believes that a key feature of its business is its ability to design,
manufacture,  and  sell  low cost  garments  which  are  similar  in  style  and
appearance to more expensive garments.

Work in Progress; Backlog

     A  significant  portion  of USAC's  sales are  generated  from  short  term
purchase  orders from  customers  who place orders on an as-needed  basis.  USAC
typically  manufactures  its products  upon receipt of orders from its customers
and  delivers  goods  within four weeks of receipt of an order.  USAC  generally
manufactures  approximately  10% more  goods than is  ordered  by  customers  in
anticipation of reorders from customers.  Information  relative to open purchase
orders at any date may be materially affected by, among other things, the timing
of recording of orders and shipments.  Accordingly, the Company does not believe
that the amount of its unfilled  orders at any time is meaningful.  As March 31,
1998,  USAC had  approximately  $102,000 worth of unfilled  purchase orders with
respect to orders received from K-Mart. Financing

     USAC bills its client's on a net 30-day basis.  There is a lag time between
the time the raw materials are  purchased,  the final  products are produced and
shipped and receipt of payment is  received.  Although  it is  customary  in the
garment industry to finance  receivables  through  "factoring" (i.e.,  financing
secured by  accounts  receivable  of the  borrower's  customers),  USAC does not
normally factor any of its receivables.  Although USAC has no present  intention
to do so, it may rely on factoring to finance future operations.

Competition

     There  is  intense  competition  in the  apparel  industry  in  which  USAC
participates.  USAC  designs,  manufactures,  and markets a line of T-shirts and
polo  shirts  to  large  department  stores.   USAC  competes  with  many  other
manufacturers  in this  market,  many of  which  are  larger  and  have  greater
resources than USAC.

     USAC's  business  is  highly  competitive,  with  relatively  insignificant
barriers to entry and with numerous firms competing for the same customers. USAC
is  in  direct   competition  with  local,   regional,   and  national  clothing
manufacturers,   many  of  which  have  greater  resources  and  more  extensive
distribution  and  marketing  capabilities  than USAC.  In addition,  many large
retailers have recently  commenced sales of "store brand" garments which compete
with  those  sold by USAC.  Management  believes  that  USAC's  market  share is
insignificant in its product lines.

     Many of the national  clothing  manufacturers  have  extensive  advertising
campaigns which develop and reinforce brand  recognition.  In addition,  many of
such  manufacturers  have agreements with department  stores and national retail
clothing chains to jointly advertise and market their products.  Since USAC does
little  advertising  and has no agreement with any department  store or national
retail chain to advertise  any of its products,  USAC  competes  with  companies
which have brand names  which are well known to the  public.  It can be expected
that a retail  shopper will buy a garment from a "brand name" entity before that
of an unknown entity, if all other factors are equal.

Play Co. Toys & Entertainment Corp.

General

     Play Co. Toys &  Entertainment  Corp. was founded in 1974, at which time it
operated one store under the name Play Co. Toys in Escondido,  California.  Play
Co. now operates 21 stores: 18 are located throughout Southern California in Los
Angeles,  Orange,  San Diego,  Riverside,  and San Bernardino  Counties,  one is
located in Tempe,  Arizona,  one is located  in Las  Vegas,  Nevada,  and one is
located in Dallas,  Texas.  Play Co. has executed  leases to build and open four
additional  stores during  calendar  1998.  Play Co.  expects that by the end of
calendar 1998 it shall have 25 stores.  In calendar 1999, the Company expects to
open an additional  six stores,  bringing its total to 31. The Company  operates
its stores under the following  names:  Play Co. Toys, Toys  International,  Toy
Co.,  and Tutti  Animali.  It shall  continue  to open  stores  under such names
contingent  upon  the  product  mix  and  location  of the  store.  The  Company
periodically  reviews each individual  store=s sales history and prospects on an
individual basis to decide on the appropriate product mix.

Corporate Overview

     Traditionally,  the  Company's  merchandising  strategy  was  to  offer  an
alternative,  less intimidating environment than that provided by the larger toy
retailers who are in competition  with the Company.  In 1996,  management of the
Company realized the inherent value in, and thus the demand for, a retail outlet
which provides a combination of (i) educational, new electronic interactive, and
specialty  and  collectible  toys and  items;  and  (ii)  traditional  toys.  In
addition,  the  Company  determined  that it should  place  such  stores in high
traffic malls,  rather than in strip shopping centers where most of its original
stores were  located.  To achieve its goals,  the Company  developed a new store
design and marketing format which provides an interactive  setting together with
a retail  operation.  This format and design has formed the  foundation  for the
Company's  future  direction and growth plans,  thereby  allowing the Company to
meet what it believes are the industry=s current and future demands

     The  Company  has thus  far  remodeled  four of its  original  stores  (the
AOriginal  Stores@) to fit its new store design (the ANew  Stores@),  opened six
New Stores,  and  acquired  three stores in the January  1997  acquisition  Toys
International,  Inc.  ("Toys").  Three of the six New Stores  operate  under the
tradename Toy Co. In conformance with its new goals, Play Co.'s New Stores shall
be smaller  (5,000 to 10,000 square feet in size) and shall operate  exclusively
in high traffic  malls  rather than in strip  shopping  centers.  Play Co.'s New
Stores have and are expected to continue to produce  higher gross  profits since
they focus on the sale of educational and electronic interactive games and toys,
specialty  products,  and collector's  toys,  which generally carry higher gross
margins than  traditional  toys. Of the 25 stores the Company expects to have in
operation by the end of the 1998  calendar  year, 18 shall follow Play Co.'s new
concept and seven shall follow its old format.

     The  Company  shall  continue to operate its  Original  Stores  until their
leases expire, except with respect to certain stores for which it is negotiating
lease extensions, which stores it may redesign to fit the New Store concept. The
Original Stores sell children's and adult toys, games, bicycles, and other wheel
goods,  sporting goods,  puzzles,  Nintendo and Sony electronic game systems and
cartridges for such game systems,  cassettes,  and books. They offer over 15,000
items for sale, most of which are major brand name toys and hobby products.

     The New Stores also carry some of the items found in the  Original  Stores;
however, they focus on selling educational toys, Steiff and North America Bears,
Small World toys,  LBG trains,  CD-ROMs,  electronic  software  games,  Learning
Curve,  and Ty products.  The  Company's  Tutti  Animali  store,  located in the
Crystal Court Mall in Costa Mesa, California, is a unique store which sells only
stuffed animals.


                                        4



<PAGE>
Financing

     On  January  21,  1998,  Play  Co.  entered  into a $7.1  million  secured,
revolving  Loan and  Security  Agreement  (the AFINOVA  Agreement@)  with FINOVA
Capital Corporation (AFINOVA@), which line was increased to $7.6 million in July
1998.  Play Co.  recently  received from FINOVA verbal  approval to increase the
aforesaid  line by $1 million (to $8.6  million) for a period  through and until
December 31,  1998,  at which time the line shall  revert to $7.6  million.  The
FINOVA credit line is secured by substantially all Play Co.'s assets and expires
on August 3, 2000.  The credit line bears  interest at a rate of floating  prime
plus one and one-half percent.

     On September 18, 1998, Play Co. and Amir Overseas Capital Corp. (AAmir@), a
British Virgin Islands corporation,  executed a subordinated  security agreement
for a $1 million  loan (the AAmir  Loan@) made by Amir to Play Co. The Amir Loan
shall be repaid by Play Co. at a 12% annual interest rate pursuant to a schedule
which requires full repayment on or before December 23, 1998.

Employees

     As of March 31, 1998,  the Company,  including  USAC,  had three  executive
officers and two full-time  employees.  None of the employees of the Company are
represented by a union, and the Company considers employee relations to be good.
Play Co. has three executive officers, approximately 65 full time employees, and
approximately  259 part time  employees.  None of the  employees of Play Co. are
represented by a union,  and Play Co. considers  employee  relations to be good.
Each store employs a store manager, an assistant manager, and between fifteen to
twenty-five full-time and part-time employees. Each of Play Co.'s store managers
reports to Play Co.'s director of operations and director of  merchandising  who
in turn report directly to Play Co.'s Executive Officers.

ITEM 2.               PROPERTIES

     Until April 1998,  Company subleased 20,000 square feet of industrial space
at 448 West 16th Street,  New York, New York, at an approximate  rate of $12,500
per annum.  It is at this  location that the Company  housed its  administrative
offices.

     In  April  1998,  in  connection  with  UTTC's  cessation  of  its  textile
operations, the Company moved its administrative offices to 1410 Broadway, Suite
1602,  New York,  New York 10018 and vacated  its former  office,  factory,  and
warehouse  space  at 448 West  16th  Street.  The  lease  for the 1410  Broadway
location is leased by USAC. Pursuant to an oral agreement with USAC, neither the
Company nor UTTC pays any remuneration for its use of the premises.

     Play Co.  maintains  approximately  3,500 square feet of  executive  office
space and 48,000  square feet of warehouse  space at 550  Rancheros  Drive,  San
Marcos,  California.  The combined 51,700 square foot office and warehouse space
are leased at an  approximate  annual cost of  $281,000,  the lease  expiring on
April 30, 2000. The office and warehouse are leased from a company owned in part
by Richard  Brady,  the President  and a Director of Play Co. Play Co.  believes
that  the  lease  is on  terms  no more or less  favorable  than  terms it might
otherwise have  negotiated with an  unaffiliated  party.  In addition,  Play Co.
currently  leases  18  stores in  southern  California  and one store in each of
Arizona, Nevada, and Texas.

     During the last  calendar  quarter  of 1997,  Play Co.  opened a  temporary
short-term seasonal store (in Crystal Court Mall in Costa Mesa,  California) and
three new stores in high traffic  shopping  malls:  one in South Bay Galleria in
Redondo Beach, California; one in Ontario Mills in Ontario,  California; and one
in Arizona  Mills in Tempe,  Arizona (Play Co.'s first store outside of southern
California).  In addition,  in 1998, Play Co. has opened one store in Las Vegas,
Nevada and one store in Dallas, Texas and has executed four additional leases to
open additional locations within the remainder of the 1998 calendar year.

     Play Co. has recently  completed the  enlargement  of one of its 21 stores,
the Toys store  located  in Los  Angeles,  California.  The lease for this store
expired in January  1998 and was  extended,  at a new  location  within the same
mall,  through and until  March 31,  2001.  Three of Play Co.'s  other  Original
stores are  operating  under leases that either also have expired or will expire
in 1998,  the fate of such  stores to  depend  upon Play  Co.'s  intentions  and
concomitant lease negotiations with the landlords of same.

