FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

           For the Quarterly Period Ended March 31, 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 NO. 0-7843

                            4KIDS ENTERTAINMENT, INC.
             (Exact name of registrant as specified in its Charter)

                                    NEW YORK
                            (State of Incorporation)

                                   13-2691380
                     (I.R.S. Employer Identification Number)

                 1414 Avenue of the Americas, New York, New York
                    (Address of Principal Executive Offices)

                                      10019
                                   (Zip Code)

                                 (212) 758-7666
              (Registrant's Telephone Number, Including Area Code)

                                 NOT APPLICABLE
              (Former Name, Former Address and Former Fiscal Year
                         if changed since last report)

Indicate by a check mark whether the registrant: (1) has filed all annual,
quarterly and other reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or 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 _______
                              
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the close of the latest practicable date.

          Class                           Outstanding at May 14, 1999
          -----                           ---------------------------
Common Stock, $.01 Par Value                       5,343,727

<PAGE>

                            4KIDS ENTERTAINMENT, INC.
                                AND SUBSIDIARIES
                                      INDEX

                                                                     PAGE NUMBER
PART I: FINANCIAL INFORMATION

    Item 1:   Financial Statements

    Consolidated Balance Sheets                                                1
    March 31, 1999  (Unaudited) and
    December 31, 1998.

    Consolidated Statements of Income                                          2
    Three Months Ended March 31, 1999 and 1998 (Unaudited)
 
    Consolidated Statements of Cash Flows                                      3
    Three Months Ended 
    March 31, 1999 and 1998 (Unaudited)

    Notes to Consolidated Financial                                            4
    Statements (Unaudited)

    Item 2:   Management's Discussion and Analysis                             6
    of Financial Condition and Results of Operations

PART II:  OTHER INFORMATION                                                   11

<PAGE>

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

                                                        MARCH 31,   DECEMBER 31,
                                                          1999         1998
                                                      -----------   ------------
ASSETS                                                              (UNAUDITED)
CURRENT ASSETS:
  Cash and cash equivalents                           $16,202,265   $ 9,749,956
  Accounts receivable, net                              8,532,829    17,694,262
  Film inventory-net                                    1,241,530     1,079,677
  Prepaid refundable income taxes                         366,095       324,864
  Prepaid expenses and other current assets             1,107,840     1,151,974
                                                      -----------   -----------
       Total current assets                            27,450,559    30,000,733
                                                      -----------   -----------
FURNITURE, FIXTURES AND COMPUTER EQUIPMENT - (Net)        165,603       174,783

FILM INVENTORY - Noncurrent                             1,875,000     1,875,000

ACCOUNTS RECEIVABLE - Noncurrent, net                   2,429,442     2,627,680

SECURITY DEPOSITS AND OTHER ASSETS                        307,955       282,959
                                                      -----------   -----------
TOTAL ASSETS                                          $32,228,559   $34,961,155
                                                      ===========   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Due to licensors                                    $ 6,850,592   $ 3,690,582
  Media payable                                         3,732,689    11,460,913
  Accounts payable and accrued expenses                   739,893     1,285,624
  Taxes payable                                         1,195,154     1,750,799
  Current Deferred Tax Liability                          989,000       989,000
                                                      -----------   -----------
       Total current liabilities                       13,507,328    19,176,918

NONCURRENT DEFERRED TAX LIABILITY                         379,012       379,012
                                                      -----------   -----------
       Total liabilities                               13,886,340    19,555,930
                                                      -----------   -----------
STOCKHOLDERS' EQUITY
  Preferred stock, $.01 par value - authorized,
    3,000,000 shares; none issued
  Common stock, $.01 par value - authorized, 
    20,000,000 shares; issued, 5,027,153 and 
    4,594,103 shares                                       50,271        45,941
  Additional paid-in capital                            7,134,864     4,946,830
  Retained earnings                                    11,157,084    10,412,454
                                                      -----------   -----------
       Total stockholders' equity                      18,342,219    15,405,225
                                                      -----------   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $32,228,559   $34,961,155
                                                      ===========   ===========

