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

                                   FORM 10-QSB
                                   (Mark One)

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

                For the quarterly period ended September 30, 1999

                                       OR

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

             For the transition period from __________ to __________

                         Commission File Number O-25030

                       PLAY CO. TOYS & ENTERTAINMENT CORP.
        (Exact Name of Small Business Issuer as Specified in its Charter)

<TABLE>
<CAPTION>
<S>                                                                                     <C>
         Delaware                                                                       95-3024222
         (State or Other Jurisdiction of                                                (IRS Employer Identification No.)
         Incorporation or Organization)
</TABLE>

                550 Rancheros Drive, San Marcos, California 92069
                    (Address of Principal Executive Offices)

                                 (760) 471-4505
                (Issuer's Telephone Number, Including Area Code)

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares of each of the issuer's classes of common equity
outstanding as of the latest  practicable  date:  Common Stock,  $.01 par value:
5,548,857 shares outstanding as of November 19, 1999.

     Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.

                                TABLE OF CONTENTS

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

Item 1. FINANCIAL STATEMENTS

<S>                                                                         <C> <C>                                             <C>
                     Condensed consolidated balance sheets as of  September 30, 1999                                            3
                     and March 31, 1999.

                     Condensed consolidated statements of operations and comprehensive
                     net loss for three months and six months ended September 30, 1999 and 1998.                                4

                     Condensed consolidated statements of cash flows for the six months
                     ended September 30, 1999 and 1998.                                                                         5

                     Notes to condensed consolidated financial statements                                                     6-8

Item 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF  OPERATIONS                                                                    9-17

PART II. OTHER INFORMATION                                                                                                     18

Item 1.              LEGAL PROCEEDINGS

Item 2.              CHANGES IN SECURITIES AND USE OF PROCEEDS                                                                 18

Item 3.              DEFAULTS UPON SENIOR SECURITIES                                                                           18

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

Item 5.              OTHER INFORMATION                                                                                         18

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

                     Signatures                                                                                                19

</TABLE>
<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.
                 (A SUBSIDIARY OF UNITED TEXTILES & TOYS CORP.)
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>

                                                               September 30, 1999 March 31, 1999
                                                                    (unaudited)

Current

<S>                                                                  <C>           <C>
            Cash .................................................   $   377,178   $   125,967
            Accounts receivable ..................................       172,442        98,276
            Merchandise inventories ..............................    15,127,625    11,506,284
            Stock subscription receivable ........................       723,678          --
            Other current assets .................................     2,425,601     1,660,263
                                                                     -----------   -----------

                                              Total current assets    18,826,524    13,390,790

Property and Equipment, Net of accumulated
            depreciation and amortization of $4,511,565
            and $4,058,603, respectively .........................     7,245,790     5,348,175



Deposits and other assets ........................................     3,412,965     2,411,427
                                                                     -----------   -----------

                                                                     $29,485,279   $21,150,392
                                                                     ===========   ===========


                       LIABILITIES & STOCKHOLDERS' EQUITY

                                                                              September 30, 1999  March 31, 1999
Current

<S>                                                                                <C>             <C>
           Accounts payable ....................................................   $  9,705,643    $  5,611,442
           Accrued expenses and other liabilities ..............................        260,709         595,008
           Current portion of notes payable and capital leases .................        864,429       1,352,197
           Borrowings under financing agreement ................................     10,725,774            --
                                                                                   ------------    ------------

                   Total current liabilities ...................................     21,556,555       7,558,647


Borrowings under financing agreement ...........................................           --         7,814,666
Notes payable and capital leases, net of current portion .......................      1,000,637         585,681
Deferred rent liability ........................................................        130,881         126,769
                                                                                   ------------    ------------

                           Total liabilities ...................................     22,688,073      16,085,763
                                                                                   ------------    ------------



Minority interest in subsidiary ................................................      1,612,976            --
                                                                                   ------------    ------------



Stockholders' equity:

           Convertible series E preferred stock, $1 par, 25,000,000 shares
             authorized: 5,858,903 shares outstanding ..........................      6,638,047       5,682,101
           Convertible  series F preferred  stock,  $0.01 par,  5,500,000 shares
             authorized; 750,000 and 0
             shares outstanding, respectively ..................................        428,571            --
           Common stock, $.01 par value, 160,000,000 shares authorized;
             5,548,852 and 5,503,519 shares outstanding, respectively ..........         55,488          55,035
           Additional paid-in-capital ..........................................     17,960,428      15,335,172
           Accumulated deficit .................................................    (19,898,304)    (16,007,679)
                                                                                   ------------    ------------

