SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


For the fiscal year ended April 1, 2000              Commission File No. 0-12375


                        PEACHES ENTERTAINMENT CORPORATION
             (Exact name of registrant as specified in its charter)

            Florida                                            59-2166041
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                            Identification No.)

     1180 East Hallandale Beach Boulevard, Hallandale, Florida     33009
              (Address of principal executive offices)           (Zip Code)

Registrant's telephone number, including area code: (954) 454-5554

Securities registered pursuant to Section 12(b) of the Act: None

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

                     Common Stock, par value $.01 per share


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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 [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

                              YES [ ]   NO [X]

The aggregate  market value (based on the average  closing bid and asked prices)
of the voting stock held by  non-affiliates of the registrant was, as of June 1,
2000, approximately $128,000.

As of June 1, 2000 the  registrant's  transfer  agent  reported  as  issued  and
outstanding:

     39,781,270 Shares of Common Stock

<PAGE>

                                     PART I

Item 1. BUSINESS

     Peaches Entertainment Corporation ("PEC" or the "Company"), a Florida
corporation, began business in 1982. It is engaged in the operation of retail
stores which sell prerecorded music, videos, and related products (the "Retail
Business") in the Southeastern part of the United States under the name
"PEACHES".

     URT Industries, Inc. ("URT"), a Florida corporation, and certain of its
directors and officers presently own approximately 94% of PEC's issued and
outstanding shares of common stock and all of its issued and outstanding shares
of preferred stock, and control PEC. The remaining approximately 6% of PEC's
issued and outstanding shares of common stock is owned by non-affiliated
persons.

The Peaches Stores

     The following table sets forth the number of "Peaches" stores (the
"'Peaches' stores") which were open at the beginning of the year, which opened
during the year, which closed during the year and which were open at the end of
the year, with respect to PEC's last five complete fiscal years ending with the
fiscal year ended April 1, 2000 (the "2000 fiscal year"):

                                      2000     1999      1998      1997     1996
                                      ----     ----      ----      ----     ----
Number of stores:

At beginning of period                 12       12        13        13       19
Opened during period                    0        1         0         0        0
Closed during period                    0       (1)       (1)        0       (6)
                                      ---      ---       ---       ---      ---

   At end of period                    12       12        12        13       13

     Subsequent to the close of the 2000 fiscal year, PEC closed one of its
stores for which the lease expired. The eleven "Peaches" stores which are in
operation are located in the following four states: Florida (five stores),
Virginia (three stores), North Carolina (two stores), and Alabama (one store).
The utilized space of the stores ranges from approximately 7,000 square feet to
approximately 14,000 square feet. Each store either has its own parking area or
is located in a shopping center which provides parking. PEC has options to renew
most of its leases for various periods. Two of the Florida stores, one in Fort
Lauderdale and the other in Orlando, are currently leased from the Chairman of
PEC and his brother, a former director of PEC. (See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS").

     For information concerning real property owned by PEC, see "Properties".

E-Commerce

     In July 2000, PEC launched its e-commerce site, www.peachesmusic.com. The
site offers over 250,000 different items, including compact discs, cassettes,
DVD's as well as digital downloading. As of the date of this filing, the web
site has not had a material impact on PEC's


                                       -2-
<PAGE>


financial condition or results of operations.

Trademarks

     PEC is the registered owner of and owns nationwide rights to the tradename,
service mark and trademark "PEACHES" (the "Trademarks") in connection with the
operation of the Retail Business.

Operation of the Peaches Stores

     The "Peaches" stores are all similar in appearance. They have distinct,
wood paneled interiors, are decorated in a manner which identifies them as
"Peaches" stores and carry a wide selection of prerecorded music as well as
recorded and blank video tapes, accessory items and specialty items such as
T-shirts and crates. Some stores are free standing and others are contiguous to
other stores in shopping centers. At present, each "Peaches" store is managed by
an individual director who is responsible for re-orders of merchandise and
displaying merchandise sold in the store, hiring and firing personnel and other
matters relating to store administration. Certain other matters, including
pricing, relationships with landlords and the purchase and allocation of new
releases, are handled by the home office. PEC has a computerized inventory
control system in place at each of its stores.

     The vast majority of PEC's products are purchased directly from the five
major music distributors. Such distributors are: BMG(Bertelsman Music Group),
EMD (EMI Music Distribution), Sony Music, Universal Distribution and WEA
(Warner/Elektra/Atlantic). PEC does not have material long-term purchase
agreements with any of such distributors. Such arrangement is typical in the
industry.

     Purchases from given suppliers are, to a great extent, determined by which
of them are manufacturing or distributing the most popular prerecorded music
products at a given time, as well as the credit and other terms on which such
suppliers are willing to sell to PEC. PEC is not obligated to purchase
merchandise from any supplier. It has numerous alternate sources of supply for
inventory. However, a loss of one of its principal suppliers may have a
materially adverse effect on PEC's financial condition and results of
operations.

     Merchandise is delivered directly by suppliers to the stores. The usual
terms received by PEC from suppliers provide for payment to be made within 60
days from the end of the month in which a purchase was made. In addition, PEC
normally receives an additional 30 to 120 days to pay for certain purchases
during the course of the year. Such terms are usual in the industry.