ITEM 3.           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. No director, officer, or affiliate of the Company, or any associate of
any of them, is a party to or has a material interest in any proceeding  adverse
to the Company.

     In June 1997, in the Superior Court of the State of California, Los Angeles
County, Shook Development Corp. commenced suit against the Company for breach of
contract  pertaining to premises  leased by the Company from South San Dimas,  a
California Limited Partnership.  In addition, in the Superior Court of the State
of California,  Orange County, Prudential Insurance Company of America commenced
suit against the Company for breach of contract pertaining to premises leased by
the Company. In May 1997, in the Superior Court of the State of California,  Los
Angeles  County,  PNS Stores,  Inc.  commenced  suit against the Company and its
former  guarantor for breach of contract  pertaining  to premises  leased by the
Company.  These actions  settled for an aggregate of $469,600 during fiscal year
1998.

     In October 1997, in the Superior Court of the State of  California,  County
of San Bernardino,  Foothill Marketplace  commenced suit against the Company and
its former guarantor for breach of contract pertaining to premises leased by the
Company  in  Rialto,  California.  The  lease for the  premises  has a term from
February 1987 through  November 2003. The Company vacated the premises in August
1997. Under California State law and the provisions of the lease,  plaintiff has
a duty to mitigate its damages. Plaintiff seeks damages, of a continuing nature,
for unpaid rent,  proximate damages,  costs, and attorneys= fees. This action is
in the discovery phase.

                                        5



<PAGE>
ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  Common Stock and Warrants have been quoted on the Nasdaq OTC
Bulletin  Board  since  April 8,  1997.  From  November  10,  1995  (date of the
Company's  initial public  offering)  until March 21, 1997 the Company=s  Common
Stock and  Warrants  were  quoted  on the  Nasdaq  SmallCap  Stock  Market.  The
following  table  sets  forth  representative  high and low  closing  prices  as
reported by a market maker, during the periods stated below.  Quotations reflect
prices between  dealers,  do not include resale mark-ups,  mark-downs,  or other
fees or commissions.
<TABLE>
<CAPTION>

                                                            Common Stock                                       Public Warrants
Calendar Period                                      Low               High                      Low               High
---------------                                      ---               ----                      ---               ----
<S>                                         <C>                        <C>                       <C>               <C>
04/01/96 - 06/30/96                         8 3/4                      9 5/8                     2 3/8             3 3/8
07/01/96 - 09/30/96                         5                          9                         1 1/4             4 1/8
10/01/96 - 12/31/96                         1 15/16                    4 1/2                      11/32            1 3/8
01/01/97 - 03/31/97                            5/8                     3 1/8                       1/16             17/32
04/01/97 - 06/30/97 (1)                        1/4                       7/8
07/01/97 - 09/30/97                            1/4                     1
10/01/97 - 12/31/97                            1/8                       1/2
01/01/98 - 03/31/98                            1/8                       7/16
04/01/98 - 06/30/98                            5/64                      9/16
06/30/98 B 08/31/98                            1/4                      13/32
----------------
</TABLE>

     (1) There was no market for the  Warrants  from  April 8, 1997 until  their
expiration on November 8, 1997. No Warrants were exercised prior to expiration.

     As of August 31,  1998  there  were 41  holders of record of the  Company's
Common Stock,  although the Company  believes that there are  approximately  440
beneficial  owners of shares of Common Stock.  As of August 31, 1998, the number
of shares of Common Stock outstanding of the Company was 3,005,000.


                                        6



<PAGE>
                                     PART II

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS


     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.

     The following  table  summarizes  certain  selected  financial  data and is
qualified in its entirety by the more detailed  financial  statements  contained
elsewhere in this document:

                                                  March 31,        September 30,
                                                    1998               1997


Balance Sheet Data:

 Working capital ...........................     $  6,500,401      $  1,784,565
 Total assets ..............................       15,750,583         7,905,149
 Total current liabilities .................        3,997,337           482,809
 Long-term obligations .....................        7,055,549              --
 Stockholders= equity ......................        1,983,988         7,422,340

Operating Data:

 Net sales .................................     $ 15,869,731      $  2,054,792
 Cost of sales .............................       10,897,966         1,647,563
 Total operating expenses ..................        6,251,399           621,724
 Net income (loss) .........................       (5,438,352)          (32,334)
 Income (loss) per common share ............     $      (1.81)     $       (.01)
 Weighted average shares outstanding .......        3,005,000         3,005,000


Results of Operations

     The Company=s  Board of Directors  voted to change the end of the Company=s
fiscal year from  September 30th to March 31st.  The  accompanying  consolidated
financial  statements as of March 31, 1998 reflect the results of operations for
the six months ended March 31, 1998. The financial statements for the year ended
September  30, 1997 have not been restated to reflect the  acquisition  of UTTC,
which occurred in January 1998.

     The consolidated  financial  statements contained herein for the six months
ended March 31, 1998 in this  document  reflect the  operations of the Company=s
wholly-owned  subsidiary,  USAC, and its 78.5% owned subsidiary UTTC, as well as
the UTTC 59.1% owned subsidiary, Play Co.

For the six ended March 31, 1998

     Consolidated  net  sales  for the six  months  ended  March  31,  1998 were
$15,869,731.  This  represented the  consolidated net sales of the Company which
was comprised of the following components:

         U.S. Apparel              $    566,478
         Play Co.                    15,303,253
                                     ----------
                                     $15,869,731

     At the end of March 1998, Play Co. had 19 retail locations,  compared to 21
retail  locations  at the end of March 1997.  During the fiscal year ended March
31, 1998, Play Co. opened four new stores and closed six stores.

     Consolidated  cost of sales were $10,897,966 for the six months ended March
31, 1998. The component breakdown of this item was as follows:

         U.S. Apparel              $   501,644
         Play Co.                   10,396,322

     Consolidated  operating  expenses (total operating expenses less litigation
related expenses and depreciation and amortization)  were $5,272,210 for the six
months ended March 31, 1998.

     Play Co. incurred  $583,541 of litigation  related expenses in period.  The
expenses were  associated  with the closure of five store  locations and related
subsequent litigation. This expense includes settlement amounts relating to four
of the five  closed  locations  and the related  legal fees and costs.  Play Co.
remains  in  litigation  regarding  the fifth  closed  store.  Depreciation  and
amortization  expense in the six months  ended  March 31,  1998 was  $395,64.80.
Total interest  expense  amounted to $384,901 for the six months ended March 31,
1998.

     For the year ended March 31, 1998,  subsequent  to the  adjustment  for the
minority  interest in the net losses of  subsidiaries,  the  Company  reported a
consolidated net loss of $5,438,352, or $1.81 per common share.

Liquidity and Capital Resources

     At March 31, 1998,  consolidated working capital was $6,500,402 as compared
to a working  capital of $1,784,565  at September  30, 1997.  For the six months
ended  March  31,  1998,   consolidated   operating  activities  used  funds  of
$7,012,362.  Cash flows from investing activities for the six months ended March
31, 1998 amounted to $206,729.

     Consolidated  financing activities generated funds of $8,571,433 during the
six months  ended March 31,  1998.  The primary  elements in the  generation  of
financing funds were net borrowings under a new financing  agreement by Play Co.
and net proceeds received by Play Co. from notes payable.

     As a result,  consolidated net cash increased from $13,189 at September 30,
1997 to $1,621,869 at March 31, 1998.

Trends Affecting Liquidity, Capital Resources and Operations

     As a result of its planned  merchandise mix change to emphasize  specialty,
educational,  electronic,  interactive,  and collectible  toys, Play Co. enjoyed
significant sales and gross profits in the year ended March 31, 1998. While Play
Co.  believes  that its new product mix will remain  popular  with the  consumer
market for the  remainder of 1998,  there can be no  assurance  that this growth
will  continue.  As a result of the  continual  changing  nature  of  children's
consumer  preferences and tastes, the success of the Company is dependent on its
ability to change and adapt to such changing tastes and preferences.  Children's
entertainment  products are often  characterized by fads of limited life cycles.
There can be no assurance  that the Company will be able  accurately to forecast
consumer  preferences or that specialty toys will continue to have higher profit
margins.

         Play Co.=s sales efforts are focused primarily on a defined  geographic
segment consisting of the Southern  California area and the Southwestern  United
States.  Play Co.=s  future  financial  performance  will depend upon  continued
demand for toys and hobby items and on the general  economic  conditions  within
that geographic market area, its ability to choose locations for new stores, its
ability to purchase  product at favorable prices and on favorable terms, and the
effects of increased competition and changes in customer 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.  There can be no assurance that Play Co.=s  business  strategy
will enable it to compete effectively in the toy industry.

Seasonality

     Play Co.=s operations are highly seasonal with approximately  30-40% of its
sales falling within the third quarter which  encompasses the Christmas  selling
season.  Play Co. intends to open new stores  throughout the year, but generally
before the Christmas selling season, which will make third quarter sales an even
greater percentage of the total year=s sales.


Impact of Inflation

     The impact of inflation on consolidated  results of operations has not been
significant.  Play Co. attempts to pass on increased costs by increasing product
prices over time.


ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - Annexed hereto

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 
         ON ACCOUNTING AND FINANCIAL DISCLOSURE

     On May 14, 1997, the  Registrant  and Lazar,  Levine & Company LLP mutually
agreed  that  Lazar,  Levine & Company  LLP would no longer be the  Registrant's
auditors.  The  resignation  of Lazar,  Levine & Company  LLP was not due to any
discrepancies or disagreements  between the Company and Lazar,  Levine & Company
LLP on any matter of accounting  principles or  practices,  financial  statement
disclosure,  or auditing scope or procedure.  There were no disagreements during
the  two  fiscal  years  ended  September  30,  1996  and  through  the  date of
resignation,  May 14, 1997.  The  Registrant's  board of directors  approved the
acceptance of the accountant's resignation.

     The former accountants=  reports on the Registrant=s  financial  statements
for the two years ended  September  30, 1996 and 1995  contained an  explanatory
paragraph addressing the Company's ability to continue as a going concern.


