UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20659



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

For the Quarterly period ended                   June 30, 1997




                         Commission File Number 0-25030




                       PLAY CO TOYS & ENTERTAINMENT CORP.


             (Exact Name of Registrant as specified in its charter)

Delaware                                          95-3024222
(State or other jurisdiction of                   (I.R.S. Employer ID No.)
incorporation or organization) .

                550 Rancheros Drive, San Marcos, California 92069
              (Address of principle executive offices) (Zip Code)

                                 (760) 471-4505
              (Registrant's telephone number, including area code)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.


                                        YES [ X ]     NO [   ]


Common Stock, $.01 par value: 4,103,519 shares outstanding as of June 30, 1997.



<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>



                                                                                                                   PAGE
<S>                                                                                                                <C>
PART I.   FINANCIAL INFORMATION:

Item 1.   FINANCIAL STATEMENTS

          Condensed balance sheets as of  June 30, 1997                                                            3
          and March 31, 1997.

          Condensed statements of operations for the
          three months ended June 30, 1997 and 1996.                                                               4

          Condensed statements of cash flows for
          the three months ended June 30, 1997 and 1996.                                                           5

          Notes to condensed financial statements                                                                  6


Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
              FINANCIAL CONDITION AND RESULTS OF
              OPERATIONS.                                                                                          7



PART II.  OTHER INFORMATION

Item 5.   Other Information and Signatures                                                                         12
</TABLE>

<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

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

                            CONDENSED BALANCE SHEETS
                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                       (unaudited)
                                                                                                     June 30, 1997   March 31, 1997
                                                                                                      -------------   --------------

Current

<S>                                                                                                   <C>             <C>         
                 Cash ................................................................................$    163,022    $    177,722
                 Subscription receivable (Note 2) ....................................................     550,000            --
                 Accounts receivable .................................................................      45,430          60,206
                 Merchandise inventories .............................................................   6,550,784       6,092,930
                 Other current assets ................................................................     173,463         247,313
                                                                                                      ------------    ------------

                                                  Total current assets ...............................7,482,699          6,578,171



Property and Equipment, net of accumulated
depreciation and amortization of $2,967,938
and $2,828,913, respectively .....................................................................      2,401,143       2,475,650

Deposits and other assets ..............................................................................  260,564         324,797
                                                                                                      ----------    ------------
                                                                                                     $ 10,144,406    $  9,378,618
                                                                                                     ============    ============

                       LIABILITIES & STOCKHOLDERS' EQUITY
                                                                                                    June 30, 1997    March 31, 1997
                                                                                                     ------------    ------------
Current
           Bank overdraft ...........................................................................$     93,882    $    135,325
           Borrowings under financing agreement .....................................................   4,826,063       4,438,875
           Accounts payable .........................................................................   3,726,313       3,123,851
           Accrued expenses and other liabilities .....................................................   143,444         308,940
           Current portion of notes payable ..............................................................100,000         141,666
                                                                                                    ------------    ------------
                   Total current liabilities ........................................................   8,889,702       8,148,657
Notes payable, net of current portion ..................................................................   75,000         226,925

Deferred rent liability ................................................................................  135,672            --
     Stockholders' equity:
           Series E preferred stock, $1 par, 4,000,000 shares authorized; 250,000
             subscribed; 3,200,570 and 2,500,570 shares outstanding (Note 2) ...........................3,700,570       2,500,570

           Common stock, $.01 par value, 40,000,000 shares
             authorized; 4,103,519 and 4,083,519 shares outstanding .....................................  41,035          40,835

           Additional paid-in-capital (Note 2) .........................................................6,562,407       6,512,107

           Accumulated deficit .......................................................................(9,259,980)     (8,050,476)
                                                                                                     -----------    ------------
              Total stockholders' equity .........................................                     1,044,032       1,003,036
                                                                                                    $ 10,144,406    $  9,378,618
                                                                                                    ============    ============
</TABLE>
            See accompanying notes to condensed financial statements



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

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                               Three Months Ended June 30,

                                                              1997            1996
                                                                           
<S>                                                        <C>            <C>        
Net sales ..............................................   $ 3,142,813    $ 3,184,903