     Under current industry procedure, PEC is able to return merchandise,
subject to certain


                                       -3-
<PAGE>


limitations, to all of its major suppliers, who charge a penalty if returns
exceed certain percentages of the dollar amounts of gross purchases. Such return
policies do not have a materially adverse effect on PEC's business.

     Advertising in local newspapers and media is determined by consultation
between each store director and PEC management. PEC also engages in cooperative
advertising with suppliers who pay a portion of the cost. In addition to the
director, each "Peaches" store is staffed with managers, cashiers and sales and
stock room personnel. The stores are open seven days a week.

     Quarterly results are affected by the timing of holidays, the timing and
strength of new releases, new store openings/closings and sales performance of
existing stores. During the 2000 fiscal year, sales between April and June were
approximately 24% of total sales; sales between July and September were
approximately 22% of total sales; sales between October and December were
approximately 30% of total sales; and sales between January and March were
approximately 24% of total sales.

Competition

     The retail sale of prerecorded music and video products is highly
competitive. There are hundreds of retail, department, discount and variety
stores and supermarkets which offer such merchandise to the public. PEC's share
of the retail market in the Southeastern United States is not significant. In
recent years, in addition to usual competition, there has been a proliferation
of non-traditional music outlets, such as appliance retailers and super
bookstores, some of whom have used very aggressive price cutting tactics
including selling some products below actual cost in order to attract customers
and sell non-music and video products. In addition, the expansion of e-commerce
has resulted in competition from outside the normal geographic spheres of
competition.

Employees

     As of the last day of the 2000 fiscal year, PEC had approximately 220
employees. It is not a party to any collective bargaining agreements. Relations
with employees have been satisfactory and there have been no work stoppages.

Management Agreements

     During the 2000 fiscal year, as in the prior fiscal year, there were three
agreements in place pertaining to the management of PEC. Two of such agreements
were between URT and PEC and the third was between URT and Allan Wolk, URT's
Chairman, President and Chief Executive Officer. Pursuant to such agreements
(hereinafter collectively referred to as the "Management Agreements") the
following arrangements were in effect: URT was required to provide to PEC during
such period the services of Mr. Wolk as PEC's Chairman, President and Chief
Executive Officer; PEC was required to pay to Mr. Wolk during such period, so
long as he continued to provide such services, a salary in the amount described
below; the amount so paid by PEC to Mr. Wolk pursuant to such arrangements was
credited against the amount


                                       -4-
<PAGE>

payable by URT to Mr. Wolk pursuant to the employment agreement between them
(see "EXECUTIVE COMPENSATION" below); and URT and PEC were required to continue
to equitably apportion taxes so long as they continue to file a consolidated
federal return. The salary payable by PEC to Mr. Wolk pursuant to the Management
Agreements, as revised by further agreement between URT and PEC, was $250,000
during the 1999 fiscal year and $248,000 during the 2000 fiscal year.

     The Management Agreements expired on March 31, 2000 but have been extended
by URT and PEC on a month-to-month basis during the current fiscal year pending
the negotiation and preparation of proposed replacement agreements. Such
extension has been on the same terms as the Management Agreements, except that
the compensation payable by PEC to Mr. Wolk has been further reduced to a rate
of $240,000 per annum during the period of such negotiations pursuant to an oral
understanding between the two companies.

     During both the 2000 and 1999 fiscal years, Mr. Wolk devoted approximately
75% of his contractual working time to the business of PEC.

Item 2. PROPERTIES

     PEC's headquarters are located in Hallandale, Florida in a building which
is leased by PEC. Such building contains a total of approximately 6,000 square
feet of office space.

     PEC owns real property in Mobile, Alabama on which it constructed and
operates a "Peaches" store. Such property is subject to a first mortgage on the
part of an institutional lender, and is also subject to mortgages on the part of
URT and Allan Wolk (see "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").

     All "Peaches" stores, other than the Mobile, Alabama store discussed
immediately above, are leased. For information concerning such other stores
operated by PEC, see "BUSINESS--The Peaches Stores".

     As part of its on-going long term strategic planning, PEC may sell its
leasehold interest(s) in one or more of its stores.

Item 3. LEGAL PROCEEDINGS

     In February, 2000, PEC amicably resolved a lawsuit with one of its
landlords which had been commenced by PEC in the Circuit Court of the Ninth
Judicial Circuit of Orange County, Florida, about representations made by the
landlord to PEC concerning the shopping center in which one of PEC's Orlando
stores is located.

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

     None.