                                        7



<PAGE>
                                    PART III


ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors

     The directors of the Company are elected  annually by the  shareholders and
the officers are appointed annually by the Board of Directors.  Vacancies on the
Board of Directors may be filled by the remaining  directors.  Each director and
officer will hold office until the next annual meeting of shareholders, or until
his successor is elected and qualified.  The executive officers and directors of
the Company are as follows:
<TABLE>
<CAPTION>

         Name                               Age                       Position

<S>                                         <C>                       <C>
         Ilan Arbel                         43                        President and Director

         Rivka Arbel                        44                        Vice President and Director

         Allean Goode                       63                        Secretary and Director

         Yair Arbel                         48                        Director

</TABLE>

     The directors of the Company are elected  annually by its  stockholders and
the officers of the Company are  appointed  annually by its Board of  Directors.
Vacancies on the Board of Directors  may be filled by the  remaining  directors.
Each current director and officer will hold office until the next annual meeting
of stockholders, or until his successor is elected and qualified.

     Ilan Arbel was the President,  Secretary and a Director of the Company from
inception until June 12, 1995 upon the election of Sheikhar  Boodram.  Mr. Arbel
was  re-elected  as  President of the Company in May 1996.  In August 1995,  Mr.
Arbel was re-elected as a Director of the Company.  Mr. Arbel was the President,
Chief  Executive  Officer,  and a Director of American Toys, Inc. from inception
until July 1996.  From May 1993 to April 1997,  Mr. Arbel was a Director of Play
Co. Toys & Entertainment Corp., of which from June 1994 until his resignation in
April 1997,  he was the  Chairman of the Board.  Since 1991,  Mr. Arbel has been
President,  Chief Executive Officer, and a Director of UTTC, formally Mister Jay
Fashions International,  Inc. Mr. Arbel is a graduate of the University Bar Ilan
in Israel, with B.A. degrees in Economics, Business, and Finance.

     Rivka Arbel has been a Director of the Company  since June 12, 1995 and was
elected as Vice President of the Company in May 1996. In October 1996, Ms. Arbel
resigned  as an  officer  of the  Company.  Ms.  Arbel  was  re-elected  as Vice
President  in May 1997.  From 1992 to present,  Ms. Arbel has been a director of
UTTC.  From 1986 to  present,  Ms.  Arbel has been  President  and a Director of
Amigal, Ltd., a producer of men's and women's wear in Israel. Ms.

                                        8



<PAGE>
Arbel is the wife of Yair Arbel.

     Yair Arbel has been a director  of the  Company  since June 12,  1995.  Mr.
Arbel is currently  employed by Israeli Aircraft  Industries,  where he has been
employed since 1980. Yair Arbel is the husband of Rivka Arbel and the brother of
Ilan Arbel, the President and Director of the Company.

     Allean Goode was appointed  Secretary and Treasurer of the Company in March
1998.  Ms.  Goode has been  Secretary,  Treasurer,  and a Director of UTTC since
September  1992.  Ms.  Goode was  Assistant  Secretary of Play Co. from May 1993
until approximately May 1995. From 1991 until September 1992, Ms. Goode acted as
an independent  contractor performing  bookkeeping services for the Company. Ms.
Goode was  Secretary,  Treasurer,  and a Director of American Toys from February
1993 until July 1996.  From 1981 until 1991,  Ms.  Goode was  employed as Office
Manager and Bookkeeper of Via West Sportswear,  a New York based manufacturer of
sportswear.

Significant Employees

     Albert  Benaderet,  through  Westside  Apparel,  a company in which he is a
partner,  has been a consultant to the Company and it's subsidiaries since 1992.
From  1992 to 1994,  Mr.  Benaderet  was a  consultant  to  Match  II  regarding
manufacturing  and sales.  From 1994 to 1996, Mr.  Benaderet was a consultant to
American Eagle regarding overseas  production and  manufacturing.  Since January
1997,   Mr.   Benaderet  has  been  a  consultant  to  USAC   regarding   sales,
manufacturing,  and close outs. Westside Apparel,  Inc. receives a weekly fee of
$2,000 and has the right to 5% of all earnings before interest and taxes.

     The Company has agreed to indemnify its officers and directors with respect
to  certain  liabilities   including  liabilities  which  may  arise  under  the
Securities Act of 1933. Insofar as indemnification for liabilities arising under
the  Securities  Act may be permitted to directors,  officers,  and  controlling
persons of the Company  pursuant to any charter,  provision,  by-law,  contract,
arrangement,  statute,  or  otherwise,  the Company has been advised that in the
opinion of the  Securities  and Exchange  Commission,  such  indemnification  is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.  In the  event  that a claim  for  indemnification  against  such
liabilities  (other than the payment by the Company of expenses incurred or paid
by a director,  officer,  or controlling person of the Company in the successful
defense of any such action,  suit, or  proceeding) is asserted by such director,
officer,  or controlling person of the Company in connection with the Securities
being  registered,  the Company  will,  unless in the opinion of its counsel the
matter  has  been  settled  by  controlling  precedent,  submit  to a  court  of
appropriate  jurisdiction  the question  whether such  indemnification  by it is
against  public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's  officers,  directors,  and persons who beneficially own more than
ten percent of a

                                        9



<PAGE>
registered  class  of  the  Company's  equity  securities  to  file  reports  of
securities  ownership  and changes in such  ownership  with the  Securities  and
Exchange  Commission ("SEC").  Officers,  directors and greater than ten percent
beneficial  owners also are required by rules  promulgated by the SEC to furnish
the Company with copies of all Section 16(a) forms they file.  Based solely upon
requests for information of the Company's  officers,  directors and greater than
10%  shareholders,  during  fiscal 1997,  the Company has been informed that all
officers, directors, or greater than 10% shareholders have stated that they have
filed such  reports as is  required  pursuant to Section  16(a)  during the 1997
fiscal year. The Company has no basis to believe that any required filing by any
of the above indicated individuals has not been made.

ITEM 10.          EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

     The following provides certain information concerning all Plan and Non-Plan
(as  defined in Item 402 (a)(ii) of  Regulation  S-B)  compensation  awarded to,
earned by, paid by the Company during the years ended September 30, 1998,  1997,
and 1996 to each of the named executive officers of the Company.
<TABLE>
<CAPTION>

                           Summary Compensation Table

                               Annual Compensation

(a)                            (b)           (c)            (d)                 (e)            (g)

                                                                                               Securities
Name and Principal                                                              Other Annua    Underlying
Position                       Year          Salary($)      Bonus($)(1)         Compensation($)Options/ SARs(#)

<S>                            <C>            <C>           <C>                  <C>             <C>       
Ilan Arbel(2)                  1998           -             -                    -(1)                   -
 President                     1997           -             -                    -(1)                   -
                               1996           -             -                    -(1)            2,900,000 (2)
</TABLE>


     Mr.  Arbel  does not  receive  any cash  compensation  as an officer of the
Company.  Mr. Arbel entered into an employment agreement with the Company in May
1996. See "Employment Agreements." (2) See "Employment Agreements."

Employment Agreements

     On April 4, 1996,  the board of directors  authorized  the Company to enter
into a compensation  agreement with Ilan Arbel.  Pursuant  thereto,  the Company
granted to Ilan Arbel an option to purchase 1,900,000 warrants, identical to the
Warrants  sold by the Company in its  initial  public  offering.  The option was
exercisable at $.04 per Warrant. The Warrants and shares underlying the Warrants
were registered for resale pursuant to a Form S-8  registration  statement.  Mr.
Arbel  exercised  this option in full and sold the  Warrants  in April 1996.  In
addition,  the board authorized the Company to issue an additional option to Mr.
Arbel to purchase  200,000  shares of Common Stock at $3.70 per share.  On April
19,  1996,  the board of  directors  of the  Company and Mr.  Arbel  amended the
compensation  agreement and terminated the option to purchase  200,000 shares of
Common  Stock and in lieu  thereof,  issued an option to purchase an  additional
1,000,000 Warrants. The option was exercisable at $.04 per Warrant. The Warrants
were registered for resale pursuant to an amendment to the Form S-8 registration
statement.  Mr.  Arbel  exercised  this  option  in full and  sold the  Warrants
commencing in May 1996.

     As of May 15, 1996, the Company  entered into an employment  agreement with
Ilan Arbel, for a period of five years.  Pursuant thereto,  Mr. Arbel became the
President and Chief Executive  Officer of the Company.  At such time the Company
and Mr.  Arbel  agreed to increase  the option price to purchase the Warrants to
$1.90 per  Warrant,  whereby Mr.  Arbel owed the Company  $7,250,000,  which was
payable either in cash, or other securities.  The term securities was defined as
any debt or equity security or convertible security,  the underlying security of
which, is traded on either a national securities exchange or on the Nasdaq Stock
Market. The price for which the securities could be exchanged to reduce the debt
was 50% of the average bid price of the securities or the underlying  securities
of a convertible security, for a period of ninety days ending five days prior to
the exchange.  The employment  agreement  provides that no other compensation or
remuneration be paid to Mr. Arbel during its term. Mr. Arbel, through affiliates
has transferred to the Company an aggregate of 803,070 shares of Play Co. Series
E Preferred  Stock,  each of which is convertible at any time into six shares of
Play Co.=s common stock as payment of the debt.

     In May 1996, the Company, in anticipation of the execution of an employment
agreement  with Rivka Arbel,  granted Mrs.  Arbel an option to purchase from the
Company up to 600,000  Warrants,  which  Warrants  were to be  identical  to the
Warrants issued in the Company's  initial public offering.  Initially Mrs. Arbel
was to pay $.04 per  Warrant  and resell  the  Warrants  pursuant  to a Form S-8
registration  statement,  however,  the Company and Mrs.  Arbel agreed that such
price was too low and decided to increase the price to $2.50 per Warrant,  which
was to be paid either in cash,  or other  securities,  as such term is described
above.  In June 1996,  Mrs. Arbel entered into an employment  agreement with the
Company,  for a period of five  years,  pursuant  thereto  Mrs.  Arbel  became a
Vice-President of the Company.  The employment  agreement provided that no other
compensation  or  remuneration  be paid to Mrs. Arbel during its term. In August
1996,  this agreement was terminated  and the 600,000  Warrants  returned to the
Company=s treasury unexercised.

1995 Senior Management Incentive Plan

     In June  1995,  the  Board  of  Directors  adopted  the  Senior  Management
Incentive  Plan (the  "Management  Plan"),  which  was  adopted  by  stockholder
consent.  The Management  Plan provides for the issuance of up to 150,000 shares
of the Company's  Common Stock in connection  with the issuance of stock options
and other stock purchase rights to executive officers and other key employees.