                                               Total stockholders' equity ......      5,184,230       5,064,629
                                                                                   ------------    ------------

                                                                                   $ 29,415,279    $ 21,150,392
                                                                                   ============    ============

</TABLE>

            See accompanying notes to condensed financial statements

<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.
                 (A SUBSIDIARY OF UNITED TEXTILES & TOYS CORP.)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           AND COMPREHENSIVE NET LOSS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                          Three Months Ended September 30, Six-months Ended September 30,

                                                                1999           1998            1999             1998
                                                                ----
<S>                                                         <C>             <C>             <C>             <C>
Net sales ...............................................   $  6,867,119    $  6,098,315    $ 13,375,684    $ 12,455,710
Cost of Sales ...........................................      3,600,901       3,414,054       7,364,115       7,120,385
                                                            ------------    ------------    ------------    ------------
                                 Gross profit ...........      3,266,218       2,684,261       6,011,569       5,335,325
                                                            ------------    ------------    ------------    ------------
Operating expenses:
                 Operating expenses .....................      3,790,268       2,610,120       7,545,358       5,093,891
                 Depreciation and amortization ..........        228,514         193,794         452,982         382,211
                                                            ------------    ------------    ------------    ------------
                                 Total operating expenses      4,018,782       2,803,914       7,998,340       5,476,102
                                                            ------------    ------------    ------------    ------------
Operating loss ..........................................       (752,564)       (119,653)     (1,986,771)       (140,777)
                                                            ------------    ------------    ------------    ------------
Interest expense:
                 Interest and finance charges ...........        300,016         156,860         584,680         295,312
                 Amortization of debt issuance costs ....         47,424          27,202          78,154          54,402
                                                            ------------    ------------    ------------    ------------
                                 Total interest expense .        347,440         184,062         662,834         349,714
                                                            ------------    ------------    ------------    ------------


Minority interest in loss of consolidated subsidiary ....        143,497            --           143,497            --
                                                            ------------    ------------    ------------    ------------
Net income (loss) .......................................       (956,507)       (303,715)     (2,506,108)       (490,491)

Other comprehensive income (loss) .......................           --              --              --              --
                                                            ------------    ------------    ------------    ------------
Comprehensive net income (loss) .........................   $   (956,507)   $   (303,715)   $ (2,506,108)   $   (490,491)
                                                            ============    ============    ============    ============
Calculation of basic and diluted income (loss) per share:
  Net income (loss) .....................................   $   (956,507)   $   (303,715)   $ (2,506,108)   $   (490,491)
  Effects of non-cash dividends on convertible
     preferred stock ....................................       (799,402)     (1,200,000)     (1,384,517)     (1,200,000)
                                                            ------------    ------------    ------------    ------------
   Net income (loss) applicable to common
      shares ............................................   $ (1,755,909)   $ (1,503,715)   $ (3,890,625)   $ (1,690,491)
                                                            ============    ============    ============    ============

  Basic and diluted loss per common share
                 and share equivalents ..................   $      (0.32)   $      (0.37)   $      (0.70)   $      (0.41)
                                                            ============    ============    ============    ============
 Weighted average number of common shares
          and share equivalents outstanding .............      5,548,852       4,103,525       5,537,457       4,103,525
                                                            ============    ============    ============    ============
</TABLE>

            See accompanying notes to condensed financial statements


<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.
                 (A SUBSIDIARY OF UNITED TEXTILES & TOYS CORP.)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                      Six-months Ended September 30,

                                                                           1999               1998
                                                                           ----               ----

CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                     <C>             <C>
         Net loss ...................................................   $ (2,506,108)   $   (490,491)
         Adjustments used to reconcile net loss to net
           cash used in operating activities:
                  Depreciation and amortization .....................        452,962         382,211
                  Minority interest in net loss of subsidiary .......       (143,497)           --
                  Deferred rent .....................................          4,112           9,102
                  Stock compensation ................................           --            21,876