See accompanying notes to consolidated financial statements


                                      -1-
<PAGE>

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

                                                        THREE  MONTHS ENDED
                                                     MARCH 31,       MARCH 31,
                                                       1999            1998
                                                    -----------     ------------
NET REVENUES:                                       $ 3,251,941     $ 2,403,378

COST AND EXPENSES:
  Selling, general and administrative cost            2,090,886       1,535,853
  Amortization of capitalized film cost                       0         455,680
                                                    -----------     -----------
         TOTAL COST AND EXPENSES                      2,090,886       1,991,533
                                                    -----------     -----------
                                                      1,161,055         411,845
INTEREST INCOME                                         145,575          76,458
                                                    -----------     -----------
INCOME BEFORE INCOME
TAX PROVISION                                         1,306,630         488,303

INCOME TAX PROVISION                                   (562,000)       (210,000)
                                                    -----------     -----------
NET INCOME                                          $   744,630     $   278,303
                                                    ===========     ===========
PER SHARE AMOUNTS

Basic Earnings per share                            $      0.16     $      0.06
                                                    ===========     ===========

Diluted Earnings per share                          $      0.13     $      0.05
                                                    ===========     ===========

See accompanying notes to consolidated financial statements.


                                      -2-
<PAGE>

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)                                    
                                                      THREE           THREE
                                                   MONTHS ENDED    MONTHS ENDED
                                                     MARCH 31,       MARCH 31,
                                                       1999            1998
                                                   -------------   ------------
OPERATING ACTIVITIES:
 Net income                                        $    744,630    $    278,303
  Adjustments to reconcile net
      income to net
      cash (used in)/provided
      by operating activities:
    Depreciation and amortization                        21,577          19,341
    Amortization of capitalized film cost                    --         455,680
    Changes in assets and liabilities
      (using)/providing cash:
    Accounts receivable                               9,359,671      18,750,261
    Film inventory                                     (161,853)        (90,761)
    Prepaid expenses and other current assets            44,134        (154,636)
    Prepaid/Refundable income taxes                     (41,231)         (7,461)
    Security deposits and other assets                  (24,996)          6,983
    Due to licensors                                  3,160,010         540,105
    Accounts payable and accrued expenses              (545,731)        259,199
    Taxes payable                                      (555,645)        158,672
    Media payable                                    (7,728,224)    (15,202,669)
                                                   ------------    ------------
     Net cash (used in) provided by
       operating activities                           4,272,342       5,013,017
                                                   ------------    ------------
INVESTING ACTIVITIES:
  Purchase of furniture and fixtures                    (12,397)        (33,561)
                                                   ------------    ------------
     Net cash (used in)
        investing activities                            (12,397)        (33,561)
                                                   ------------    ------------
FINANCING ACTIVITIES:
  Proceeds from exercise of stock options
    and related tax benefit                           2,192,364              --
                                                   ------------    ------------
     Net cash provided by
       financing activities                           2,192,364              --
                                                   ------------    ------------
NET INCREASE IN CASH 
  AND CASH EQUIVALENTS                                6,452,309       4,979,456
CASH AND CASH EQUIVALENTS, BEGINNING PERIOD           9,749,956       2,805,573
                                                   ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD           $ 16,202,265    $  7,785,029
                                                   ============    ============

See accompanying notes to consolidated financial statements.


                                      -3-
<PAGE>

4KIDS ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999

Note 1

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes as required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation of the interim financial information have been included. Operating
results for three months ended March 31, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999. For
further information, refer to the consolidated financial statements and
footnotes thereto included in 4Kids Entertainment, Inc.'s (the "Company") Form
10-K for the year ended December 31, 1998.

Note 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

For a summary of significant accounting policies reference is made to the
Company's report on Form 10-K previously filed for the year ended December 31,
1998.