Cost of Sales ..........................................     1,973,365      2,151,718
                                                           -----------    -----------
                                Gross profit ...........     1,169,448      1,033,185
Operating expenses:
                 Operating expenses ....................     2,028,403      1,741,792
                 Depreciation and amortization .........       139,027         95,580
                                                           -----------    -----------
                                Total operating expenses     2,167,430      1,837,372
                                                           -----------    -----------

Operating loss .........................................      (997,982)      (804,187)
Interest expense .......................................       211,522        179,174
                                                           -----------    -----------
Net loss ...............................................   $(1,209,504)   $  (983,361)
                                                           ===========    ===========

Net loss applicable to common shares ...................   $(1,209,504)   $  (983,361)
                                                           ===========    ===========

Net loss per common share ..............................   $     (0.30)   $     (0.76)
                                                           ===========    ===========

Weighted average number of common shares and
          share equivalents outstanding ................     4,083,739      1,287,843
                                                           ===========    ===========
</TABLE>




            See accompanying notes to condensed financial statements




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

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                          Three Months Ended June 30,

                                                                           1997             1996
                                                                                           
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                      <C>            <C>         
         Net loss ....................................................   $(1,209,506)   $  (983,361)
         Adjustments used to reconcile net loss to net
           cash used for operating activities:
                  Depreciation and amortization ......................       139,027         95,580
                  Preferred stock issued for financing charges .......          --           16,000
                  Change in assets and liabilities:
                             Merchandise inventories .................      (457,854)    (1,259,686)
                           Other assets ..............................       152,837        145,011
                           Accounts payable ..........................       602,457      1,320,106
                             Accrued and other liabilities ...........      (165,469)      (177,415)
                             Deferred rent liability .................         8,746        (20,825)
                             Net cash used for operating activities ..      (929,762)       864,590)
                                                                                        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Purchases of property and equipment .........................       (64,518)       (86,905)
                                                                         -----------    -----------
                             Net cash used for investing activities ..       (64,518)       (86,905)
                                                                         -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from issuance of preferred and common stock ........       700,501        334,000
         Change in bank overdraft ....................................       (41,443)          --
         Borrowings on line of credit ................................       387,188        853,768
         Repayments of long-term debt ................................       (66,666)          --
         Redemption of preferred stock ...............................          --          (87,680)
                                                                         -----------    -----------
                             Net cash provided by financing activities       979,580      1,100,088
                                                                        -----------    -----------
Net increase in cash .................................................       (14,700)       148,593
Cash at beginning of period ..........................................       177,722         83,650
Cash at end of period ................................................   $   163,022    $   232,243

</TABLE>


            See accompanying notes to condensed financial statements

<PAGE>
                       PLAY CO. TOYS & ENTERTAINMENT CORP.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                  June 30, 1997
                                   (Unaudited)

Note 1.

The interim  accompanying  unaudited  condensed  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, 1997  included in its Annual  Report on Form  10-KSB.  Operating
results  for the three  month  period  ended June 30,  1997 are not  necessarily
indicative of the results of operations that may be expected for the year ending
March 31, 1998.

Note 2.

In an agreement  dated June 30, 1997, the Company agreed to issue 250,000 shares
of series E preferred stock for $500,000 and for an additional  $50,000 to issue
500,000  warrants to purchase  series E preferred  stock in a private sale. As a
result of that  agreement,  the Company  booked a  subscription  receivable  for
$550,000  and  recorded  increases  to series E preferred  stock and  additional
paid-in-capital of $500,000 and $50,000,  respectively. The Company had received
all of the $550,000 of proceeds from the private sale by August 12, 1997.

Over the  course of the  quarter  ended  June 30,  1997,  the  Company  received
advances  against equity  aggregating  $700,000.  Europe American  Capital Corp.
exercised its option  whereby the $700,000 was converted  into 700,000 shares of
series E preferred stock in June 1997.



<PAGE>
ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSES 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  which 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.  UTTC  currently  owns
approximately 59.3% of the issued and outstanding shares of the Company's Common
Stock.