     The  Management  Plan was  adopted to provide the Board of  Directors  with
sufficient  flexibility regarding the forms of incentive  compensation which the
Company will have at its disposal in rewarding  executive officers and directors
who are also  employees of the  Company,  or a  subsidiary  or the Company,  who
render significant services to the Company or one of its subsidiaries. To enable
the  Company to attract and retain  qualified  personnel  without  unnecessarily
depleting the Company's cash reserves,  the Board of Directors  intends to offer
key personnel equity ownership in the Company through the grant of stock options
and other  rights  pursuant  to the  Management  Plan.  The  Management  Plan is
designed to augment the Company's existing compensation programs and is intended
to enable the Company to offer  executive  officers and  directors  who are also
employees of the Company a personal interest in the Company's growth and success
through  awards of either shares of Common Stock or rights to acquire  shares of
Common Stock.

     The Management  Plan is intended to help the Company attract and retain key
executive   management  personnel  whose  performance  is  expected  to  have  a
substantial  impact on the Company's  long-term  profit and growth  potential by
encouraging and assisting those persons to acquire equity in the Company.  It is
contemplated  that only those  executive  management  employees  (generally  the
Chairman of the Board,  Vice-Chairman,  Chief Executive Officer, Chief Operating
Officer,  President, and Vice Presidents of the Company) who perform services of
special  importance  to the Company  will be eligible to  participate  under the
Management  Plan.  The Company does not presently have any intention to hire any
additional  management  employees  and has not engaged in any  solicitations  or
negotiations with respect to the hiring of any management  employees.  As of the
date of this  Prospectus,  the  Company's  sole  officers are Ilan Arbel,  Rivka
Arbel,  and Allean Goode, and its directors also includes Yair Arbel. A total of
150,000  shares  of  Common  Stock  will be  reserved  for  issuance  under  the
Management  Plan. It is anticipated  that awards made under the Management  Plan
will be subject to three-year vesting periods,  although the vesting periods are
subject to the  discretion  of the Board of  Directors.  In December  1995,  the
Company granted an option to purchase 75,000 shares at $8.75 per share to Howard
Wertheim,  D.M.D.,  who was the President and sole director of MMP at such time.
This option has been terminated by the Company.


                                       10



<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information at August 31, 1998 based
upon  information  obtained  by the persons  named  below,  with  respect to the
beneficial ownership of common shares by (i) each person known by the Company to
be the  owner  of 5% or  more of the  outstanding  common  shares;  (ii) by each
director;  (iii) and by all officers and directors as a group. Percent of Number
of Common Stock Name Shares Owned (1) American Telecom,  PLC (2)(3)(4) 1,868,000
62.2% c/o Multimedia Concepts International, Inc. 448 West 16th Street New York,
New York
<TABLE>
<CAPTION>

<S>                                                                                        <C>                                 <C>  
U.S. Stores Corp. (2)(3)(4)                                                                1,868,000                           62.2%
c/o Multimedia Concepts International, Inc.
448 West 16th Street
New York, New York

Ilan Arbel (3)(4)                                                                                --                             --
c/o Multimedia Concepts International, Inc.
448 West 16th Street
New York, New York

Yair Arbel (3)(4)                                                                                --                             --
c/o Multimedia Concepts International, Inc.
448 West 16th Street
New York, New York

 Rivka Arbel (3)(4)                                                                              --                             --
c/o Multimedia Concepts International, Inc.
448 West 16th Street
New York, New York

 Officers and Directors                                                                          --                            --
(4 as a Group) (3)(4)
</TABLE>

     (1) Does not give effect to 150,000  shares of Common  Stock  reserved  for
issuance under the Company's 1995 Senior Management  Incentive Plan. U.S. Stores
Corp. ("U.S.  Stores") is a wholly owned subsidiary of American Telecom,  PLC, a
publicly traded company in Great Britain.

     (3) Dated as of January 2, 1998, U.S. Stores acquired control of a majority
of the  outstanding  shares of the  Company,  of which (i)  403,000  shares were
acquired  through  purchases  in the public  market (ii)  1,339,000  shares were
acquired  from  European  Ventures  Corp.,  a company  in which Ilan Arbel is an
officer and director,  in a private sale and (iii) 100,000  shares were acquired
from another shareholder in a private transaction.

     (4) Yair Arbel and Ilan Arbel are  brothers  and Rivka Arbel is the wife of
Yair Arbel.  Though it can be expected  any shares of Common Stock of record and
beneficially  owned by members of the Arbel  family would be voted as a group on
matters  presented to the  Company's  stockholders;  however  there is no voting
agreement or arrangements which require such unified voting.



<PAGE>



ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     On April 4, 1996,  the board of directors  authorized  the Company to enter
into a compensation  agreement with Ilan Arbel.  Pursuant  thereto,  the Company
granted to Ilan Arbel an option to purchase 1,900,000 warrants, identical to the
Warrants sold by the Company in its initial public  offering.  The Warrants were
registered  for resale  pursuant to an  amendment  to the Form S-8  registration
statement.  Mr.  Arbel  exercised  this  option  in full and  sold the  Warrants
commencing in May 1996. See "Executive Compensation - Employment Agreements"

     From  October 1995 to September  1997,  the Company  loaned an aggregate of
$1,276,235  to UTTC.  $1,000,000  of which  was  converted  into  equity  in the
Company. See "Business-United Textiles & Toys." On December 1, 1997, the Company
received  3,571,429  shares of UTTC's  common  stock  from UTTC as  payment  for
$1,000,000 owed to the Company by UTTC.

     In June 1996,  the Company  loaned  $331,136 to Ilan Arbel,  the  Company's
President,  which was payable upon demand not accruing any  interest.  This loan
has been repaid.

     As of June 30,  1996,  the  Company  had loaned  approximately  $420,000 to
Hollywood  Productions,  Inc.  The loan accrued no interest and was payable upon
demand. The loan has been repaid.

     On October 21, 1996, the board of directors adopted resolutions authorizing
the Company,  subject to  stockholder  approval,  to terminate its ownership and
relationships   with  American   Eagle  and  MMP  as   non-profitable   business
investments.  These  resolutions  were adopted by the Company=s  shareholders in
December 1996.

     On January 2, 1998, the Company was issued 3,571,429 shares of common stock
of UTTC, a company of which Ilan Arbel is President,  Chief  Executive  Officer,
and a Director, at a price of $.28 per share as payment for $1,000,000 loaned by
the Company to UTTC. As a result of the  transaction,  the Company owns 78.5% of
the  outstanding  shares  of common  stock of UTTC,  effectively  making  UTTC a
subsidiary of the Company.  Because UTTC owns 61% of the  outstanding  shares of
common  stock  of  Play  Co.,  thus  the  Company  and its  management  obtained
beneficial voting control of Play Co.

     On January 20, 1998,  U.S.  Stores,  a company  which was  incorporated  on
November 10, 1997 acquired  1,465,000  shares of the  Company=s  Common Stock of
which 1,339,000 shares were acquired from European  Ventures Corp., a company in
which Ilan Arbel is an  officer  and  director,  in a private  sale.  After this
transaction,  U.S. Stores held an aggregate of 1,868,000 shares of the Company=s
Common Stock, or 62.2% of the outstanding shares, effectively making the Company
a subsidiary of U.S. Stores.

     In April 1998,  American  Telecom,  exchanged  all its  outstanding  common
shares and all of the  outstanding  shares of its wholly owned  subsidiary  U.S.
Stores with American  Telecom,  PLC, a publicly traded company in Great Britain.
After this  transaction,  both  American  Telecom and U.S.  Stores became wholly
owned subsidiaries of American Telecom, PLC.

                                       12


<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a) The following financial  statements of the Company are included as Part
II, Item 8:

<TABLE>
<CAPTION>

<S>                                                                                          <C>
  Report of Independent Certified Public Accountant                                        F-2

Consolidated Financial Statements:

  Consolidated  Balance  Sheets as of March 31, 1998 and  September 30, 1997               F-3
  Consolidated Statements of Operations for the six months ended March 31, 1998            
      and the year ended September 30, 1997                                                F-5
  Consolidated Statement of Changes in Stockholders= Equity for the two years
        in the period ended March 31, 1998                                                 F-6

  Consolidated Statements of Cash Flows for the six months ended March 31, 1998
        and the year ended September 30, 1997                                              F-7


  Notes to Financial Statements                                                            F-9
</TABLE>

     (b) On March 31, 1998, the Company filed a Form 8-K detailing the March 16,
1998  resignation of Sheikhar  Boodram as a Director of the Company.  On May 15,
1998,  the Company  filed a Form 8-K changing the  Company's  fiscal year end to
March 31, 1998.

     (c) The  following  exhibits  designated by an asterisk (*) are to be filed
with the Commission via Form SE. The exhibits not designated by an asterisk have
previously  been filed with the  Commission  in  connection  with the  Company's
Registration  Statement on Form SB-2 and  pursuant to 17 C.F.R.  230.411 and are
incorporated by reference herein.
<TABLE>
<CAPTION>

<S>                                 <C>
  3.1                      -        Certificate of Incorporation of the Company
  3.2                      -        Amendment to Certificate of Incorporation of the Company, filed in May 1995
  3.3                      -        Second Amendment to Certificate of Incorporation of the Company, filed in June 1995
  3.5                      -        By-Laws of the Company
  3.9                      -        Certificate of Incorporation of U.S. Apparel  Corp.
  4.1                      -        Specimen Common Stock Certificate.
 10.1                      -        The Company Senior Management Incentive Plan.
 10.2                      -        Sublease at 448 West 16th Street, New York, New York
 10.4                      -        Dytex Agreement
 10.5*                     -        Lease for 1410 Broadway, Suite 1602, New York, New York

</TABLE>


                                       13


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES


                               TABLE OF CONTENTS

                     March 31, 1998 and September 30, 1997




<TABLE>
<CAPTION>

                                                                                                          Page


<S>                                                                                                         <C>
Report of Independent Certified Public Accountant                                                         F-2

Consolidated Financial Statements:

  Consolidated  Balance  Sheets as of March 31, 1998 and  September 30, 1997                              F-3
  Consolidated Statements of Operations for the six months ended March 31, 1998
        and the year ended September 30, 1997                                                             F-5
  Consolidated Statement of Changes in Stockholders= Equity for the two years
        in the period ended March 31, 1998                                                                F-6

  Consolidated Statements of Cash Flows for the six months ended March 31, 1998
        and the year ended September 30, 1997                                                             F-7


  Notes to Financial Statements                                                                           F-9


</TABLE>

                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT




Board of Directors
Multimedia Concepts International, Inc.