                                     PART II


                                       -5-
<PAGE>

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock

     PEC's Common Stock is quoted by market makers on the over-the-counter
market. The following table sets forth the closing high and low, bid and asked
quotations for PEC's Common Stock for the calendar periods indicated, based on
information supplied by Pink Sheets LLC:

                                         Bid Prices        Asked Prices
                                        -------------     -------------
                                        High      Low     High      Low
1998

      Quarter ended March 31,           .001     .001     .05       .05
      Quarter ended June 30,            .001     .001     .10       .05
      Quarter ended September 30,       .01      .001     .10       .08
      Quarter ended December 31,        .01      .01      .08       .08

1999

      Quarter ended March 31            .06      .01      .125      .08
      Quarter ended June 30,            .03125   .03125   .09       .09
      Quarter ended Sept. 30,           .03125   .02      .09       .05
      Quarter ended Dec. 31,            .02      .01      .05       .02

2000

      Quarter ended March 31,           .20      .01      .28125    .02
      Quarter through June 1,           .05      .04      .07       .06

     The above over-the-counter quotations represent prices between dealers, do
not include retail markups, markdowns or commissions and do not necessarily
represent actual transactions.

Dividends

     Since its inception, there has been no payment of dividends on PEC's Common
Stock. Payment of dividends on such stock in the future will depend upon PEC's
earnings and needs.

     PEC is required to pay dividends on its outstanding shares of preferred
stock (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS--Liquidity and Capital Resources").


                                       -6-
<PAGE>

Approximate Number of Equity Security Holders

     The following table indicates the approximate number of holders of record
of each class of PEC's common equity securities as of June 1, 2000, based on
information supplied by PEC's transfer agent:

                                                        Number of Record
          Title of Class                                    Holders
          --------------                                ---------------

          Common Stock, $.01 par value                      1,435

Item 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial data and other operating
information of the Company. The selected financial data should be read in
conjunction with the financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

<TABLE>
<CAPTION>
                                                     April 1,        April 3,        March 28,       March 29,       March 30,
                                                       2000            1999            1998            1997            1996
                                                       ----            ----            ----            ----            ----
<S>                                               <C>             <C>             <C>             <C>             <C>
Operating Statement Data:

   Net sales                                      $ 15,377,711    $ 17,480,467    $ 17,077,501    $ 18,109,119    $ 23,626,489

   Net loss                                           (269,521)        (89,586)       (468,209)       (865,313)     (2,416,051)

   Basic and diluted earnings per share (1)                 --              --           (0.01)          (0.04)          (0.12)

   Weighted average number of common
      shares outstanding (1)                        39,781,270      39,781,270      39,781,270      20,055,243      19,781,270

Balance Sheet Data:

   Working capital excluding liabilities
      subject to compromise in 1996                   (133,392)        128,620         252,883       1,513,459       6,083,691

   Total assets                                      4,212,606       4,582,948       5,353,203       6,170,065       9,442,616

   Current portion of long-term
      obligations                                      329,234         108,280         732,319         730,239         124,774

   Long-term obligations                               415,525         469,759         578,127       1,337,190         810,367

   Shareholders' equity                                631,316         960,837         760,423         913,913       1,429,226
</TABLE>

There were no cash dividends declared for common stock in any of the periods
presented.

(1)  In 1997, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standard (SFAS) No. 128 which requires the disclosure
     of basic earnings per share and diluted earnings per share. Earnings per
     share for all prior periods have been restated to reflect the provisions of
     this Statement.

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

From time to time, PEC (sometimes referred to herein as the "Company") may make
certain statements that contain "forward-looking" information (as defined in the
Private Securities Litigation Reform Act of 1995). Words such as "believe",
"anticipate", "estimate", "project" and similar expressions are intended to
identify such forward-looking statements. Forward- looking statements may be
made by management orally or in writing, including, but not limited to, in press
releases, as part of this Management's Discussion and Analysis of Financial
Condition and Results of Operations and as a part of other sections of this
Annual Report or other filings. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
respective dates, and are subject to certain risks, uncertainties and
assumptions. These risks include, but are not limited to: changes in the
competitive environment for the Company's products, including the entry or exit
of non- traditional retailers of the Company's products to or from its markets;
the release by the music industry of an increased or decreased number of "hit
releases"; general economic factors in markets where the Company's products are
sold; and other factors discussed in this filing and the Company's other
filings. Should one or more of these risks or uncertainties materialize, or
should any of the underlying assumptions prove incorrect, actual results of
current and future operations may vary materially from those anticipated,
estimated or projected.

Results of Operations


                                       -7-
<PAGE>


FISCAL YEAR ENDED APRIL 1, 2000 ("fiscal 2000") COMPARED TO FISCAL YEAR
ENDED APRIL 3, 1999 ("fiscal 1999")

     Net Sales. The Company's net sales decreased during fiscal 2000 by $2.1
million or 12%. Factors that contributed to the decrease are a 6.4% decline in
comparable store sales, the fact that the Company operated one more store during
most of fiscal 1999, as well as the fact that fiscal 1999 was a 53 week year
compared to fiscal 2000 which was a 52 week year.

     Cost of Sales. The Company's cost of sales as a percentage of net sales
decreased from 59.3% in fiscal 1999 to 58.1% in fiscal 2000. The decrease is
primarily due to increases in certain retail selling prices.

     Expenses. Selling, general and administrative expenses (SG&A), including
depreciation, increased as a percentage of net sales from 40.5% in fiscal 1999
to 43.4% in fiscal 2000. The increase is primarily due to the decrease in sales.