         Increase (decrease) from changes in:
                             Accounts receivable ....................        (74,166)         21,077
                           Merchandise inventories ..................     (3,621,341)     (4,312,326)
                           Other current assets .....................       (647,338)       (500,243)
                           Deposits and other assets ................     (1,001,538)       (163,756)
                           Accounts payable .........................      4,094,201       2,144,710
                             Accrued expenses and other liabilities .       (334,299)       (528,880)
                                                                        ------------    ------------
                             Net cash used in operating activities ..     (3,777,012)     (3,416,720)
                                                                                        ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Purchases of property and equipment ........................     (1,919,427)     (1,149,757)
                                                                        ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from issuance of preferred and common stock .......      3,540,504         156,877
         Borrowings under financing agreement .......................     21,157,590      17,967,798
         Repayments under financing agreement .......................    (18,246,482)    (14,931,000)
         Borrowings under notes payable .............................           --         1,147,450
         Repayments under notes payable and capital leases ..........       (503,962)           --
                                                                        ------------    ------------
                            Net cash provided by financing activities      5,947,650       4,341,125
                                                                        ------------    ------------
Net increase (decrease) in cash .....................................        251,211        (225,352)
Cash at beginning of period .........................................        125,967         648,986
Cash at end of period ...............................................   $    377,178    $    423,634
                                                                        ============    ============
</TABLE>

            See accompanying notes to condensed financial statements
<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999
                                   (Unaudited)

Note 1.           General

     The  interim  accompanying   unaudited  condensed   consolidated  financial
statements have been prepared in accordance with generally  accepted  accounting
principles ("GAAP") for interim financial  information and with the instructions
to Form  10-QSB.  Accordingly,  they do not include all of the  information  and
footnotes required by GAAP for complete financial statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  For further  information,
management  suggests that the reader refer to the audited  financial  statements
for the year ended March 31, 1999  included in its Annual Report on Form 10-KSB.
Operating  results for the  six-month  period ended  September  30, 1999 are not
necessarily indicative of the results of operations that may be expected for the
year ending March 31, 2000.

Note 2.           Leases

     During the three-month period ended September 30, 1999, the Company entered
into several  capital leases to help finance its new computer system and several
new stores.  The leases are for an  aggregate  principal  amount of $336,109 and
bear interest at rates varying between 9.2% and 17.5%.

Note 3.           Sale of Shares in Subsidiary

     On July 15, 1999,  Tudor  Technologies,  Inc.  ("Tudor"),  a British Virgin
Islands  corporation,  an entity  of which Mr.  Moses  Mika (a  director  of the
Company)  is a  shareholder  - as an assignee of an option to acquire 25% of the
outstanding  shares  of the  common  stock of the  Company's  then  wholly-owned
subsidiary,  Toys International.COM  ("Toys"), elected to exercise the option to
purchase the stock in the subsidiary.  As of this date, Tudor received 2,335,000
or 25% of the  outstanding  shares of the subsidiary,  for $723,678.  The option
called for the purchase price to be 25% of the  subsidiary's  book value at June
30, 1999. The Company has recorded a stock subscription  receivable as a current
asset to reflect this transaction as the funds were received in October 1999.

     This option arose out of the June 30, 1998  conversion,  by ABC Fund,  Inc.
("ABC," an affiliate of the Company),  of a $1.5 million debenture into Series E
Preferred Stock ("Series E Stock") as of June 30, 1998. Pursuant to the terms of
the  debenture,  in September  1998, ABC assigned its right to purchase the Toys
common stock to Tudor.

     On July 20,  1999,  the Company  entered  into an agreement to sell 660,000
shares of Toys common  stock to CDMI  Capital  Corporation  ("CDMI") and Concord
Effekten  ("Concord") of Frankfurt,  Germany. Mr. Mika is a shareholder of CDMI.
This investment represented a 6.6% ownership for these shareholders. The Company
received   gross   proceeds  of  $2,800,000  and  recorded  this  as  an  equity
transaction.



<PAGE>
     No gain or loss was recorded on the sales of Toys shares to Tudor, CDMI, or
Concord per Staff Accounting  Bulletin No. 5 as such sales of shares were issued
as part of a broader corporate reorganization contemplated by the Company in the
form of a public offering of Toys shares as discussed below.

     Toys has granted an aggregate  250,000  options to purchase common stock of
Toys to certain  directors,  officers,  and advisors  with an exercise  price of
$4.24 per share.  These  options  are for a period of three years and may not be
exercised  until twelve months after the public offering on the Toys shares (see
below).  As the Company  and Toys  utilize  the  provisions  of APB 25 for stock
options granted to employees,  no compensation  expense was recorded for 224,000
of these  options  as the  exercise  price was  estimated  by  management  to be
approximately  equal to the fair  value  given  the sales of Toys  shares  which
immediately preceded these grants.  However,  26,000 of the options were granted
to a legal advisor for services related to the proposed public  offering.  These
shares were valued by management at the  estimated  fair value of  approximately
$118,000 and were recorded as deferred offering costs which is included in other
current  assets at September 30, 1999,  with an offsetting  effect to additional
paid-in  capital.  Upon  recording the effects of the completed  offering,  this
amount  will  be  netted  against  the  proceeds  of the  offering  credited  to
additional paid-in capital. As such, the compensation  recorded for these shares
will have no net  effect on the  Company's  consolidated  equity or  results  of
operations.