Note 3

NET INCOME PER SHARE:

The Company applies Statement of Accounting Standards("SFAS") No. 128 "Earnings
per Share" which requires the computation and presentation of earnings per share
("EPS")to include basic and diluted EPS. Basic EPS is computed based solely on
the weighted average number of common shares outstanding during the period.
Diluted EPS reflects all potential dilution of common stock. For the three
months ended March 31, 1999, the weighted average number of common shares
outstanding for basic and diluted EPS was 4,770,213 and 5,679,156 respectively.
For the three months ended March 31, 1998, the weighted average number of common
shares outstanding for basic and diluted EPS was 4,417,247 and 5,105,912
respectively.


                                      -4-
<PAGE>

Note 4

CREDIT FACILITY:

The Company's line of credit (the Credit Facility) from Chase Bank expires June
30, 1999. Under the terms the Company may borrow from time to time for general
working capital purposes up to $2 million. Any borrowings under the credit
facility would be secured by the Company's receivables. The Credit Facility
provides for an interest rate of 1% over the bank's prime rate and an annual
commitment fee of 3/4%. As of May 14, 1999 the Company had no borrowings under
the Credit Facility.

Note  5

STOCK SPLIT

      On March 29, 1999, the Company's Board of Directors approved the
         declaration of a 3 for 2 stock split effective for shareholders of 
         record on April 15, 1999. The accompanying financial statements have 
         been retroactively restated to reflect the stock split.

Note 6

SEGMENT AND RELATED INFORMATION

      The Company applies Statement of Financial Accounting Standards No. 131
      ("SFAS No. 131"), "Disclosures About Segments of an Enterprise and Related
      Information". The Company has three reportable segments; Licensing, Media
      Buying Planning and Television Distribution and Television Production.

      The accounting policies of the segments are the same as those described in
      the summary of significant accounting policies. The Company does not have
      any inter-segment sales or transfers.

      The Company's reportable segments are strategic business units which,
      while managed separately, work together as a vertically integrated
      Entertainment Company.

<TABLE>
<CAPTION>
                                           MEDIA &       TELEVISION
                          LICENSING    TV DISTRIBUTION   PRODUCTION       TOTAL
                          ---------    ---------------   ----------       -----
<S>                     <C>             <C>             <C>             <C>         
3 Months Ended
March 31,

1999
  Revenues              $  2,567,720    $    482,575    $    201,646    $  3,251,941
  Amortization                   --              --              --              --
  Segment Profit (Loss)    1,391,273        (142,195)         57,552       1,306,630
  Segment Assets          18,798,490       9,909,421       3,520,648      32,228,559

1998
  Revenues              $  1,876,710    $    320,988    $    205,680    $  2,403,378
  Amortization                   --              --          455,680         455,680
  Segment Profit (Loss)    1,039,072        (273,458)       (277,311)        488,303
  Segment Assets          10,391,489      10,055,234       4,905,965      25,352,688
</TABLE>


                                      -5-
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS:

The Company receives revenues from a number of sources, principally licensing,
media buying and television distribution. The Company typically derives a
substantial portion of its licensing revenues from a small number of properties,
which properties usually generate revenues only for a limited period of time.
Because the Company's licensing revenues are highly subject to changing fashion
in the toy and entertainment business, its licensing revenues from year to year
from particular sources are subject to dramatic increases and decreases. It is
not possible to precisely anticipate the length of time a project will be
commercially successful, if at all. Popularity of properties can vary from
months to years. As a result, the Company's revenues and net income may
fluctuate significantly between comparable periods. The Company's revenues have
historically been primarily derived from the license of toy and game concepts.
Thus a substantial portion of the Company's revenues and net income are subject
to the seasonal variations of the toy and game industry. Typically, a majority
of toy orders are shipped in the third and fourth calendar quarters. In addition
the Company's media buying subsidiary concentrates its activities on the youth
oriented market. As a result, most of its revenue is earned in the fourth
quarter when the majority of toy and video game advertising occurs. As a result,
in the Company's usual experience, its net income during the second half of the
year will generally be greater than during the first half of the year. However,
the Company has little control over the timing of guarantee and minimum royalty
payments, some of which are made upon the execution and delivery of license
agreements.