FISCAL 1999 COMPARED TO FISCAL YEAR ENDED MARCH 28, 1998
("fiscal 1998")

     Net Sales. The Company's net sales for 1999 increased $403,000 or 2.4%
compared to 1998. The increase is primarily due to the fact that the Company
operated one more store for a portion of 1999 offset by a comparable store
decrease of 1.6 %.

     Cost of Sales. The Company's cost of sales, as a percentage of net sales,
decreased from 61.5 % in 1998 to 59.3 % in 1999. Such decrease is primarily
attributable to an increase in certain retail prices and increases in purchase
discounts.

     Expenses. Selling, general and administrative expenses, including
depreciation, expressed as a percentage of net sales increased to 40.5% in 1999
compared to 39.9% in 1998. The increase is primarily attributable to expenses
incurred throughout the Company's first quarter of 1999 relating to the new
store that did not actually open until after the first quarter began.

FISCAL 1998 COMPARED TO FISCAL YEAR ENDED MARCH 29, 1997
("fiscal 1997")

     Net sales. Net sales for 1998 decreased by 5.7% compared to 1997. Such
decrease is attributed to a 3.2% decrease in comparable store sales, and a 2.5%
decrease in sales due to one store that closed in 1998.

     Cost of Sales. The cost of sales for 1998 was lower than that for 1997 due
principally to a


                                       -8-
<PAGE>

decrease in net sales. Cost of sales as a percentage of net sales decreased from
63.2% in 1997 to 61.4% in 1998 due principally to the fact that during the first
quarter of 1998 the Company began to receive discounts associated with normal
trade terms as a result of the confirmation of its Amended Plan of
Reorganization ("Plan of Reorganization") on January 17, 1997, following its
voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (the
"Chapter 11 proceeding"). Such decrease is also attributed to increases in other
purchase discounts and an increase in certain retail selling prices.

     Expenses. Selling, general and administrative expenses, including
depreciation and amortization ("SG&A") in 1998 decreased by 10.1% compared to
1997. Such decrease is attributed to a decrease in corporate overhead (7.8%) and
a decrease due to the closing of one of the Company's stores (2.5%), offset by
an increase in comparable store expenses (0.2%). SG&A expenses, as a percentage
of net sales, decreased from 42% in 1997 to 40% in 1998 primarily due to such
overhead reductions.

     During 1998, the Company's primary suppliers initiated steps to help
protect the retail marketplace from certain low cost retailers of music. These
steps included not disbursing cooperative advertising funds to retailers which
engage in low cost selling practices in violation of the minimum advertised
pricing policies of such suppliers. Management believes that such initiatives,
in combination with the other factors mentioned immediately below, helped the
Company to restore itself to a more competitive position. Another factor which
had a positive effect on the Company's performance is the increase in gross
profit percentage. Also, the Company's Chapter 11 Plan of Reorganization was
confirmed during the last quarter of 1997. The benefits of the reorganization
included the termination of the leases associated with the six unprofitable
stores which were closed during 1996, the closing of the Company's former
headquarters and warehouse, and the termination of other unprofitable business
arrangements. Other competitive advantages over certain competitors include a
large selection of inventory, convenient store locations, a high level of
customer service and the widely recognized "Peaches" name.

Liquidity and Capital Resources

Cash generated from operations and cash equivalents are the Company's primary
source of liquidity. Management anticipates that the cash generated from
operations, cash equivalents on hand and financing will provide sufficient
liquidity to maintain adequate working capital for operations.

At April 1, 2000, the Company had long-term obligations of $415,525. Management
anticipates that its ability to repay its long-term obligations will be
satisfied primarily through funds generated from its operations or from possible
financing.

Although the Company cannot accurately determine the precise effect of inflation
on its operations, management does not believe inflation has had a material
effect on the results of


                                       -9-
<PAGE>

operations in the last three fiscal years. When the cost of merchandise items
has increased, the Company has been able to pass the increase on to its
customers.

The Company's business is seasonal in nature, with the highest sales and
earnings historically occurring in the third fiscal quarter, which includes the
Christmas selling season.

The Company has from time to time received from its parent, URT, loans and other
financial assistance (See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS).

Recent Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements". SAB 101
provides guidance for revenue recognition under certain circumstances. It is
effective during fiscal year 2001. Management is reviewing the effect, if any,
of SAB 101 on the Company's results of operations, financial position and cash
flows.

In June 1998, the Financial Accounting Standards Board, or FASB, issued FAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". FAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities . It requires the Company to measure all derivatives at
fair value and to recognize them on the balance sheet as an asset or liability,
depending on the Company's rights or obligations under the applicable derivative
contract. In July 1999, the FASB issued FAS No. 137, which deferred the
effective date of adoption of FAS 133 for one more year. The Company does not
currently own any derivative instruments and does not anticipate that FAS 133
will have any effect on its results of operations, financial position or cash
flows.