     We have audited the accompanying  consolidated balance sheets of Multimedia
Concepts  International,  Inc. as of March 31, 1998 and September 30, 1997,  and
the related statements of operations,  stockholders=  equity, and cash flows for
the six months ended March 31, 1998 and the year ended September 30, 1997.

     These  financial   statements  are  the  responsibility  of  the  Company=s
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based upon our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in  all  material  respects,  the  financial  position  of  Multimedia  Concepts
International,  Inc. at March 31, 1998 and September 30, 1997, and the result of
its  operations  and its cash flows for the six months  ended March 31, 1998 and
the  year  ended  September  30,1997  in  conformity  with  generally   accepted
accounting principles.





                                                      JEROME ROSENBERG, CPA,P.C.




Syosset, New York
July 6, 1998


                                       F-1


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                   As of March 31, 1998 and September 30, 1997
<TABLE>
<CAPTION>

                                                March 31,     September 30,
                                                 1998             1997

                                ASSETS (Note 10)

CURRENT ASSETS:
<S>                              <C>          <C>           <C>        
 Cash and cash equivalents (Note 3c) ......   $ 1,635,058   $    13,189
 Restricted certificate of deposit (Note 7)       250,000          --
 Accounts receivable ......................       404,288       723,112
 Advances to supplier .....................          --          60,000
 Inventories (Note 3d) ....................     7,929,061        66,662
 Prepaid expenses and other current assets        189,516          --
 Loans and advances-affiliate .............        89,815        89,815
 Loans and advances-officer ...............          --       1,314,596

         Total current assets .............    10,497,738     2,267,374

PROPERTY AND EQUIPMENT-NET(Notes 2f and 9)      2,782,386          --

OTHER ASSETS:
Restricted certificate of deposit (Note (7)     2,000,000          --
Due from affiliate ........................          --       1,276,235   
Investment in convertible preferred stock (Note 5)   -        4,221,490
Advances to equity affiliate (Note 1) .....       140,000       140,000
Deposits and other assets (Note 10) .......       330,459            50
                                                              

         Total assets .....................   $15,750,583   $ 7,905,149
                                                              
</TABLE>
















                 See accompanying notes to financial statements

                                       F-2


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                   As of March 31, 1998 and September 30, 1997
<TABLE>
<CAPTION>

                                                                                     March 31,           September 30, 
                                                                                      1998                 1997
                                                                                     ---------           ------------

                      LIABILITIES AND STOCKHOLDERS= EQUITY

CURRENT LIABILITIES:
<S>                                                                                <C>                  <C>    
 Accounts payable ..............................................................   $  3,593,811         429,283
 Accrued expenses and other current liabilities ................................         53,526          53,526
 Current portion of notes payable (Note 12) ....................................        350,000            --
                                                                                   ------------   ------------
         Total current liabilities .............................................      3,997,337         482,809
                                                                                   ------------   ------------

LONG-TERM LIABILITIES:
Borrowings under financing agreement (Note10) ..................................      5,445,198            --
Note payable, net of current portion (Note 12) .................................      1,500,000            --
Deferred rent liability ........................................................        110,351            --
                                                                                   ------------   ------------
         Total long-term liabilities ...........................................      7,055,549            --
                                                                                   ------------   ------------
         Total liabilities .....................................................     11,052,886         482,809
                                                                                   ------------   ------------

MINORITY INTERESTS IN SUBSIDIARIES .............................................      2,713,709            --
                                                                                   ------------   ------------

COMMITMENTS AND CONTINGENCIES (Notes 7,10,11,13 and 15)

STOCKHOLDERS EQUITY:
   Common stock, $.001 par value; 10,000,000 shares authorized; 3,005,000 shares
     issued and outstanding at March 31, 1998 and September 30, 1997
      respectively .............................................................          3,005           3,005
  Additional paid-in capital ...................................................     13,102,005      13,102,005
  Retained earnings (Deficit) ..................................................    (11,121,022)     (5,682,670)
                                                                                   ------------   ------------
            Total stockholders' equity .........................................      1,983,988       7,422,340    
Total liabilities and stockholders' equity                                         $ 15,750,583    $  7,905,149
                                                                                   ------------    ------------

</TABLE>












                 See accompanying notes to financial statements

                                       F-3


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  Six Months
                                                                   Ended            Year Ended
                                                                   March 31,        September 30,
                                                                    1998            1997
                                                                 ---------          -------

<S>                                                                <C>             <C>         
Net sales ......................................................   $ 15,869,731    $  2,054,792
                                                                   ------------    ------------
Cost of sales ..................................................     10,897,966       1,647,563
                                                                   ------------    ------------

Gross profit ...................................................      4,971,765         407,229
Operating expenses:
Operating expenses .............................................      5,272,210         603,275
         Litigation related expenses ( Note 13) ................        583,541            --
         Depreciation and amortization .........................        395,648          18,449
                                                                   ------------    ------------
                  Total operating expenses .....................      6,251,399         621,724
                                                                   ------------    ------------

         Operating (loss) ......................................     (1,279,634)       (214,495)
                                                                   ------------    ------------

         Other income:
                  Interest and other income ....................         12,500         182,161
                                                                   ------------    ------------

                                                                     (1,267,134)        (32,334)
         Other expenses:
                  Loss on investment (Note 5) ..................      4,221,490            --

Interest expense: ( Note 10 )
         Interest and finance charges ..........................         96,256            --
         Amortization of debt issuance costs ...................        288,645            --
                                                                   ------------    ------------
         Total interest expense ................................        384,901            --
                                                                   ------------    ------------

(Loss) before Minority interest ................................   $ (5,873,525)        (32,334)

  Minority interest in net (loss)
    of consolidated subsidiary (Note 6) ........................        435,173            --
                                                                   ------------    ------------

Net (loss) .....................................................   $ (5,438,352)   $    (32,334)
                                                                   ============    ============

(Loss) per basic and diluted common share and share equivalents:
         Net loss before minority interest .....................      $ ( 1.96)        $ ( .01)
         Minority interest in net loss .........................            .15            --
                                                                   ------------    ------------
Net (loss) .....................................................   $      (1.81)       $ ( .01)
                                                                   ============    ============

Weighted average number
  of common shares outstanding .................................      3,005,000         978,805
                                                                   ============    ============

</TABLE>




                 See accompanying notes to financial statements
<PAGE>
              MULTIMEDIA CONCEPTS INTERNATIONAL, INC. ANDSIDIARIES
             STATEMENT OF CHANGES IN STOCKHOLDERS= (DEFICIT) EQUITY


                For the Period October 1, 1996 to March 31, 1998
<TABLE>
<CAPTION>

                                       Additional   Common Stock   Paid -in     Accumulated     
                                       Shares         Amount       Capital      (Deficit)



<S>          <C>                       <C>         <C>            <C>            <C>          
Balance, Oct 1, 1996 ............      3,005,000   $      3,005   $ 13,102,005   $ (5,650,336)


Net loss for the year ended
 September 30,1997 ..............           --             --             --         (32,334)
                                      ------------   ------------   ------------    ------------

Balance, September 30, 1997 .....      3,005,000   $      3,005   $ 13,102,005   $  (5,682,670)


Net loss for the six months ended
  March 31, 1998 ................           --             --             --        (5,438,352)
                                      ------------   ------------   ------------    ------------

Balance, March 31, 1998 .........      3,005,000   $      3,005   $ 13,102,005   $  (11,121,022)
                                      ============   ============   ============    ============

</TABLE>

                 See accompanying notes to financial statements

                                       F-4


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                           Increase (Decrease) in Cash

<TABLE>
<CAPTION>

                                                                 Six Months
                                                                    Ended       Year Ended
                                                                  March 31,     September 30,
                                                                     1998          1997
                                                                    -----          ----


CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                <C>            <C>      
Net loss .......................................................   $(5,438,352)   $(32,334)
                                                                    -----------    -----------
Adjustments to reconcile net loss to cash (used)
  provided for operating activities:
  Depreciation and amortization ................................       395,648         18,449
  Loss on abandonment of assets ................................        45,255           --
  Minority interest in net loss of subsidiary ..................     2,713,709           --
Changes in assets and liabilities:
 Decrease in Accounts receivable ...............................       318,824        468,398
 Decrease in advances to supplier ..............................        60,000        (60,000)
(Increase) decrease in Merchandise inventories .................    (7,862,399)       (28,572)
(Increase) decrease in prepaid expenses and other current assets      (189,516)          --
(Increase) decrease in deposits and other assets ...............      (330,409)           (50)
 Increase in accounts payable ..................................     3,164,527        147,911
(Decrease) in accrued expenses and liabilities .................          --           (7,185)
Increase in deferred rent liability ............................       110,351           --
                                                                   -----------    -----------
         Total adjustments .....................................    (1,574,010)       538,951
                                                                   -----------    -----------
         Net cash provided by operating activities .............    (7,012,362)       506,617
                                                                   -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of restricted certificates of deposit .................    (2,250,000)          --
Increase in property and equipment .............................    (3,223,288)          --
Loss on investment .............................................     4,221,490           --
Loans  made and repaid by officer ..............................     1,314,596       (369,455)
                                                                    -----------    -----------
         Net cash (used for) investing activities ..............        62,798       (369,455)
                                                                    -----------    -----------
</TABLE>




                 See accompanying notes to financial statements

                                       F-5


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           Increase (Decrease) in Cash
<TABLE>
<CAPTION>

                                                     Six Months
                                                       Ended        Year Ended
                                                      March 31,     September 30,
                                                        1998           1997
                                                       -----           ----



CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                   <C>            <C>
 Net borrowings under financing agreement ........    5,445,198         --
 Loans and advances-affiliates ...................    1,276,235     (595,235)
 Advances to equity investee .....................         --        (20,000)
 Proceeds from notes payable .....................    1,850,000         --
                                                     ----------   ----------
         Net cash provided by investing activities    8,571,433     (615,235)
                                                     ----------   ----------


NET INCREASE (DECREASE) IN CASH ..................    1,621,869     (478,073)
Cash, beginning of period ........................       13,189      491,262
                                                     ----------   ----------
Cash, end of period ..............................   $1,635,058   $   13,189
                                                     ==========   ==========
Supplemental disclosure of cash flow information:
Interest paid ....................................   $  526,875   $     --
Taxes paid .......................................   $      800   $     --

</TABLE>


















                 See accompanying notes to financial statements


                                       F-6


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL INC., AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1- DESCRIPTION OF COMPANY:

     Multimedia  Concepts  International,  Inc.  (the  "Company")  is a Delaware
corporation  which  was  organized  in  June  1994  under  the  name  U.S.  Food
Corporation. The Company changed its name to American Eagle Holdings Corporation
in  April  1995 and then to its  present  name in June  1995.  The  Company  was
initially  formed as a holding  company for the purpose of forming an integrated
clothing design,  manufacturing,  and distribution  operation. In June 1994, the
Company acquired 55% of the outstanding shares of common stock of American Eagle
Industries  Corp.,  which had acquired 1 00% of the outstanding  shares of Match
II, Inc.