Three Months Ended March 31, 1999 Compared to the Three Months Ended March 31,
1998

Consolidated net revenue increased 35% ($848,563)to $3,251,941 for the three
month period ended March 31, 1999 as compared to the same period in 1998. The
increase in net revenue for the 


                                      -6-
<PAGE>

three month period was primarily due to increased revenue related to licensing
activities. Increased licensing revenue was recognized in the three month period
from the World Championship Wrestling "WCW/NWO" and "Pokemon" properties. The
Company's media buying and television distribution division recognized increased
revenue over the three month period due to an increase in television
distribution activities related to the Pokemon television program. The increase
was partially offset by a decrease in media buying activity due to the loss of
Tiger Electronics media business. Effective January 1, 1999, the Company will no
longer be the media agency for Tiger due to Tiger's acquisition by Hasbro in
1998.

Selling, general and administrative expenses increased 36% or $555,033 three
month period ended March 31, 1999 when compared to the year ago period. These
increases were primarily due to costs associated with an increase in payroll and
marketing costs associated with the Company's expanded licensing activities.
Additionally, bonus accruals, which are contractually based on pre-tax income
levels were higher in 1999 as a result of higher pre-tax income.

At March 31, 1999 there were $3,116,530 of capitalized film production costs
which primarily relate to 26 episodes of "WMAC Masters" and work related to the
adaptation of episodes 53 to 104 of the Pokemon episodes for distribution in the
United States. "WMAC Masters" is a weekly syndicated television program produced
by the Company's 4Kids Productions subsidiary. The 1998 amortization relates to
the "WMAC Masters" television program. At March 31, 1999 the percentage of total
unamortized film cost expected to be amortized within the next three years
exceeds 70%.


                                      -7-
<PAGE>

The Company periodically evaluates its anticipated revenue from film production
and, consequently, amortization rates may change as a result of such estimates.
In accordance with this policy, the Company recognized approximately $250,000 in
additional amortization expense during the three month period ended March 31,
1998 which all related to the WMAC Masters film inventory.

Interest income increased by $69,117 for the three month period ending March 31,
1999 as compared to the same period in 1998.  This increase is  attributable  to
higher levels of invested cash during the first three months of the current year
as compared to the same period in 1998.

LIQUIDITY AND CAPITAL RESOURCES:

At March 31, 1999 the Company had working capital of $13,943,231 as compared to
working capital of $10,823,815 at December 31, 1998, an increase in working
capital of $3,119,416. Cash and cash equivalents increased by $6,452,309 to
$16,202,265 from December 31, 1998. The increase in cash and cash equivalents is
due primarily to the seasonality of the Company"s business and the timing of
advance payments due on new licensing agreements. The Company generates
significantly higher receivables and payables during the fourth quarter of the
year primarily related to its media buying and licensing activities. Such
amounts are collected in the first quarter.

Accounts receivable, net (current and noncurrent) decreased from $20,321,942 at
December 31, 1998 to $10,962,271 at March 31, 1999. The decrease is primarily
due to the Company's media buying activities. When the Company assumes payment
obligation for the media it places on behalf of its clients, the Company records
a receivable from its clients and a corresponding media payable for the gross
amount of the media due. The seasonality of the Company's business tends to
generate higher receivables in the fourth quarter which are generally collected
in the first quarter. There was a corresponding decrease in media payable of
$7,728,224.

Amounts due to licensors, which represents the owner's share of royalties
collected, increased by $3,160,010 to $6,850,592 from December 31, 1998. The
increase is primarily due to higher amounts of royalties and advances collected
during the quarter which are payable to licensors after the close of the
quarter.


                                      -8-
<PAGE>

In the opinion of management, the Company will be able to satisfy its
foreseeable financial obligations from its current working capital and credit
facility. As described in Note 4 to the financial statements, the Company has
established a $2,000,000 credit facility with Chase Manhattan Bank for general
working capital purposes. As of May 14, 1999 there were no borrowings under this
facility.