     Concurrently,  the Company granted an additional  450,000 incentive options
to acquire  shares of Toys common stock which have an exercise  period over nine
years at an exercise  price of 3 Euro per share.  As these  options were granted
subject to Toys meeting future performance criteria, no compensation expense has
been recorded currently as the compensation has not yet been earned.

     On November  19,  1999,  Toys  completed an initial  public  offering  (the
"Offering") on the SMAX segment of the Frankfurt Stock Exchange in Germany.  The
Offering was  underwritten by Concord.  Toys sold 2 million  shares,  or a 16.7%
interest,  in the Offering for gross proceeds of approximately $27 million.  The
offering  was  priced at 13 Euro per  share,  which was  approximately  equal to
$13.52 per share. The Company retained  majority  ownership of Toys with a 58.4%
equity interest in the subsidiary and, as a result, will continue to consolidate
Toys' operations in its financial statements.

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

     The Company  expects to complete the accounting for the net proceeds of the
Offering during the quarterly period ended December 31, 1999.

     As a result of the  transactions  involving  Toys  stock,  the  Company has
recorded a minority interest in its consolidated financial statements to reflect
the ownership of the minority owners. This represents the minority shareholders'
basis in Toys,  along with their  respective  portion of the net losses recorded
for Toys from the transaction date through September 30, 1999.




<PAGE>
Note 4.            Basic and Diluted Loss per Share

     The basic and  diluted  loss per  common  share for the three and six month
periods  ending  September  30,  1999 and 1998,  are the same as the  effects of
common stock equivalents are  anti-dilutive  given the net loss per common share
in each period.  Potentially  dilutive  common  shares  aggregate  approximately
68,383,000,  which could result from the exercise of options,  warrants, and the
conversion  of  debentures  and/or the Series E and  Series F  Preferred  Stock.
Exercise or conversion of certain of these  instruments  is restricted  based on
defined holding periods or vesting schedules.

Note 5.           Subsequent Events

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

     On  October  25,  1999,  Tudor  lent the  Company  $127,922  under a Demand
Promissory  Note  ("Demand  Note").  The Demand Note carries an interest rate of
eight  percent per annum.  The Demand Note was a bridge loan designed to be paid
off after the completion of the then  contemplated  initial  public  offering of
Toys.
<PAGE>
 ITEM 2.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS


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  that could cause actual  results to differ  materially
from those projected.

     The Company's operations are substantially  controlled by United Textiles &
Toys Corp.  ("UTTC"),  the Company's parent,  which currently owns approximately
43.9% of the issued and outstanding  shares of the Company's Common Stock.  UTTC
is a Delaware  corporation  and public company which was organized in March 1991
and commenced  operations  in October 1991 and now operates  solely as a holding
company.

For the three months ended September 30, 1999 compared to the three months ended
September 30, 1998

     The Company  generated  net sales of  $6,867,119  in the three months ended
September 30, 1999. This represented an increase of $768,804, or 12.6%, from net
sales of  $6,098,315 in the three months ended  September 30, 1998.  All of this
sales growth came from the Company's new stores as same store sales  declined by
24.8% for the period.

     The Company  believes  that its same store sales  showed a decline  after a
period of two years of continuous increases (in the fiscal years ended March 31,
1998 and March 31, 1999)  because in the three months ended  September 30, 1999,
the flow of allocated or "hot" selling merchandise is being spread over 25% more
stores.  This  shortfall in allocated or "hot" selling  inventory is a result of
the current  credit  lines that the Company  has with some of its  vendors.  The
Company is  working to  increase  its lines of credit  with its  vendors to more
adequately  address not only the past growth but its expected  future  growth as
well.  In  addition,  the  Company  held back a  substantial  amount of critical
inventory  from its  existing  stores  for the six new  stores  it opened in the
September through late October timeframe.

     The Company  posted a gross profit of  $3,266,218 in the three months ended
September 30, 1999, an increase of $581,957,  or 21.7%, from the gross profit of
$2,684,261  in the three months  ended  September  30,  1998.  This gross profit
increase  was due to the  increase  in sales  noted above and an increase in the
Company's  gross margin.  The gross margin of 47.6% in the September 1999 period
was an  increase  of 3.6%  over  the  Company's  gross  margin  of  44.0% in the
September 1998 period.