In March 1998, the Accounting Standards Executive Committee issued Statement of
Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use". SOP 98-1 requires all costs related to the
development of internally used software, other than those incurred during the
application development stage, to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized and amortized
over the estimated useful life of the software. SOP 98-1 was adopted by the
Company during fiscal 2000 and did not have a material effect on the Company's
financial position or results of operations.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company owns no derivative financial instruments or derivative
commodity instruments. The Company's exposure to changes in interest rates is
limited to cash, cash equivalents, investments and long term debt. Changes in
interest rates by 10% would not have a material impact on the company's
financial condition or results of operations.


                                      -10-
<PAGE>

Item 8. FINANCIAL STATEMENTS


                        PEACHES ENTERTAINMENT CORPORATION


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         PAGE
<S>                                                                                                  <C>
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                  F-1 to F-2


FINANCIAL STATEMENTS

   Balance Sheets as of April 1, 2000 and April 3, 1999                                                  F-3

   Statements of Operations for Each of the Years in the Three-Year Period Ended April 1, 2000           F-4

   Statements of Shareholders' Equity for Each of the Years in the Three-Year Period Ended
      April 1, 2000                                                                                      F-5

   Statements of Cash Flows for Each of the Years in the Three-Year Period Ended
      April 1, 2000                                                                                      F-6

   Notes to Financial Statements                                                                     F-7 to F-17
</TABLE>

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Directors and Shareholders
Peaches Entertainment Corporation
Hallandale, Florida


We  have  audited  the  accompanying  balance  sheet  of  Peaches  Entertainment
Corporation  (the  Company) as of April 1, 2000,  and the related  statements of
operations,  shareholders'  equity and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Peaches   Entertainment
Corporation  as of April 1, 2000, and the results of its operations and its cash
flows for the year then ended in conformity with generally  accepted  accounting
principles.


                            RACHLIN COHEN & HOLTZ LLP


Miami, Florida
June 12, 2000, except for Note 8, as to which
    date is September 14, 2000


                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


Directors and Shareholders
Peaches Entertainment Corporation
Hallandale, Florida


We  have  audited  the  accompanying  balance  sheet  of  Peaches  Entertainment
Corporation  (the "Company") as of April 3, 1999, and the related  statements of
operations,  shareholders'  equity  and cash  flows for each of the years in the
two-year  period  ended  April  3,  1999.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Peaches   Entertainment
Corporation  as of April 3, 1999, and the results of its operations and its cash
flows  for each of the  years in the  two-year  period  ended  April 3,  1999 in
conformity with generally accepted accounting principles.


                                    KPMG LLP

Fort Lauderdale, Florida
May 28, 1999


                                      F-2
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                                 BALANCE SHEETS

                         APRIL 1, 2000 AND APRIL 3, 1999


<TABLE>
<CAPTION>
                                                                                     2000                  1999
                                                                                     ----                  ----
<S>                                                                             <C>                   <C>
                                    ASSETS
Current Assets:
   Cash and cash equivalents                                                    $   733,697           $   615,665
   Inventories                                                                    2,058,373             2,309,600
   Prepaid expenses and other current assets                                        151,654               247,122
                                                                                -----------           -----------
         Total current assets                                                     2,943,724             3,172,387

Property and Equipment                                                            1,106,617             1,235,570
Other Assets                                                                        162,265               174,991
                                                                                -----------           -----------
         Total assets                                                           $ 4,212,606           $ 4,582,948
                                                                                ===========           ===========

                     LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                             $ 2,116,659           $ 2,240,109
   Accrued liabilities                                                              616,038               680,193
   Note Payable to Parent                                                           275,000                    --
   Current portion of long-term obligations                                          54,234               108,280
   Current portion of Due to Parent                                                  15,185                15,185
                                                                                -----------           -----------
         Total current liabilities                                                3,077,116             3,043,767

Long-Term Obligations                                                               415,525               469,759
Due to Parent                                                                        30,370                45,555
Deferred Rent                                                                        58,279                63,030
                                                                                -----------           -----------
         Total liabilities                                                        3,581,290             3,622,111
                                                                                -----------           -----------

Commitments, Contingencies and Subsequent Events                                         --                    --

Shareholders' Equity:
   Preferred stock, $100 par value; 50,000 shares authorized;
      5,000 shares issued and outstanding                                           500,000               500,000
   Common stock, $.01 par value; 40,000,000 shares authorized;
      39,781,270 shares issued as of April 1, 2000 and April 3, 1999                397,813               397,813
   Additional paid-in capital                                                     1,979,190             2,039,190
   Accumulated deficit                                                           (2,245,687)           (1,976,166)
                                                                                -----------           -----------
         Total shareholders' equity                                                 631,316               960,837
                                                                                -----------           -----------
         Total liabilities and shareholders' equity                             $ 4,212,606           $ 4,582,948
                                                                                ===========           ===========
</TABLE>

                       See notes to financial statements.