For the three months ended June 30, 1997 compared to three months ended June 30,
1996

         The Company generated net sales of $3,142,813 in the three months ended
June 30, 1997. This  represented a decrease of $42,090,  or 1.3%, from net sales
of $3,184,903  in the three months ended June 30, 1996.  The decline in sales is
directly attributable to decreased wholesale sales, primarily to military bases,
of $72,101 and to an absence of video rental income  compared to $27,173 of such
income in the prior period.  Prior to the beginning of the period ended June 30,
1997,  management  had  determined  that the  video  rental  market  had  become
unprofitable and,  accordingly,  exited that market.  Excluding the video rental
and  wholesale  related  sales,  the  Company's  sales from its stores  actually
increased by $57,184, or 1.9%, from $2,996,759 to $3,053,943.

         The Company  posted a gross  profit of  $1,169,448  in the three months
ended June 30, 1997, an increase of $136,263, or 13.2%, from the gross profit of
$1,033,185  in the  three  months  ended  June 30,  1996.  This  represented  an
improvement in the Company's  gross margin from 32.4% in the June 1996 period to
37.2% in the June 1997 period.  This 4.8% gross margin  improvement  was largely
due to the ongoing  implementation  of the Company's ongoing plan to augment its
traditional  product  base  of  lower  margin  promotional  toys  with  a mix of
educational toys, which generally produce better margins than promotional toys.

         Operating  expenses  in the  three  months  ended  June 30,  1997  were
$2,028,403.  This represented a $286,611,  or 16.5%, increase over the Company's
operating  expenses of $1,741,792  in the three months ended June 30, 1996.  The
primary  reasons for the  operating  expense  increase  were an increase in rent
expense of $226,338 and an increase in payroll and related  expenses of $103,896
Those increases were partially  offset by a reduction in advertising  expense of
$137,565. The operating expenses in the June 1996 period also had the benefit of




<PAGE>
$67,229 more of other  income,  primarily  related to income  received  from the
filming of a movie at one of the Company's stores in the earlier period.

         During the three  months  ended June 30,  1997,  the  Company  recorded
non-cash  depreciation and amortization expenses of $139,027, a $43,447 increase
from $95,580 in the period ended June 30, 1996. This increase was largely due to
depreciation on the Toys  International  assets acquired in January 1997.  Total
operating   expenses   (operating   expenses   combined  with  depreciation  and
amortization)  in the June 1997 period were  $2,167,430,  a $330,058,  or 18.0%,
increase from total operating expenses of $1,837,372 in the June 1996 period.

         As a result of the $330,058  increase in total operating  expenses more
than  offsetting  the  $136,263  improvement  in  gross  profit,  the  Company's
operating loss increased by $193,797 from $804,187 during the three months ended
June 30, 1996 to $997,984 during the three months ended June 30, 1997.

          Interest  expense totaled $211,522 for the three months ended June 30,
1997. This  represented a $32,348,  or 18.1%,  increase over interest expense of
$179,174 in the three  months ended June 30,  1996.  The primary  reason for the
increased level of interest expense was a higher level of borrowings in the June
1997 period than in the June 1996 period.

         As a result of the above mentioned factors,  the Company recorded a net
loss of $1,209,506 for the three months ended June 30, 1997. This  represented a
$226,145 increase to the net loss of $983,361 recorded in the three months ended
June 30,  1996.  The net loss per  common  share  for the June 1997  period  was
$(0.30)  compared  to a net loss per  common  share in the June  1996  period of
$(0.76). The loss per common share decreased in the June 1997 period compared to
the corresponding prior period due to an increase in the weighted average number
of shares outstanding from 1,287,843 in the June 1996 period to 4,083,739 in the
June 1997 period.

Liquidity and Capital Resources

         At June  30,  1997,  the  Company  had a  working  capital  deficit  of
$(1,406,998)  compared to a working capital deficit of $(1,570,486) at March 31,
1997. The Company has generated  operating losses for the past several years and
has  historically  financed  those losses and its working  capital  requirements
through  sales of preferred  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 three months ended June 30, 1997,  the Company used $929,762
of cash in its  operations  compared to $864,590 used in operations in the three
months  ended June 30,  1996.  The  Company's  net loss was  approximately  $1.2
million and $1.0 million, respectively, in those periods.