     Operating expenses  (excluding  depreciation and amortization  expenses) in
the three months ended September 30, 1999 were  $3,790,268.  This  represented a
$1,180,148,  or  45.2%,  increase  over  the  Company's  operating  expenses  of
$2,610,120 in the three months ended September 30, 1998. The primary reasons for
the operating  expense increase were an increase in payroll and related expenses
of $525,871  and an increase in rent expense of  $519,877.  The payroll  expense
increase was due to the addition of several middle  managers and of employees at
new  stores.  The growth of rent  expense  was the  result of adding  additional
stores.



<PAGE>
     During the three months ended  September  30,  1999,  the Company  recorded
non-cash  depreciation  and  amortization  expenses of $228,514,  a $34,720,  or
17.9%,  increase  from $193,794 in the period ended  September  30, 1998.  Total
operating   expenses   (operating   expenses   combined  with  depreciation  and
amortization)  in the September 1999 period were  $4,018,782,  a $1,214,868,  or
43.3%,  increase  from total  operating  expenses of $2,803,914 in the September
1998 period.

     Since the $581,957  increase in gross  profit was less than the  $1,214,868
increase in total operating expenses,  the Company's operating loss increased by
$632,911  from  $119,653  during the three  months ended  September  30, 1998 to
$752,564 during the three months ended September 30, 1999.

     Interest  expense totaled $347,440 for the three months ended September 30,
1999. This represented a $163,378  increase from interest expense of $184,062 in
the three months ended  September 30, 1998. The primary reason for the increased
level of interest  expense was a higher level of  borrowings in the three months
ended September 30, 1999 than in the September 1998 period.

     During the three months ended  September 30, 1999,  the Company  recorded a
minority  interest in the loss of  consolidated  subsidiary  of  $143,497.  This
minority  interest  arose  out of the  sale  of  stock  of  the  Company's  Toys
International.COM,  Inc. ("Toys") subsidiary in July 1999 to Tudor Technologies,
Inc.  ("Tudor"),   CDMI  Capital  Corporation  ("CDMI"),  and  Concord  Effekten
("Concord"),  as described  in Note 3 to the  condensed  consolidated  financial
statements  and below.  Since Toys incurred a loss during the three months ended
September  30,  1999,  this  minority  interest  represented  a reduction in the
Company's net loss.

     As a result of the above-mentioned factors, the Company recorded a net loss
of $956,507 for the three months ended  September 30, 1999.  This  represented a
$652,792  increase  over the net loss of $303,715  recorded in the three  months
ended September 30, 1998. For the  three-month  periods ended September 30, 1999
and 1998, the net losses of $956,507 and $303,715,  respectively, were increased
by non-cash  dividends of $799,402  and  $1,200,000,  respectively,  in order to
determine  the net loss  applicable  to common  shares.  The non-cash  dividends
represent  amortization  of the discount  recorded upon the issuance of Series E
Preferred  Stock  ("Series E Stock") with a beneficial  conversion  feature.  No
dividends in the form of securities or other assets were actually paid out.

     The basic and  diluted  net loss per common  share for the  September  1999
period was $0.32  compared to a basic and  diluted net loss per common  share in
the September 1998 period of $0.37.

For the six months  ended  September  30,  1999  compared  to six  months  ended
September 30, 1998



<PAGE>
     The Company  generated net sales of  $13,375,684  in the  six-month  period
ended  September 30, 1999.  This  represented an increase of $919,974,  or 7.4%,
from net sales of $12,455,710 in the six-month  period ended September 30, 1998.
All of this sales growth came from the  Company's new stores as same store sales
declined by 26% for the period.

     The Company  believes  that its same store sales  showed a decline  after a
period of two years of continuous increases (in the fiscal years ended March 31,
1998 and March 31, 1999)  because in the  six-month  period ended  September 30,
1999,  the flow of allocated or "hot" selling  merchandise  is being spread over
25% more stores.  This  shortfall in allocated or "hot"  selling  inventory is a
result  of the  current  credit  lines  that the  Company  has with  some of its
vendors. The Company is working to increase its lines of credit with its vendors
to more  adequately  address  not only the past growth but its  expected  future
growth as well.  In  addition,  the Company  held back a  substantial  amount of
critical  inventory from its existing stores for the six new stores it opened in
the September through late October timeframe.

     The Company  posted a gross profit of $6,011,569  in the  six-month  period
ended  September  30, 1999,  an increase of $676,244,  or 12.7%,  from the gross
profit of  $5,335,325  in the six-month  period ended  September 30, 1998.  This
gross  profit  increase  was due to the increase in sales noted above and in the
Company's gross margin. The gross margin of 44.9% for the six-month period ended
September  30, 1999 was an increase of 2.1% over the  Company's  gross margin of
42.8% in the six-month period ended September 30, 1998.