                                      F-3
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                            STATEMENTS OF OPERATIONS

       FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED APRIL 1, 2000


<TABLE>
<CAPTION>
                                                                    2000                  1999                 1998
                                                                    ----                  ----                 ----
<S>                                                            <C>                   <C>                   <C>
Net Sales                                                      $ 15,377,711          $ 17,480,467          $ 17,077,501
                                                               ------------          ------------          ------------

Costs and Expenses:
   Cost of sales                                                  8,940,342            10,361,351            10,501,123
   Selling, general and administrative expenses                   6,440,301             6,781,522             6,582,377
   Depreciation and amortization                                    232,994               304,344               270,191
                                                               ------------          ------------          ------------
                                                                 15,613,637            17,447,217            17,353,691
                                                               ------------          ------------          ------------

Income (Loss) from Operations                                      (235,926)               33,250              (276,190)
                                                               ------------          ------------          ------------

Other Income (Expense):
   Interest expense                                                 (56,564)             (135,765)             (219,148)
   Interest income                                                   22,969                12,929                27,129
                                                               ------------          ------------          ------------
                                                                    (33,595)             (122,836)             (192,019)
                                                               ------------          ------------          ------------

Loss Before Income Taxes                                           (269,521)              (89,586)             (468,209)

Provision for Income Taxes                                               --                    --                    --
                                                               ------------          ------------          ------------

Net Loss                                                       $   (269,521)         $    (89,586)         $   (468,209)
                                                               ============          ============          ============

Basic and Diluted Net Loss Per Common Share                    $         --          $         --          $      (0.01)
                                                               ============          ============          ============
</TABLE>

                       See notes to financial statements.


                                      F-4
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                       STATEMENTS OF SHAREHOLDERS' EQUITY

       FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED APRIL 1, 2000


<TABLE>
<CAPTION>
                                                                                                        Common Stock
                                             Preferred Stock               Common Stock                  Subscribed
                                             ---------------               ------------                  ----------
                                          Shares        Amount        Shares         Amount         Shares         Amount
                                          ------        ------        ------         ------         ------         ------
<S>                                         <C>     <C>            <C>           <C>             <C>           <C>
Balance, March 29, 1997                     5,000   $   500,000    19,889,120    $   198,892     20,000,000    $   350,000

Net Loss                                       --            --            --             --             --             --
Contributed Capital                            --            --    20,000,000        200,000    (20,000,000)      (350,000)
Payment of Preferred Stock Dividend
   to Parent ($12.00 per share)                --            --            --             --             --             --
Cancellation of Treasury Stock                 --            --      (107,850)        (1,079)            --             --
                                      -----------   -----------   -----------    -----------    -----------    -----------

Balance, March 28, 1998                     5,000       500,000    39,781,270        397,813             --             --

Net Loss                                       --            --            --             --             --             --
Contributed Capital                            --            --            --             --             --             --
Payment of Preferred Stock Dividend
   to Parent ($12.00 per share)                --            --            --             --             --             --
                                      -----------   -----------   -----------    -----------    -----------    -----------

Balance, April 3, 1999                      5,000       500,000    39,781,270        397,813             --             --

Net Loss                                       --            --            --             --             --             --
Payment of Preferred Stock Dividend
   to Parent ($12.00 per share)                --            --            --             --             --             --
                                      -----------   -----------   -----------    -----------    -----------    -----------

Balance, April 1, 2000                      5,000   $   500,000    39,781,270    $   397,813             --    $        --
                                      ===========   ===========   ===========    ===========    ===========    ===========

<CAPTION>
                                              Treasury Stock        Additional
                                              --------------          Paid-In      Accumulated
                                          Shares         Amount       Capital        Deficit           Total
                                          ------         ------       -------        -------           -----
<S>                                      <C>         <C>            <C>            <C>            <C>
Balance, March 29, 1997                  (107,850)   $   (19,780)   $ 1,284,471    $(1,399,670)   $   913,913

Net Loss                                       --             --             --       (468,209)      (468,209)
Contributed Capital                            --             --        524,719             --        374,719
Payment of Preferred Stock Dividend
   to Parent ($12.00 per share)                --             --        (60,000)            --        (60,000)
Cancellation of Treasury Stock            107,850         19,780             --        (18,701)            --
                                      -----------    -----------    -----------    -----------    -----------

Balance, March 28, 1998                        --             --      1,749,190     (1,886,580)       760,423

Net Loss                                       --             --             --        (89,586)       (89,586)
Contributed Capital                            --             --        350,000             --        350,000
Payment of Preferred Stock Dividend
   to Parent ($12.00 per share)                --             --        (60,000)            --        (60,000)
                                      -----------    -----------    -----------    -----------    -----------

Balance, April 3, 1999                         --             --      2,039,190     (1,976,166)       960,837

Net Loss                                       --             --             --       (269,521)      (269,521)
Payment of Preferred Stock Dividend
   to Parent ($12.00 per share)                --             --        (60,000)            --        (60,000)
                                      -----------    -----------    -----------    -----------    -----------

Balance, April 1, 2000                         --    $        --    $ 1,979,190    $(2,245,687)   $   631,316
                                      ===========    ===========    ===========    ===========    ===========
</TABLE>

                       See notes to financial statements.