         The Company used $64,518 of cash in its investing activities during the
three months  ended June 30, 1997  compared to $86,905 in the three months ended
June 30, 1996.




<PAGE>
         The Company  generated  $979,580 from its  financing  activities in the
three months ended June 30, 1997 compared to the  generation of $1,100,088  from
financing  activities  in the three  months  ended June 30,  1996.  The  largest
contribution to the Company's  financing  activities in the 1997 fiscal year was
the receipt of $700,000 from the sale of preferred  stock.  Those  proceeds were
used to finance the  Company's  operating  losses  during the three months ended
June 30, 1997.

         As a result of the above  factors,  the Company  had a net  decrease in
cash of  $14,700  in the three  months  ended June 30,  1997  compared  to a net
increase in cash of $148,593 in the three months ended June 30, 1996.

         At June 30, 1997, the Company had an inventory financing line of credit
with Congress Financial  Corporation  ("Congress") in connection with a Loan and
Security Agreement ("Loan Agreement") that was executed on February 1, 1996. The
Loan Agreement  provides for maximum borrowings of $7,000,000 based on the "Cost
Value  of  Eligible  Inventory,"  as  defined  in the Loan  Agreement.  The Loan
Agreement  also requires the Company to maintain,  at all times,  a net worth of
$500,000.  The Loan Agreement requires the payment of a quarterly service fee of
$10,000,  The line of credit  is  secured  by  substantially  all  assets of the
Company, is guaranteed by United, and is further collateralized by $3,000,000 in
letters of credit provided by Europe American Capital Corp.  ("EACC").  Interest
on  outstanding  balances  is charged at prime  plus  1.5%.  The Loan  Agreement
matures February 1, 1998.

         As compensation  for the issuance of the letter of credit,  the Company
granted to EACC options (i) to purchase up to an  aggregate of 1,250,000  shares
of the  Company's  Common  Stock at a purchase  price of 25% of the  closing bid
price for the Common Stock on the last  business  day prior to  exercise,  for a
period of six months  from the date of  issuance  and (ii) to  purchase up to an
aggregate  of  20,000,000  shares of the  Company's  newly  authorized  Series E
Preferred Stock.

         The Company  purchases  approximately 95% of its products directly form
manufacturers.  Approximately 30% of the Company's  inventory purchases are made
directly from five (5) manufacturers.  The Company typically  purchases products
from its suppliers on credit  arrangements  provided by the  manufacturers.  The
five major manufacturers  mentioned above generally provide credit terms of 180+
days while other vendors offer credit terms of 30 to 120 days.

         The toy  industry  is  seasonal  with  approximately  45% to 49% of the
Company's annual sales occurring during the months of October through  December.
As a result,  sources  of funds to repay  amounts  due under  inventory  finance
arrangements  with  financial   institutions  and  manufacturers  are  typically
generated from sales during the peak selling season.



<PAGE>
The Company has prepared  cash flow  forecasts  for the fiscal year ending March
31, 1998.  Management  acknowledges  that the Company  will  require  additional
financing in addition to its support  from its line of credit with  Congress and
from  vendor  credit  lines in order to meet its  capital  requirements  for the
fiscal  year  ending  March 31,  1998.  In  addition,  the  Company  may require
additional   capital  to  redesign   current  and  future  retail  locations  to
incorporate its plans to focus on the educational and specialty toy market.  The
Company has filed a  registration  statement  with the  Securities  and Exchange
Commission for an initial public  offering for the Company's  Series E preferred
shares to meet those impending capital requirements.  That offering is being led
by West America  Securities  Corp.  on a best efforts basis with an objective of
raising net  proceeds to the Company of  approximately  $2.5  million.  However,
there can be no assurance that this offering will be  consummated.  In addition,
Mr.  Ilan  Arbel,  an  affiliate  of EACC,  in a  letter  dated  June 10,  1997,
represented  his  willingness  to  provide  additional  working  capital  to the
Company, should such be necessary, through September 30, 1998.