Year 2000 Compliance

Overview

The Year 2000 issue is primarily the result of computer programs only accepting
a two digit date code, as opposed to four digits, to indicate the year.
Beginning in the Year 2000, and in certain instances prior to the Year 2000,
these date code fields will need to accept four digit entries to distinguish
21st century dates from 20th century dates. As a result, the Company"s date
critical functions may be adversely affected unless these computer systems and
software products are, or become, able to accept four digit entries.


                                      -9-
<PAGE>

Internal systems and equipment

The Company has commenced a comprehensive program consisting of identifying,
assessing and if necessary, upgrading and/or replacing its systems and equipment
that may be vulnerable to Year 2000 problems. The first stage of this program,
identifying the systems and equipment, has been substantially completed. The
Company has prioritized the identified items as either critical or non-critical
to the operations of the Company. The Company has made substantial progress
through the second and third stages of this program, assessing and upgrading
and/or replacing the equipment it has deemed to be non-compliant. The Company is
also in the beginning stage of developing a plan to test its entire system for
Year 2000 compliance. The Company believes that it will have completed all of
its necessary upgrades and/or replacements and the testing of its systems by
June, 1999.

Third party relationships

The Company has begun to formally communicate with its significant suppliers and
customers to determine if those parties have appropriate plans to remedy Year
2000 issues when their systems may impact the operations of the Company. There
can be no assurance, however, that the systems of other companies on which the
Company"s processes rely will be timely converted, or that a failure to
successfully convert by another company, or a conversion that is incompatible
with the Company"s systems, would not have an impact on the Company"s
operations. The Company believes that by June 1999 it will substantially
complete its assessment of the status of its significant customers" and
suppliers" compliance with the Year 2000 issues.

Contingency plans

Based on the assessment effort to date, the Company has focused on three
separate contingency plans (1) if the Company"s systems are non-compliant (2) if
the Company"s customers are non-compliant and (3) if the Company"s suppliers are
non-compliant. The Company is in the early stages of developing these plans and
believes that it will be able to fully determine its worst case scenarios by
June 1999. There can be no assurance that the Company will be able to have a
contingency plan in place for a significant supplier and/or customer that does
not become Year 2000 compliant.

Costs/Risks

Management currently estimates that the cost, in connection with bringing its
own systems and equipment into compliance, will be less than $50,000 for fiscal
1999 and does not expect the total cost to exceed $100,000. Although the Company
is not aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, there can be no assurance that
there will not be a delay in, or increased costs associated with, the
implementation of the necessary systems and changes to address the Year 2000.

Potential  sources of risk  include but are not limited to (1) the  inability of
principal clients and licensees to be Year 2000 compliant, which could result in
delays in product deliveries from such clients and licensees,  (2) the inability
of the Company"s clients and licensees to become  compliant,  which could impact
their ability to sell product or report  royalties in a timely manner  resulting
in a disruption of the  Company"s  cash flow,  and (3)  disruption of television
broadcast signals,  including satellite  distribution and commercial integration
vendors  as  a  result  of  the  general   failure  of  systems  and   necessary
infrastructure such as electrical supply.

Forward-looking Statements

This quarterly report contains forward-looking  statements. Due to the fact that
the Company faces  competition  from toy companies,  motion picture  studios and
other  licensing  companies,  and the  uncertainty  of public"s  response to the
Company"s properties,  actual results or outcomes may differ materially from any
such forward-looking statements.


                                      -10-
<PAGE>

PART II - OTHER INFORMATION

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

              None

Item 6.  Exhibits and Reports on Form 8-K

         a.  Exhibits
                  27    Financial Data Schedule

         b.  Reports on Form 8-K
                  None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated: May 17, 1999

4KIDS ENTERTAINMENT, INC.

By: /s/ Alfred R. Kahn
   ---------------------------
Alfred R. Kahn
Chairman of the Board and
Chief Executive Officer

By: /s/ Joseph P. Garrity
   ---------------------------
Joseph P. Garrity
Executive Vice President
Chief Financial Officer


                                      -11-