     In  January  1997,  the  Company  terminated  its  financing  and  business
relationships  with these  subsidiaries.  Both  companies  had ceased  operating
activities in September 1996.

     In January 1997,  the Company also  terminated  all business  relationships
with Multi Media  Publishing  Corp., an  unconsolidated  subsidiary in which the
Company had a 34% interest since June 1995.  This company during this period had
no revenue or operating activities. The Company is seeking the return of certain
funds that it had advanced to Multi Media Publishing Corp.

     In January  1997,the  Company formed a new  wholly-owned  subsidiary,  U.S.
Apparel  Corp.,  which is engaged in the  design  and  manufacture  of a line of
T-shirts  and other  tops,  predominately  for men.  U.S.  Apparel  Corp.  began
operations in January 1997.

     In  January  2,  1998,  the  Company  acquired   3,571,429  shares  of  the
outstanding common stock of United Textiles and Toys Corp. ("United  Textiles"),
a company of which the Company's  President is also  President,  Chief Executive
Officer,  and a Director.  The  issuance of these  shares at a price of $.28 per
share ($.01 above the closing  price on December 31, 1997)  represented  payment
for  $1,000,000  loaned to United  Textiles by the Company.  As a result of this
transaction, the Company owns 78.5% of the outstanding shares of common stock of
United  Textiles,  effectively  making  United  Textiles,  a  subsidiary  of the
Company.

     United Textiles is a company that was engaged in the design,  manufacturing
and marketing of a variety of lower priced women's dresses, gowns, and separates
for special occasions and formal events.

     United Textiles owns 59.1% of the outstanding common shares of Play Co Toys
and  Entertainment  Corp.  a  company  that  sells  toys and  educational  games
primarily on a retail basis.

     In  March  1998,  United  Textiles  having  sustained   continuous  losses,
discontinued operating activities.


                                       F-7


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2- BASIS OF PRESENTATION:

     In December, 1997, the Company's Board of Directors voted to change the end
of the Company's fiscal year from September 30th to March 31st. Accordingly, the
accompanying  consolidated financial statements as of March 31, 1998 reflect the
results of  operations  for the six months ended March 31, 1998.  The  financial
statements  for the year ended  September  30, 1997,  have not been  restated to
reflect the acquisition of United Textiles.

Note 3-                    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                  a.  Principles of Consolidation:

     The consolidated  financial  statements  include the accounts of Multimedia
Concepts Intentional,  Inc. and its subsidiaries,  U.S. Apparel Corp. and United
Textiles & Toys Corp. and its subsidiary Play Co. Toys and  Entertainment  Corp.
All material  intercompany  balances and  transactions  have been  eliminated in
consolidation.

                  b. Use of estimates:

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets  and  liabilities,
revenues,  and expenses and disclosure of contingent  assets and  liabilities at
the date of the  financial  statements.  Actual  amounts could differ from those
estimates.

                  c. Concentration of Credit Risk:

     Financial   instruments   that   potentially   subject   the   Company   to
concentrations of credit risk consist primarily of cash and accounts receivable.

     The Company  maintains at times,  deposits in federally  insured  financial
institutions  in excess of  federally  insured  limits.  Management  attempts to
monitor the soundness of the financial  institutions  and believes the Company's
risk is  negligible.  Concentrations  with  regard to  accounts  receivable  are
limited due to the Company's large customer base.

                  d. Merchandise Inventories:

     Merchandise  inventories  are  stated  at  the  lower  of  cost  (first-in,
first-out method- "FIFO") or market.

                  e. Fair value of Financial Instruments:

                  The carrying  amount of the Company's  financial  instruments,
consisting of accounts receivable,  accounts payable, and borrowings approximate
their fair value.


 <PAGE>

            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 3- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued)

                  f. Fixed Assets and Depreciation:

     Property and equipment is recorded at cost.  Depreciation  and amortization
are provided  using the  straight-line  method over the  estimated  useful lives
(3-15 years) of the related assets.  Leasehold  improvements  are amortized over
the lesser of the  related  lease  terms or the  estimated  useful  lives of the
improvements. Maintenance and repairs are charged to operations as incurred.

                  g.  Statements of Cash Flows:

     For purpose of the  statements  of cash flows,  the Company  considers  all
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents.

                  h. Revenue Recognition:

     The  Company  and its  subsidiaries  recognize  revenue  upon  shipment  of
finished  goods to customers.  All sales are based  pursuant to firm  contracts,
with no title to  merchandise  passing at shipping.  Sales returns and discounts
are reflected in net sales and historically have not been significant.

                  i. Income Taxes:

     The Company  accounts  for income  taxes in  accordance  with  Statement of
Financial Standards (SFAS) No. 109, Accounting for Income Taxes. Deferred income
taxes are recognized based upon the differences  between financial statement and
income tax bases of assets and liabilities using enacted rates in effect for the
year in which the differences are expected to reverse.  Valuation allowances are
established,  when  necessary,  to reduce the  deferred tax assets to the amount
expected to be  realized.  The  provision  for income taxes  represents  the tax
payable for the period and the change  during the period in deferred  tax assets
and liabilities,  including the effect of change in the valuation allowance,  if
any.

                  j. Net Loss Per Share:

     During the three-month  period ended December 31, 1997, the Company adopted
the  provisions  of SFAS  No.  128,  Earnings  Per  Share,  which  requires  the
disclosure of "basic" and "diluted"  earnings  (loss) per share.  Basic earnings
(loss) per share is computed  by dividing  net income  (loss),  by the  weighted
average number of common shares  outstanding.  Diluted earnings (loss) per share
is similar in  calculation  except that the  weighted  average  number of common
shares is increased to reflect the effects of potential  additional  shares that
would  result  from  the  exercise  of  stock   options  or  other   convertible
instruments.



                                       F-8


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3- SUMMARY OF SIGNIFICANT ACCOUNTING POLCIES: (continued)

                  k. Store Openings and Closing Costs:

     Costs  incurred  by  Play  Co.  to  open  a new  retail  location  such  as
advertising,  training  expenses,  and  salaries  of newly hired  employees  are
generally  expensed  as  incurred  and  improvements  to leased  facilities  are
capitalized.  Upon permanently closing a retail location,  the costs to relocate
fixtures, terminate employees, and other related costs are expensed as incurred.
In addition, the unamortized balance of any abandoned leasehold improvements are
expensed.

                  l.  Impairment of Long-Lived Assets:

     SFAS No. 12 1,  Accounting  for the  Impairment  of  long-lived  Assets and
long-lived Assets to be Disposed Of, requires that long-lived assets and certain
identifiable  intangibles  to be held  and used by an  entity  be  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying amount of an asset may not be recoverable. The Company adopted SFAS No.
121  effective  April 1,  1997.  There  was no impact  of such  adoption  on the
Company's financial condition and results of operations.

                  m. Stock-Based Compensation:

     SFAS  No.  123,  Accounting  for  Stock-Based   Compensation,   established
financial   accounting  and  reporting   standards  for   stock-based   employee
compensation  plans and certain  other  transactions  involving  the issuance of
stock.  The Company  adopted  the  disclosure  requirements  of SFAS No. 123 for
stock-based employee compensation  effective April 1, 1996. However, the Company
continues to use the intrinsic value method for recording  compensation expenses
as prescribed by Accounting  Principles Board Opinion (APB) No. 125,  Accounting
for Stock Issued to Employees.  The fair value method prescribed by SFAS No. 123
is used to record stock-based compensation to non-employees.

                  n. Effect of New Accounting Pronouncements:

     In June 1997, the FASB issued SFAS No. 13 1,  Disclosure  About Segments of
an  Enterprise  and  Related   Information.   This  statement   requires  public
enterprises to report financial and descriptive information about its reportable
operating  segments and  establishes  standards  for related  disclosures  about
product and services,  geographic areas, and major customers. This pronouncement
is effective for fiscal years  beginning after December 15, 1997 and the Company
expects to adopt the  provisions  of this  statement  in the  fiscal  year 1999.
Management does not expect this statement to significantly  impact the Company's
financial statements.

     In April 1998,  the American  Institute of  Certified  Public  Accountant's
Accounting  Standards  Executive  Committee  issued  Statement of Position (SOP)
98-5, Reporting on the Costs of start Up Activities. The SOP, which is effective
for fiscal years  beginning  after  December  15, 1998 with earlier  application
encouraged,  requires  entities to expense start-up and  organization  costs for
establishing  new  operations.  Management  does not expect  this  statement  to
significantly  impact the Company's  financial  statements.  MULTIMEDIA CONCEPTS
INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 4- INVESTMENT BY U.S. STORES CORP.:

     On January 20, 1998, U.S. Stores Corp. ("U.S.  Stores") acquired  1,465,000
shares of the Company'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 the
Company'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 Corp.  American
Telecom was  incorporated  on July 11,  1997.  The  Company's  President is also
President and Director of U.S. Stores. After this transaction,  American Telecom
effectively   obtained  beneficial  vesting  control  of  the  Company  and  its
subsidiaries.


Note 5- INVESTMENT IN PREFERRED STOCK:

     The Company had reflected its investment in convertible  preferred stock in
accordance with Statement of Financial Standards No. 115- Accounting for Certain
Investments in Debt and equity  Securities.  This standard requires that certain
debt  and  equity  securities  be  adjusted  to  fair  value  at the end of each
accounting  period.  Unrealized  gains  or  losses  for  securities  treated  as
available  for sale  securities  are to be  charged  or  credited  to a separate
component of shareholders'  equity. As of March 31, 1998, the Company determined
that the decline in the value of its  investment  in  preferred  stock was other
than temporary,  and accordingly,  wrote down the cost basis of this security to
zero.  The write down of $4,221,490 was recorded as a realized loss on available
for sale securities in the accompanying consolidated statement of operations for
the six months ended March 31, 1998.