Trends Affecting Liquidity, Capital Resources and Operations

         The  Company's  sales  efforts  are  focused  primarily  on  a  defined
geographic  segment,  consisting of individuals in the southern California area.
The Company's future financial performance will depend upon continued demand for
toys and hobby items by individuals  in southern  California,  general  economic
conditions  within such geographic  market area, the Company's ability to choose
locations for new stores, the Company's ability to purchase product at favorable
prices on favorable  terms as well as the effects of increased  competition  and
changes in consumer preferences.

         The toy and hobby retail industry faces a number of potentially adverse
business  conditions  including  price and gross  margin  pressures  and  market
consolidation.  The  domination of the toy industry by Toys R Us has resulted in
increased  price  competition  among various toy  retailers and declining  gross
margins for such retailers.  Moreover,  the domination of Toys R Us has resulted
in the  liquidation  or bankruptcy of many toy retailers  throughout  the United
States,  including in the southern California market.  There can be no assurance
that the Company's  business  strategy will enable it to compete  effectively in
the toy industry.

         Management  currently knows of no trends reasonably  expected to have a
material  impact upon the Company's  operations or liquidity in the  foreseeable
future. The Company's  operating history has been characterized by narrow profit
margins and,  accordingly,  the Company's earnings will depend  significantly on
its  ability  to  purchase  its  product on  favorable  terms,  to obtain  store
locations  on  favorable  terms,  retail a large  volume and variety of products
efficiently and to provide quality support  services.  The Company's prices are,
in part, based on market surveys of its competitors' prices,  primarily those of
Toys R Us. As a result,  aggressive pricing policies, such as those used by Toys
R Us, have  resulted in the Company  reducing  its retail  prices on many items,
thereby reducing the available profit margin. Moreover, increases in expenses or
other  charges  to income may have a material  adverse  effect on the  Company's
results of  operations.  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 increase profitability.




<PAGE>
         The Company's  common stock is currently  traded on the NASDAQ SmallCap
Market  System which  requires the Company to maintain  total assets of at least
$2,000,000,  stockholders'  equity of  $1,000,000,  and a  minimum  bid price of
$1.00.  If the  Company's  result of  operations  from future  periods cause the
Company to be in a position  where it is unable to satisfy these  criteria,  its
securities  will be  subject  to  being  delisted  and  trading,  if any,  would
thereafter  be  conducted in the  over-the-counter  market and quoted on the OTC
Bulletin Board. Consequently,  an investor may find it more difficult to dispose
of or obtain  accurate  quotations as to the price of the Company's  securities.
Such an event of  delisting  may also have a  negative  impact on the  Company's
ability to raise additional equity or debt financing.

Inflation and Seasonality

         During the past few  years,  inflation  in the  United  States has been
relatively stable. In management's opinion, this is expected to continue for the
foreseeable future. However, should the American economy again experience double
digit  inflation  rates, as was the case in the past, the impact on prices could
adversely affect the Company's operations.

         The Company's  business is highly  seasonal with a large portion of its
revenues and profits being  derived  during the months of November and December.
Accordingly,  the Company is required to obtain substantial short-term borrowing
during  the first  three  quarters  of the  calendar  year in order to  purchase
inventory and to finance  capital and  operational  expenditures.  The Company's
past  history of  negative  cash flows  during the fiscal  year are  partially a
result of its seasonal  business  nature.  The Company's cash flows are negative
for most months prior to the Christmas season.  The Company's negative cash flow
for all months except November and December  historically have been serviced via
the  Company's  line of credit,  special  credit terms with vendors and from the
sale of equity instruments, principally preferred stock.



<PAGE>
PART II -         OTHER INFORMATION

Item 1 -          Legal Proceedings: None

Item 2. -         Changes In Securities: None

Item 3 -          Defaults Upon Senior Securities: None

Item 4 -          Submission Of Matters To A Vote Of Security Holders: None

Item 5 -          Other Information: None

Item 6 -   Exhibits and Reports on Form 8-K: None



<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 14th day of August 1997.


                                             PLAY CO. TOYS & ENTERTAINMENT CORP.


                                                           By: \s\ Richard Brady
                                                                 Richard L Brady
                                                                       President


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






<PAGE>