U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                  FORM 10-QSB


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         For the quarterly period ended
                               February 28, 1999

                                       OR



TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________TO___________

                         Commission File No. 33-37968-A


                          IMAGICA ENTERTAINMENT, INC.
             (Exact name of Registrant as specified in its charter)



            Florida                                      59-2762999
            -------                                      ----------
  (State or other jurisdiction           (I.R.S. Employer Identification Number)
of incorporation or organization)



                    1518 SW 12th Avenue, Ocala, Florida 34474
                    -----------------------------------------
                    (Address of principal executive offices)

                                 (352) 867-7860
                                 --------------
                           (Issuer's telephone number)



Check  whether the issuer (1) 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___ No X

Number of common shares outstanding as of January 31, 1999 - 4,308,550.

Transitional Small Business Disclosure Format:
Yes _____  No X


<PAGE>

                                     Part 1


     Item 1. Financial Statements

     The financial  statements  for the 9 month period ending  February 28, 1999
follow as pages A1 through A3.

     Item 2. Management Discussion and Analysis

     The Company  continued to experience  difficulties  in the third quarter in
returning  to  profitability.  This has been due to the Company  being unable to
achieve a  production  level  that will  insure  profitability.  As a result the
Company has continued to turn down business  because of production  constraints.
To overcome  this  problem  the  Company  has entered  into a 15 year lease on a
55,000  sq. ft.  production  facility  that will allow the  Company to more than
double its  production  capacity.  To achieve that  increased  volume this space
allows the Company to currently  enter into a lease for three  additional  print
production lines and high speed materials preparation equipment and new material
handling  equipment.  Management expects these changes will position the Company
to be profitable starting in fiscal 2000.

     The Company in April of 1999  entered  into an  agreement  with Edge MIS to
develop for the Company a total  software  package that will tie together all of
the  Company's  functions.  This  system  will give the  Company  the ability to
schedule and control its production and inventory.  Further,  it will coordinate
with  accounting  for the  ultimate  in  financial  control.  This system is Y2K
sensitive and should serve the Company well into the next millennium.

     On April 15, 1999 the  Company  received a loan of  $300,000.00  from Kevin
Howell.  The terms and  conditions  of that loan  follow as pages N1 through N3.
This loan will finance the renovations of the Company's new production  facility
and  provide  the down  payment  on the  lease  of new  equipment.  The  Company
anticipates  that in  conjunction  with  obtaining  this loan it will file an SB
registration sometime in the first quarter of fiscal 2000.

     On April 16, 1999 the Company  entered  into a lease on its new  production
facility. The lease follows as pages L1 through L28.


                                     Part II


     Item 1. Legal Proceedings

     In December of 1998 the Company  resolved the litigation with the Company's
landlord  concerning past due rent. The resolution calls for the Company to over
the 9 months  that  remained  on the  lease  pay all sums  due and  unpaid  from

<PAGE>


September  1997 to the date of  settlement.  This will  amount to an  additional
$2,733.13 of rent for each of the nine months. At the same time a settlement was
arrived on a note with the  Company's  landlord  calling  for the Company to pay
$1,000.00 per month for the nine months as full payment for this note.

     The Company's  trademark was challenged by Imagica  Corporation,  a unit of
the Sony  Corporation.  After  negotiation  the parties  arrived at a settlement
which  allows  the  Company to  continue  to use the  trademark  in a non motion
picture application.

     The lawsuit by the Company's  former  President's  ex-wife,  Donna Wormser,
against the Company for notes entered into by Robert  Wormser  continues  with a
trial date probably in the second quarter of fiscal 2000.  The Company  believes
the notes to be invalid,  fraudulent,  ultra virus and without merit.  The notes
were unknown to the Company until the suit and were not  authorized by the Board
of Directors.  Further, the condition precedent for the activation of payment of
the note namely the Company  receiving  $4,000,000.00  in a stock offering never
occurred.  The Company believes this matter will be adjudicated in the Company's
favor.

     Item 2. Changes in Securities

     None

     Item 3. Defaults upon Senior Securities

     None

     Item 4. Submissions of Matters to a Vote of Security Holders

     None

     Item 5. Other Information

     Under rule 14a-4(c)(1) any shareholder wishing to bring a matter before the
annual meeting of shareholders must notify the Company 45 days in advance of the
mailing of the proxies so the matter can be included in the proxy for the annual
meeting.  The proxy for the previous  annual  meeting was mailed on February 12,
1999. It is anticipated  the proxy for the next annual meeting will be mailed on
December 1, 1999.

     Item 6. Exhibits and Reports on Form 8K

     The Company on February 6, 1999 filed on an 8K the audited  financials  for
the year end 1997 and 1998 and the first and second quarter unaudited  financial
statements for the 1999 fiscal year.

<PAGE>


                           Imagica Entertainment, Inc.
                                  Balance Sheet
                                February 28, 1999
                                   (Unaudited)


                                     Assets


Current:
       Accounts receivable, less allowance
         for possible losses of $9,239                              $   402,681
       Inventories                                                      272,799
       Prepaid expenses                                                  31,854
       Miscellaneous receivables                                         16,047
                                                                    -----------

                    Total current assets                                723,381


Property and equipment, net                                             176,966

Other assets                                                              5,390
                                                                    -----------

Total assets                                                        $   905,737
                                                                    ===========



                                       A1
<PAGE>


                         Liabilities and Capital Deficit

Current liabilities:
       Bank overdraft                                               $    11,867
       Accounts payable                                                 133,704
       Advances from related parties                                     28,831
       Debenture payable                                                 25,000
       Customer deposits                                                 40,871
       Accrued expenses                                                 107,306
       Current maturities of longterm debt                              127,209
       Current portion of obligations under capital leases               20,817
                                                                    -----------

                    Total  current liabilities                          495,605

Note payable to related party                                           322,786
Longterm debt, less current maturities                                  221,311
                                                                    -----------

                    Total liabilities                                 1,039,702

Commitments and contingencies                                              --

Redeemable common stock                                                 100,000

Capital deficit
       Common stock, $.001 par value, shares
         authorized 50,000,000                                            4,231
       Additional paidin capital                                      8,838,534
       Accumulated deficit                                           (8,973,290)
                                                                    -----------
                                                                       (130,525)
Less:  Treasury stock, at cost                                          103,440
                                                                    -----------

                   Total capital deficit                               (233,965)
                                                                    -----------

Total liabilities and capital deficit                               $   905,737
                                                                    ===========


                                       A2
<PAGE>


                           Imagica Entertainment, Inc.
                             Statement of Operations
                                   (Unaudited)

                                                         Nine Months Ended
                                                   February 28,     February 28,
                                                       1999             1998
                                                   -----------      -----------

Sales                                              $ 2,350,469        1,989,786
Cost of sales                                        1,533,321        1,467,613
                                                   -----------      -----------

               Gross profit                            817,148          522,173

Operation expenses                                     912,747          640,623
                                                   -----------      -----------

               Loss from operations                    (95,599)        (118,450)

Other income (expenses):
        Interest                                       (25,186)          (6,735)
        Interest  stock differential                  (989,154)            --
        Other                                           13,164             --
                                                   -----------      -----------
               Total other income                   (1,001,176)          (6,735)

Net loss                                           $(1,096,775)        (125,185)
                                                   ===========      ===========



                                       A3