     Operating expenses  (excluding  depreciation and amortization  expenses) in
the six-month period ended September 30, 1999 were $7,545,358.  This represented
a  $2,451,467,  or 48.1%,  increase  over the  Company's  operating  expenses of
$5,093,891 in the six-month period ended September 30, 1998. The primary reasons
for the  operating  expense  increase  were an  increase  in payroll and related
expenses  of  $962,066  and an  increase  in rent  expense  of  $1,067,934.  The
increased  expenses were due to the lease  payments on the new stores opened and
the addition of several middle managers and of employees at the new stores.

     During the six-month  period ended September 30, 1999, the Company recorded
non-cash  depreciation  and  amortization  expenses of $452,982,  a $70,771,  or
18.5%,  increase  from  $382,211 in the period ended  September  30, 1998.  This
increase was largely due to depreciation  on the fixed assets  purchased for the
newly opened stores.  Total operating expenses (operating expenses combined with
depreciation and  amortization) in the September 1999 period were $7,998,340,  a
$2,522,238,  or 46.1%,  increase from total operating  expenses of $5,476,102 in
the September 1998 period.

     Since the $676,244  increase in gross  profit was less than the  $2,522,238
increase in total operating expenses,  the Company's operating loss increased by
$1,845,994 from $140,777 during the six-month period ended September 30, 1998 to
$1,986,771 during the six-month period ended September 30, 1999.

     Interest  expense totaled $662,834 for the six-month period ended September
30, 1999.  This  represented  a $313,120,  or 89.5%,  increase over the interest
expense of $349,714 in the  six-month  period  ended  September  30,  1998.  The
primary reason for the increased level of interest expense was a higher level of
borrowings  in the  six-month  period  ended  September  30,  1999  than  in the
September 1998 period.



<PAGE>
     During the six months  ended  September  30, 1999,  the Company  recorded a
minority  interest in the loss of  consolidated  subsidiary  of  $143,497.  This
minority  interest  arose  out of the  sale  of  stock  of  the  Company's  Toys
subsidiary in July 1999 to Tudor,  CDMI, and Concord,  as described in Note 3 to
the condensed consolidated financial statements and above. Since Toys incurred a
loss during the three months ended  September 30, 1999,  this minority  interest
represented a reduction in the Company's net loss.

     As a result of the above-mentioned factors, the Company recorded a net loss
of  $2,506,108  for  the  six-month   period  ended  September  30,  1999.  This
represented a $2,015,617  increase over the net loss of $490,491 recorded in the
six-month  period ended  September  30, 1998.  For the  six-month  periods ended
September  30,  1999 and  1998,  the net  losses  of  $2,506,108  and  $490,491,
respectively, were increased by non-cash dividends of $1,384,517 and $1,200,000,
respectively,  in order to determine the net loss  applicable to common  shares.
The non-cash dividends represent  amortization of the discount recorded upon the
issuance of Series E Stock with a beneficial conversion feature. No dividends in
the form of securities or other assets were actually paid out.

     The basic and  diluted  net loss per common  share for the  September  1999
period was $0.70  compared to a basic and  diluted net loss per common  share in
the September 1998 period of $0.41.

Liquidity and Capital Resources

     At  September  30,  1999,  the  Company  had a working  capital  deficit of
$2,730,031  compared to a working  capital  position of  $5,832,143 at March 31,
1999. The primary factors in the $8.56 million decrease in working capital was a
reclassification  of the Company's  credit line with FINOVA Capital  Corporation
("FINOVA")  from  a  long  term  liability  to  a  short  term  liability.  This
reclassification was due to the expiration date of the credit facility of August
3, 2000 falling within one year of the September 30, 1999 balance sheet date.

     Prior to its most  recent  fiscal year ended  March 31,  1999,  the Company
generated operating losses in the past several years as well as in the six-month
period ended  September 30, 1999.  The Company has  historically  financed those
losses  and its  working  capital  requirements  through  loans and sales of the
Company's equity securities,  primarily through the sale of the Company's Series
E Stock.  There can be no  assurance  that the Company  will be able to generate
sufficient  revenues or have sufficient controls over expenses and other charges
to achieve profitability.