                                      F-5
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                            STATEMENTS OF CASH FLOWS

       FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED APRIL 1, 2000

<TABLE>
<CAPTION>
                                                                                         2000              1999              1998
                                                                                         ----              ----              ----
<S>                                                                                 <C>               <C>               <C>
Cash Flows from Operating Activities:
   Net loss                                                                         $  (269,521)      $   (89,586)      $  (468,209)
   Adjustments to reconcile net loss to net cash
      provided by operating activities:
         Depreciation and amortization                                                  232,994           304,344           270,191
         Changes in operating assets and liabilities:
            (Increase) decrease in:
               Inventories                                                              251,227           123,833           422,061
               Prepaid expenses and other current assets                                 95,468            61,297           (48,411)
               Other assets                                                              12,726             5,934           (22,163)
            Increase (decrease) in:
               Accounts payable                                                        (123,450)          225,435           642,805
               Accrued liabilities                                                      (64,155)         (142,477)         (133,335)
               Deferred rent                                                             (4,751)              196           (93,202)
                                                                                    -----------       -----------       -----------
                  Net cash provided by operating activities                             130,538           488,976           569,737
                                                                                    -----------       -----------       -----------

Cash Flows from Investing Activities:
   Purchase of property and equipment                                                  (104,041)         (190,182)         (180,192)
                                                                                    -----------       -----------       -----------
                  Net cash used in investing activities                                (104,041)         (190,182)         (180,192)
                                                                                    -----------       -----------       -----------

Cash Flows from Financing Activities:
   Payments on amounts due to Parent                                                    (15,185)           28,584            52,062
   Proceeds received from loans from Parent                                             275,000                --                --
   Repayment of long-term obligations                                                  (108,280)         (732,407)         (756,983)
   Dividends paid                                                                       (60,000)          (60,000)          (60,000)
                                                                                    -----------       -----------       -----------
                  Net cash provided by (used in) financing activities                    91,535          (763,823)         (764,921)
                                                                                    -----------       -----------       -----------

Net Increase (Decrease) in Cash and Cash Equivalents                                    118,032          (465,029)         (375,376)

Cash and Cash Equivalents, Beginning                                                    615,665         1,080,694         1,456,070
                                                                                    -----------       -----------       -----------

Cash and Cash Equivalents, Ending                                                   $   733,697       $   615,665       $ 1,080,694
                                                                                    ===========       ===========       ===========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the period for interest                                         $    56,564       $   107,181       $   171,365
                                                                                    ===========       ===========       ===========

Supplemental Schedule of Non-Cash Operating and
   Investing Activities:
      In 1999 and 1998, the Parent forgave $350,000 and $374,719,
        respectively, of the due to Parent, which is reflected as a
         capital contribution in the accompanying financial statements.
</TABLE>

                       See notes to financial statements.


                                      F-6
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

                 APRIL 1, 2000, APRIL 3, 1999 AND MARCH 28, 1998


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Business

          Peaches  Entertainment  Corporation  (the  Company)  is engaged in the
          business of retailing  prerecorded  music,  video and accessory items,
          principally in the Southeastern United States. The Company operates in
          a  single-industry  segment,  the  operation  of  a  chain  of  retail
          entertainment  stores. The Company is an 87.5% owned subsidiary of URT
          Industries, Inc. (the Parent).

     Fiscal Year

          The  Company's  fiscal year  consists of 52 or 53 weeks  ending on the
          Saturday  closest to the end of March.  The fiscal year ended April 1,
          2000  consists  of 52  weeks.  The  fiscal  year  ended  April 3, 1999
          consisted of 53 weeks.  The fiscal year ended March 28, 1998 consisted
          of 52 weeks.

     Cash Equivalents

          The  Company  considers  highly  liquid  investments   purchased  with
          original  maturities  of three months or less to be cash  equivalents.
          There  were no cash  equivalents  at April 1, 2000.  Cash  equivalents
          totaled  approximately  $337,000 at April 3, 1999. The carrying amount
          approximates  fair value because of the  short-term  maturity of these
          investments.  The fair  values are  estimated  based on quoted  market
          prices for these or similar instruments.

     Inventories

          Inventories,  which are comprised of compact discs, cassettes, digital
          video disks,  videos and accessories,  are stated at the lower of cost
          (principally average) including freight-in, or market.

     Property and Equipment

          Property and equipment are stated at cost and  depreciated  over their
          estimated  useful  lives  ranging  from 5 to  31.5  years  using  both
          straight-line  and  accelerated  methods.  The Company's  policy is to
          retire assets from its accounts as they become fully depreciated.

     Advertising

          Advertising costs are charged to expense as incurred.


                                      F-7
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Income Taxes

          The Company  files a  consolidated  income tax return with its Parent.
          Any  applicable tax charges or credits are allocated to the Company on
          a separate return basis.  Provision is made for deferred income taxes,
          which result from certain items of income and expense  being  reported
          for  tax  purposes  in  periods  different  from  those  reported  for
          financial  reporting  purposes.  These items relate principally to the
          methods of  accounting  for store  leases with future  scheduled  rent
          payment increases, inventory, and the utilization of different methods
          of depreciation for financial statement and income tax purposes.