     In connection with an employment  agreement  entered into with an executive
officer in May 1996, the Company granted an option to acquire  2,900,000  common
stock purchase warrants at a price of $2.50 per warrant (market value),  payable
either in cash or other  securities.  Since the  warrants  were issued at market
value, no compensation was reflected.  As of May 1996, the officer had purchased
these warrants with payment being made throughout the transfer of 528,000 shares
of convertible preferred stock in Play Co Toys & Entertainment Corp. The Company
had valued this preferred stock at $6,917,717, the deemed fair value at the time
of the  transfer,  based upon such factors as dilution,  lack of  marketability,
etc. The Company had previously written down these securities to $4,221,490, its
deemed market value.


Note 6- MINORITY INTEREST IN SUBSIDIARIES:

     The Company owns a majority  interest (78.5%) in United Textiles,  which in
turn  owns a  majority  interest  (59.1%)  in Play  Co.  The  minority  interest
liability  represents  the  minority  shareholders'  portion  (21.5%)  of United
Textiles equity at March 31, 1998.

                                       F-9


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 7- RESTRICTED CERTIFICATE OF DEPOSIT:

     At March 31,  1998,  Play Co. has two  certificates  of  deposit  which are
restricted as to their nature. The first, in the amount of $2,000,000 represents
collateral  against a letter of credit  securing the FINOVA  Financing (Note 10)
and is classified as a non-current  asset,  as the funds in the  certificate  of
deposit will remain restricted until the letter of credit expires or is released
by FINOVA  Capital  Corporation.  The  second,  in the  amount of  $250,000,  is
collateral for a facility for letters of credit.


Note 8-           WORKING CAPITAL GUARANTEE OF MAJORITY SHAREHOLDER:

     For the years  ended March 31, 1998 and 1997,  the Play Co.  reflected  net
losses of $2,054,470 and $3,584,881 respectively, which amounts include minority
shareholders'  pro-rata share.  United  Textiles has also reflected  substantial
losses,  which  reflects  the Board of  Directors'  decision to cease  operating
activities.

     The  individual,  beneficial,  majority  shareholder  of  the  Company  has
represented  his intent and  ability to provide  additional  working  capital to
United Textiles and its subsidiary, should such be necessary.


Note 9- FIXED ASSETS:
<TABLE>
<CAPTION>


                               Fixed assets consisted of the following:
                                                        March 31,         September 30,
                                                          1998                1997
<S>                                                      <C>            <C>        
Furniture, fixtures and equipment ....................   $ 4,260,738    $    29,844
Leasehold improvements ...............................     1,551,760           --
Signs ................................................       317,363           --
Vehicles .............................................       104,912           --
                                                         -----------   -----------
                                                           6,234,773        29,844
       Less: Accumulated depreciation and amortization    (3,452,387)    (  29,844)
                                                         -----------   -----------
                                                         $ 2,782,386   $      --
</TABLE>


     The  reported  amounts for March 31, 1998  include the  consolidated  fixed
assets of United Textiles and Play Co.






                                      F-10


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10- FINANCING AGREEMENTS:

     On February 7, 1996,  Play Co.  borrowed,  under an agreement with Congress
Financial  Corporation  (Western)  (the  "Congress  Financing"),   approximately
$2,243,000,  the  proceeds  of which  were  used to repay  the then  outstanding
borrowings  under a bank  line  of  credit  agreement.  The  Congress  Financing
provided for maximum  borrowings up to $7,000,000 based upon a percentage of the
cost value of  eligible  inventory,  as  defined.  Outstanding  borrowings  bore
interest at 1.5% above the prime rate, as defined.

     In connection  with the Congress  Financing,  and the previous bank line of
credit  agreement,  European  American  Capital  Corp.  ("EACC"),  an affiliate,
provided a $2,000,000 letter of credit for collateral.  As compensation to EACC,
the Play Co. granted EACC options to acquire  shares of common stock,  the value
of such  options  estimated  at  $224,000  by Play Co.;  and  options to acquire
additional  shares of common  stock and shares of Play Co.'s  Series E preferred
stock,  the  value  of these  options  estimated  at  $234,000  by Play Co.  The
aggregate  $458,000 was  initially  included in other  assets,  as debt issuance
costs,  and additional  paid-in  capital.  The option values were amortized into
interest  expense  through  the  February  1,  1998  maturity  of  the  Congress
Financing,  resulting in aggregate interest charges of $196,849 and $214,743 for
the years  ended  March 31,  1998 and 1997  respectively.  No options to acquire
shares of common stock were  exercised  before the  termination  of the exercise
period.

     The  exercise of options to acquire  shares of Series E preferred  stock by
EACC, before the options  terminated in December 1997 upon consummation by Play.
Co.'s Series E Preferred Stock offering.

     In March 1997,  the  Congress  Financing  was amended to provide or,  among
other things,  increased borrowing ratios and an additional $1,000,000 letter of
credit  as  collateral  from  EACC.  Thereafter,   the  Congress  Financing  was
collateralized  by an  aggregate  $3,000,000  in letters of credit  through  its
maturity on February 1, 1998.

     On February 3, 1998,  Play Co.  borrowed,  under an  agreement  with FINOVA
Capital Corporation (the "FINOVA financing")  $4,866,324,  the proceeds of which
were used primarily to repay the then outstanding  borrowings under the Congress
Financing, and to pay fees related to the FINOVA Financing. The FINOVA Financing
provides for maximum  borrowings up to  $7,100,000  based on a percentage of the
cost value of  eligible  inventory,  as  defined.  Outstanding  borrowings  bear
interest at 1. 5% above the prime rate,  as defined (the prime rate at March 31,
1998 was 8.5%).  The agreement  matures on August 3, 2000 and can be renewed for
one additional year at the lender's option.

     Total fees  related to the FINOVA  Financing  aggregated  $272,000  and are
being amortized over the 30-month term of the agreement. The unamortized portion
of these debt  issuance  costs,  $330,409  is included  in  "deposits  and other
assets" at March 31, 1998.

     The FINOVA Financing  includes a financial  covenant  requiring Play Co. to
maintain,  at all times, net worth, as defined, of $750,000.  At March 31, 1998,
Play Co. was in compliance with this financial covenant.

                                      F-11


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10- FINANCING AGREEMENTS: (continued)

     The  FINOVA  Financing  is  guaranteed  by the  Company  and is  secured by
substantially all of the assets of Play Co. and $3,000,000 in letters of credit.
Of the $3,000,000 in letters of credit,  $2,000,000 is collateralized by amounts
held in a restricted  certificate of deposit (Note 7). The remaining $ 1,000,000
letter of credit, has been provided by the Company.


Note 11- ASSET PURCHASE AGREEMENT:

     On January  16,  1997,  the Board of  Directors  of Play Co.  approved  the
purchase of the assets and  assumption of certain  existing  liabilities of Toys
Intentional.  Toys  Intentional  is a high-end  retailer of toys which  operated
three mall locations in Southern California.  As part of the purchase agreement,
Play Co. obtained the rights to the Toys Intentional and Tutti Animali operating
name trademarks and also assumed the existing leases at the three locations. The
total  purchase  price was $1,024,184  which  consisted  mainly of inventory and
certain prepaid  expenses and deposits.  The purchase price was paid in the form
of a cash  payment  of  $759,184  in  January  1997  and  the  execution  of two
promissory notes aggregating $265,000 (Note 12).


Note 12- NOTES PAYABLE:
<TABLE>
<CAPTION>

                                                                                             March 31,             March 31,
                                                                                                1998                 1997
<S>                                                                                        <C>       
                           Note payable to ABC Fund, Ltd., an affiliate, 
                           bearing interest at 5% per annum, principal 
                           due on August 15, 2000, accrued interest due 
                           on May 10, 1998, and quarterly until debt paid
                           in full or converted                                            $1,500,000

                           Note payable to Breaking Waves, Inc. , an 
                           affiliate, bearing interest at 15% per annum,
                           payable in ten monthly installments of $25,000                                             
                           plus accrued interest through maturity on
                           December 31, 1998.  Note is subordinate
                           to the FINOVA Financing (Note 10)                                 250,000

                           Note payable to stockholder of Toys Intentional,
                           non-interest bearing, guaranteed by the Company,
                           payable in quarterly installments of $25,000  
                           through maturity, on January 6, 1999.
                           Note is subordinate to FINOVA Financing
                           (Note 10)                                                          100,000             200,000

</TABLE>


                                      F-12


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                                                                                             March 31,             March 31,
                                                                                                1998                 1997


Note 12- NOTES PAYABLE: (continued)
<S>                           <C>                               <C> <C>                                               <C>   
                           Note payable to stockholder of Toys Intentional,
                           non-interest bearing, guaranteed by the Company,
                           payable in five installments ranging from $11,667
                           to $15,000 through maturity, on June 16, 1997                        -                     41,666

                           Total notes payable                                                1,850,000              241,666
                           Less: current portion                                               (350,000)            (141,666)
                                                                                               ---------             ---------
                           Long-term portion                                                 $1,500,000             $100,000
                                                                                              ==========             ========
</TABLE>

Note 13- CLOSURE OF RETAIL STORES-LITIGATION:

     During the year ended  March 31,  1998,  Play Co.  closed,  and  ultimately
vacated,  five  retail  locations  prior to the end of their lease  terms.  As a
result,  four of the five landlords  filed lawsuits  against Play Co. to collect
unpaid  rent as well as  rental  obligations  remaining  under  the terms of the
respective leases.

     Subsequent  to the filing of actions by the landlords and through May 1998,
Play Co., with the assistance of outside counsel,  reached settlement agreements
with the various landlords. These settlements aggregated $469,600.

     The  statement  of  operations  for the year ended March 31, 1998  includes
$583,541 of "litigation related expenses" which comprise the settlement costs on
the  aforementioned  leases,  legal fees associated with the  negotiations,  and
monthly rentals for the locations since vacating the premises.

     Play Co. currently has one remaining  landlord/tenant  matter which has yet
to be resolved. Play Co.'s management expects this matter to be resolved without
further material effects on the financial statements.