     During the  six-month  period ended  September  30, 1999,  the Company used
$3,777,012 of cash in its operations  compared to $3,416,720  used in operations
in the six-month  period ended  September  30, 1998.  The Company's net loss was
approximately  $2,506,000  and $490,000,  respectively,  in those  periods.  The
primary  reason the cash used for operating  activities  was larger than the net
loss in the  six-month  period ended  September 30, 1999 was due to increases in
deposits and other current assets related to the opening and planned openings of
additional  stores and deferred expenses related to the public offering of Toys'
common stock.
<PAGE>
     The Company used $1,919,427 of cash in its investing  activities during the
six-month  period  ended  September  30,  1999  compared  to  $1,149,757  in the
six-month  period ended September 30, 1998. The primary  investing  activity was
the purchase of equipment and fixtures for new stores.

     The Company  generated  $5,947,650  from its  financing  activities  in the
six-month  period  ended  September  30,  1999  compared  to the  generation  of
$4,341,125 from financing activities in the six-month period ended September 30,
1998.  The primary  contributors  to the  Company's  financing  activities  were
borrowings  on the  Company's  line of credit and proceeds  from the sale of the
Company's  Series F  Preferred  Stock and the sale of  common  stock of the Toys
subsidiary,  as  discussed  below.  Those  proceeds  were  used to  finance  the
Company's  working  capital  requirements,  capital  expenditures  and operating
losses during the six-month period ended September 30, 1999.

     As a result of the above factors, the Company had a net increase in cash of
$251,211 in the  six-month  period ended  September  30, 1999  compared to a net
decrease in cash of $225,352 in the six-month period ended September 30, 1998.

     During the three-month  period ended September 30, 1999, the Company opened
one new store.  This store was located in Pier 39 in San Francisco,  California.
Pier 39 is a  tourist-oriented  destination  that has a  history  of heavy  foot
traffic.  The  capital  investment  for  building  this store was  approximately
$425,000, net of landlord contributions.

     In October  1999,  the Company  opened five new stores  located in Concord,
North  Carolina  (two stores),  near Houston,  Texas (two stores) and in Mission
Viejo,  California.  These  stores are located in high traffic  shopping  malls.
These five stores  represented an aggregate capital  investment of approximately
$1.3  million,  net  of  landlord  contributions.   The  Company  postponed  the
construction  of its planned new store in Schaumburg,  Illinois until the spring
of 2000. The Company now has 32 stores located in seven states.

     The Company had planned to finance the above store  opening costs through a
combination of capital lease  financing,  use of the Company's  working capital,
and the sale of  additional  equity.  The  Company  has  obtained  approximately
$431,500 in capital lease financing this fiscal year.

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



<PAGE>
     Due to the  beneficial  conversion  feature  of the  Series  F  Stock,  the
proceeds have initially been recorded as additional  paid-in  capital,  which is
being  amortized  over an  8-month  period in the form of a  non-cash  dividend.
Management  has used an  8-month  period to  correspond  to the  estimated  time
necessary to have a registration  statement declared effective by the Securities
and Exchange Commission.

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

     On July 15, 1999,  Tudor - an entity of which Mr. Moses Mika (a director of
the Company) is a  shareholder - elected to exercise its right to purchase a 25%
ownership  interest in the Company's Toys subsidiary.  Tudor was the assignee of
an option to acquire 25% of the  outstanding  shares of the common stock of Toys
at book value.  The book value of Toys as of June 30, 1999 was  determined to be
$2,894,711.  In October,  Tudor paid the Company $723,678 (25% of the book value
as of June 30, 1999).

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

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

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

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



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

     Toys sold 2 million shares, or a 16.7% interest,  in the Offering for gross
proceeds of  approximately  $27 million.  The offering was priced at 13 Euro per
share,  which was approximately  equal to $13.52 per share. The Company retained
majority  ownership of Toys with a 58.4% equity  interest in the subsidiary and,
as a result,  will  continue to  consolidate  Toys'  operations in its financial
statements.

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

     The Company  expects to complete the accounting for the net proceeds of the
Offering during the quarterly period ending December 31, 1999.

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

Year 2000

     Many  installed  computer  systems  and  software  products  are  currently
programmed to accept two-digit entries in the date field.  Beginning in the year
2000 ("Y2K"),  however,  the  programmed  fields will have to accept  four-digit
entries,  so as to be able to distinguish dates from the 21st century from those
of the 20th century.  However,  even  four-digit date entries do not necessarily
guarantee a smooth  transition to the year 2000.  Data lost during the archiving
process or the overwriting of old information with new information may initially
remain  undiscovered  and cause problems.  As a result,  computer systems and/or
software  utilized by many  companies  must still be upgraded  before the end of
this year to become year 2000 compatible.

     The Company  believes that all of its systems are year 2000  compatible and
that the Company does not face any Y2K problems in the U.S. The services offered
by the Company are not affected by the year 2000  compatibility  of its systems.
According to the  wholesalers,  their  systems will be year 2000  compatible  as
well.

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



<PAGE>
     Year 2000 readiness is a priority of the Company,  and the Company believes
that it is taking such reasonable and prudent steps as are necessary to mitigate
the risks associated with potential year 2000 difficulties.  The effect, if any,
of year 2000 problems on the Company's results of operations if the Company's or
its customers,  vendors,  or service providers are not fully compliant cannot be
estimated  with any degree of certainty.  It is  nonetheless  possible that year
2000  problems  could  have a  material  adverse  effect  in that  holiday  1999
purchases  may be  stunted  due to  consumer  uncertainty  and that the  overall
business environment may be disrupted in the Company's fourth fiscal quarter.

     The  budget  for the  Company's  Y2K issue was  approximately  $100,000  to
$120,000  (including  upgraded  hardware),  and the Company spent all of it. The
Company used an external  consultant,  Data Pro  Consulting,  which has done the
vast majority of the Company's Y2K compliance work.

     Despite  the  measures  that have been  taken by the  Company,  there is no
guarantee  that  the  transition  to the year  2000  will be  without  problems.
Correction  of  these  problems  may be  associated  with  additional  financial
burdens.  Moreover,  it  cannot  be ruled out that  wholesalers  will  encounter
problems beyond the control of the Company.  The complexity of today's networked
systems,  internally as well as  externally,  poses a general risk.  The Company
strives to keep this risk to a minimum.

Trends Affecting Liquidity, Capital Resources and Operations

     The Company  believes  that its same store sales  showed a decline  after a
period of two years of continuous increases (in the fiscal years ended March 31,
1998 and March 31, 1999)  because in the  six-month  period ended  September 30,
1999,  the flow of allocated or "hot" selling  merchandise  is being spread over
25% more stores.  This  shortfall in allocated or "hot"  selling  inventory is a
result  of the  current  credit  lines  that the  Company  has with  some of its
vendors. The Company is working to increase its lines of credit with its vendors
to more  adequately  address  not only the past growth but its  expected  future
growth  as  well.  As  noted  above,  the  Company  has  recently  significantly
strengthened  its  balance  sheet  by  raising   approximately  $30  million  in
additional  equity,  which  should  result in expanded  lines of credit with its
trade vendors.

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

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



<PAGE>
     The toy and hobby retail  industry  faces a number of  potentially  adverse
business  conditions  including  price and gross  margin  pressures  and  market
consolidation.  The  Company  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.  The Company also competes both through its electronic commerce
operations and through its stores against  Internet  oriented toy retailers such
as eToys,  Inc. There can be no assurance that the Company's  business  strategy
will enable it to compete effectively in the toy industry.

Seasonality

     The Company's  operations are highly seasonal with approximately  30-40% of
its net sales falling within the Company's  third quarter,  which coincides with
the  Christmas  selling  season.  Also,  the  Company  opened five new stores in
October,  which will make the  Company's  third  quarter  sales an even  greater
percentage of the total year's sales.

Impact of Inflation

     The impact of inflation on the Company's results of operations has not been
significant.  The Company  attempts  to pass on  increased  costs by  increasing
product prices over time.
<PAGE>
PART II

Item 1. Legal Proceedings

     In October 1997, in the Superior Court of the State of  California,  County
of San Bernardino,  Foothill Marketplace  commenced suit against the Company 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, in the approximate  amount of
$300,000.  This action has been taken off the trial  calendar  with a settlement
review  hearing  scheduled to occur in late December 1999 or early January 2000.
Management believes that this case will reach a settlement by that date.

     No Director,  Officer,  or affiliate of the Company,  nor any  associate of
same, is a party to, or has a material  interest in, any  proceeding  adverse to
the Company.

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

Item 3. Defaults Upon Senior Securities: None

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

Item 5. Other Information: None

Item 6. Exhibits and Reports on Form 8-K

     (a) The following exhibits are filed herewith:

10.137                    Amendment to Lease Agreement - Concord Mills (Toy Co.)
27.1                      Financial Data Schedule


     (b) During the quarter  ended  September  30, 1999,  no reports on Form 8-K
were filed with the Securities and Exchange Commission.
<PAGE>
                                   SIGNATURES




     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, this 22nd day of November 1999.

                                             PLAY CO. TOYS & ENTERTAINMENT CORP.


                                                        By: /s/ Richard L. Brady
                                                                Richard L. Brady
                                           President and Chief Executive Officer


                                                         By: /s/ James B. Frakes
                                                                 James B. Frakes
                                                         Chief Financial Officer