                                      F-13


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 14- INCOME TAXES:

     Deferred income taxes reflect the net tax effects of temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes  and the  amounts  used for income  tax  purposes.  The tax  effects of
significant  items  comprising the Company's net deferred  income tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>

                                                                                     March 31,                        September 30,
                                                                                          1998                           1997
                                                                                        ------                         ------------
<S>                                                                                     <C>                                <C>   
                           Inventories                                                  $(227,696)                         $(500)
                           AMT tax credits                                                  (23,260)                        (-)
                           Accrued expenses                                                 (24,534)                        (400)
                                                                                            --------                         -----
                           Current portion of net deferred
                           income tax (assets) liabilities                                 (275,490)                        (900)
                                                                                           ---------                         -----
                           Depreciation and amortization                                    (26,974)                        (100)
                           Loss on disposal of assets                                        25,926                           -
                           Net operating loss carryforwards                              (3,877,473)                    (1,011,785)
                           Deferred rent liability                                          (43,891)                          -
                           Income taxes                                                         508                           -
                                                                                          ------------                     --------
                           Long-term portion of net deferred
                           income tax (assets) liabilities                               (3,921,904)                   (1,011,875)
                                                                                          -----------                    -----------

                           Total net deferred income tax
                           (assets) liabilities                                          (4,197,394)                   (1,012,775)
                                                                                          -----------                    -----------
                           Valuation allowance                                            4,197,394                     1,012,775
                                                                                          ---------                        ---------
                           Net deferred income taxes                                     $      -                      $        -
                                                                                          ===========                   ============
</TABLE>

     At March 31, 1998, a 100% valuation  allowance has been provided on the net
deferred  income tax assets since the Company cannot  determine that it is "more
likely than not" to be realized.

     The  reconciliation  of income taxes computed at the federal  statutory tax
rate to income  taxes at the  effective  income  tax rate in the  statements  of
operations is as follows:
<TABLE>
<CAPTION>

                                                                                        March 31,
                                                                                          1998
<S>                                                                                       <C>    
                           Federal statutory income tax (benefit) rate                    (34.0)%
                           State income taxes, net of federal benefit                       0.1
                           Change in valuation allowance                                   33.9
                                                                                           ----

                           Effective income tax rate                                          - %
</TABLE>

     At March 31, 1998,  the Company has net operating loss (NOL) carry forwards
of approximately  $1,000,000 for federal purposes and approximately $800,000 for
state  purposes.  The  federal  and state NOLs are  available  to offset  future
taxable income and expire at various dates through September 30, 2015.

<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 14- INCOME TAXES: (continued)

     A portion of the NOLs  described  above are  subject to  provisions  of the
Internal  Revenue  Code,  Section 382,  which limits use of net  operating  loss
carryforwards  when  changes in  ownership of more than 50% occur during a three
year testing period.


Note 15- COMMITMENTS AND CONTINGENCIES:

                  Operating Leases

     The Company  until March 31, 1998  occupied  space at 448 West 16th Street,
New York, NY, where it maintained its administrative offices,  showroom, factory
and warehouse.  It vacated these  premises and relocated to 141 0 Broadway,  New
York, NY where it occupies  office space with United  Textiles and U.S.  Apparel
Corp.  U.S.  Apparel  Corp. is the prime tenant on the lease and has allowed the
Company to occupy space on a rent free basis.

     The lease  which was signed on April 21,  1998  provides  for annual  lease
payments of $88,400 under this noncancellable  lease. The lease term is from May
15, 1998 through October 31, 2001. Actual lease payments do not begin until July
1998.

     Play Co. leases its retail store properties under  noncancelable  operating
lease  agreements  which expire through October 2007 and require various minimum
annual rentals.  Several of the leases provide for renewal options to extend the
leases for additional five or ten year periods.

     Certain  store  leases also require the payment of property  taxes,  normal
maintenance,  and  insurance on the  properties  and  additional  rents based on
percentages of sales in excess of various specified retail sales levels.

     During the years ended March 31, 1998 and 1997,  Play Co.  incurred  rental
expense under all operating  leases of $3,112,822 and $2,681,728,  respectively.
Contingent rent expense was insignificant  during the years ended March 31, 1998
and 1997.

     During the year ended March 31, 1997,  Play Co.  subleased  portions of its
warehouse  building  and  a  portion  of  one  of  its  retail  locations  under
noncancelable  operating  leases.  Sub lease income for the year ended March 31,
1997 was $93,822.


                                      F-14


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 15- COMMITMENTS AND CONTINGENCIES: (continued)


     At March 31, 1998,  the Aggregate  future  minimum lease payments due under
these noncancelable leases are as follows:

                    Year Ending
                    March 31,      Amount

                        1999   $ 2,541,123
                        2000     2,583,314
                        2001     2,103,669
                        2002     1,788,302
                        2003     1,665,152
Thereafter                       3,919,531
                               -----------
Total minimum lease payments   $14,601,091
                               ===========

                  Termination of Warehouse Lease

     In April 1997,  Play Co.  negotiated  a  settlement  with a landlord for an
excess  warehouse  facility,  whereby  Play Co.  was  released  from  the  lease
obligation for a settlement of $60,000. This early lease termination will result
in annual  savings of  approximately  $235,000  based on the original  scheduled
lease term through April 2000.

                  Convertible Debt Agreement

     As  discussed  in Note 12, Play Co. has a $1.5  million note payable to ABC
Fund, an affiliate. Prior to the August 15, 2000 maturity date, the note payable
is  convertible  into the common stock of a subsidiary of Play Co. ABC Fund may.
At its option,  convert all or a portion of the note and accrued unpaid interest
thereon  into up to 25% of the common  stock of the  subsidiary  at an  exercise
price equal to the net book value of the subsidiary's shares.

                  Dependence on Suppliers

     For the year ended March 31, 1998,  United  Textiles  ceased  manufacturing
activities. United Textiles had disposed of all remaining inventory.

     The Company's sales through its subsidiary, U.S. Apparel are generated from
short-term  purchase  orders  from  customers  who place  orders on an as needed
basis.  The Company  typically  manufactures its products upon receipt of orders
from  customers and delivers  finished  goods within four weeks of receipt of an
order.  The  Company  generally  manufactures  10% more  goods than is needed in
anticipation of reorders from customers.

     The  Company  has been able to  purchase  raw  materials  from a variety of
suppliers.

                                      F-15


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 15- COMMITMENTS AND CONTINGENCIES: (continued)

     Approximately  thirty -One percent (31%) of Play Co.'s inventory  purchases
are made  directly from five (5)  manufacturers.  Play Co.  typically  purchases
products from it suppliers on credit arrangements provided by the manufacturers.
The  termination  of a  credit  line  or the  loss of a  major  supplier  or the
deterioration  of Play Co.'s  relationship  with a major  supplier  could have a
material adverse effect on Play Co.'s business.

                  Seasonality

     Play Co.'s business is highly seasonal with a large portion of its revenues
and  profits  being  derived   during  the  months  of  November  and  December.
Accordingly,  in order  for Play Co.  to  operate,  it must  obtain  substantial
short-term  borrowings  from  lenders and its  suppliers  during the first three
quarters  of  each  fiscal  year  to  purchase   inventory   and  for  operating
expenditures.  Historically,  Play  Co.  has been  able to  obtain  such  credit
arrangements  and  substantially  repay the amounts  borrowed from suppliers and
reduce  outstanding  borrowings from its lender during the fourth quarter of its
fiscal year.


Note 15- RELATED PARTY TRANSACTIONS:

                  Office and warehouse lease

     Play Co.  leases an office and warehouse  building  from a  partnership  of
which one of the partners is a Company officer,  stockholder and director.  Rent
expense  under this lease for the years ended  March 31,  1998 and 1997  totaled
$247,289 and $227,546, respectively. The lease expires in April 2000.

                  Sub-Lease

     During the year ended March 31,  1997,  sub-lease  rental  income  included
$54,422 from an entity in which  stockholders  and employees of Play Co. have an
ownership interest.  Sub-lease income was insignificant for the year ended March
31, 1998.

                  Consulting Agreement

     In January  1997,  Play Co.  entered into a consulting  agreement  with the
stockholder  of Toys  Intentional  as part of the purchase  agreement  with Toys
Intentional. The term of the agreement commenced on January 16, 1997, expired on
April 16,  1997 and called for three  monthly  payments of $ 10,000  each.  As a
result, the expenses related to the agreement totaled $23,334 and $6,666 for the
years ended March 31, 1998 and 1997, respectively.




                                      F-16


<PAGE>
            MULTIMEDIA CONCEPTS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




Note 15- RELATED PARTY TRANSACTIONS: (continued)
                  Consulting Fees

     Play Co. made  payments  aggregating  $25,000 and $7,000 to the Chairman of
the Board of Directors for various  consulting  services  during the years ended
March 31, 1998 and 1997, respectively.

                  Commitment of Financing

     The individual, beneficial majority stockholder of the Company, in a letter
dated May 15, 1998, has represented his intent and ability to provide additional
working capital to Play Co., should such be necessary, through September 1999.


Note 16- YEAR 2000:

     The  Company  does not  believe  that the impact of the year 2000  computer
issue will have a significant  impact on its  operations or financial  position.
Furthermore,  the  Company  does  not  believe  that  it  will  be  required  to
significantly modify its internal computer systems. However, if internal systems
do not correctly recognize date information when the year changes to 2000, there
could be adverse impact on the Company's operations.  Furthermore,  there can be
no assurance that another  equity's failure to ensure year 2000 capability would
not have an adverse effect on Company and its subsidiary, Play Co.


Note 17- SUBSEQUENT EVENTS:

     In April  1998,  American  Telecom in a  transaction  in which  shares were
exchanged, 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.



                                      F-17


<PAGE>
                                   SIGNATURES

     In  accordance  with Section 13 or 15(d) of the  Exchange  Act of 1934,  as
amended  the  Registrant  has  caused  this  report to be signed on its  behalf,
thereunto duly authorized as of the 15th day of September, 1998.


MULTIMEDIA CONCEPTS INTERNATIONAL, INC.


By: /s/ Ilan Arbel
Ilan Arbel, President

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  Registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>


<S>                                                           <C>                                                  <C>
/s/ Ilan Arbel                                                President and Director                               9/15/98
Ilan Arbel                                                                                                         Date

/s/ Rivka Arbel                                               Director                                             9/15/98
Rivka Arbel                                                                                                        Date

/s/ Yair Arbel                                                Director                                             9/15/98
Yair Arbel                                                                                                         Date

</TABLE>