          The Company accounts for income taxes under the provision of Statement
          of Financial  Accounting  Standards  (SFAS) No. 109,  which  generally
          requires  recognition of deferred tax  liabilities  and assets for the
          future  tax  consequences  of events  that have been  included  in the
          financial statements or tax returns.  Under this method,  deferred tax
          assets and  liabilities  are  determined  on  differences  between the
          financial  reporting and tax bases of assets and  liabilities  and are
          measured by applying  enacted tax rates and laws for the taxable years
          in which those  differences  are  expected to reverse.  Under SFAS No.
          109, the effect on deferred tax assets and  liabilities of a change in
          tax rates is  recognized  in income in the period  that  includes  the
          enactment date. A valuation allowance is provided if it is more likely
          than not that the Company  will not realize the benefits of a deferred
          tax asset.

     Use of Estimates

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

     Fair Value of Financial Instruments

          The fair  value of the  Company's  long-term  debt,  note  payable  to
          Parent,  and due to Parent is estimated by discounting the future cash
          flows for each  instrument at rates  currently  offered to the Company
          for  similar  debt   instruments  of  comparable   maturities,   which
          approximates the carrying value.

     Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of

          The Company  accounts for  long-lived  assets in  accordance  with the
          provision of SFAS No. 121, Accounting for the Impairment of Long-Lived
          Assets and for  Long-Lived  Assets to be Disposed  of. This  statement
          requires that long-lived  assets and certain  identifiable  intangible
          assets be  reviewed  for  impairment  whenever  events or  changes  in
          circumstances indicate that


                                      F-8
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of
     (Continued)

          the carrying amount of an asset may not be recoverable. Recoverability
          of  assets  to be held and used is  measured  by a  comparison  of the
          carrying  amount of an asset to future net cash flows  expected  to be
          generated by the asset.  If such assets are considered to be impaired,
          the impairment to be recognized is measured by the amount by which the
          carrying  amount of the assets  exceeds  the fair value of the assets.
          Assets to be  disposed of are  reported  at the lower of the  carrying
          amount or fair value less costs to sell.

     Recent Accounting Pronouncements

          In December 1999, the Securities and Exchange  Commission issued Staff
          Accounting Bulletin, or SAB No. 101, "Revenue Recognition in Financial
          Statements".  SAB 101 provides guidance for revenue  recognition under
          certain  circumstances.  The staff  accounting  bulletin is  effective
          during fiscal year 2001.  SAB 101 is not expected to have an effect on
          the Company's  consolidated results of operations,  financial position
          and cash flows.

          In June 1998,  the  Financial  Accounting  Standards  Board,  or FASB,
          issued FAS No. 133, "Accounting for Derivative Instruments and Hedging
          Activities".  FAS 133 establishes  accounting and reporting  standards
          for derivative instruments and for hedging activities.  It requires us
          to measure all  derivatives at fair value and to recognize them on the
          balance  sheet as an asset or  liability,  depending  on our rights or
          obligations under the applicable  derivative  contract.  In July 1999,
          the FASB  issued  FAS No.  137 that  deferred  the  effective  date of
          adoption of FAS 133 for one more year.  The Company  currently  has no
          derivative instruments or hedging activities.

          In March 1998, the Accounting  Standards  Executive  Committee  issued
          Statement  of  Position  ("SOP")  98-1,  "Accounting  for the Costs of
          Computer  Software  Developed or Obtained for Internal  Use". SOP 98-1
          requires  all costs  related to the  development  of  internally  used
          software other than those incurred during the application  development
          stage  to  be  expensed  as  incurred.   Costs  incurred   during  the
          application  development  stage are  required  to be  capitalized  and
          amortized over the estimated useful life of the software. SOP 98-1 was
          adopted by the Company  during the fiscal year 2000 and did not have a
          material  effect on the  Company's  financial  position  or results of
          operations.

     Reclassifications

          Certain  amounts in the 1999 and 1998 financial  statements  have been
          reclassified to conform to the 2000 presentation.


                                      F-9
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 2. LIQUIDITY

     As of  April  1,  2000,  the  Company  reflected  shareholders'  equity  of
     approximately  $631,000.  Since 1993,  the Company has  incurred  operating
     losses and has an accumulated deficit balance of approximately $2.2 million
     at April 1, 2000. Several factors,  which have had a positive effect on the
     Company's performance,  include the increase in gross profit percentage and
     reduction of certain  expenses.  The Company's ability to achieve sustained
     profitable  operations  is dependent on  continuing  to obtain  products at
     competitive prices, restructuring operations to minimize cash expenditures,
     and  successfully  competing with larger retailers who have greater capital
     resources  than the  Company.  Management  believes  that  cash  flow  from
     operations or  additional  financing  available  from other sources will be
     sufficient  to fund  operations  during the next fiscal  year.  There is no
     assurance that such events will occur or such financing will be available.


NOTE 3. BUSINESS AND CREDIT CONCENTRATIONS

     Competition

          The retail  sale of  prerecorded  music and video  products  is highly
          competitive.   The  Company's  share  of  the  retail  market  in  the
          Southeastern  United States is not  significant.  The number of stores
          and types of competitors  faced by the Company's  stores has increased
          significantly,    including   non-mall   discount   stores,   consumer
          electronics  superstores and other  mall-based  music,  video and book
          specialty retailers expanding into non-mall multimedia  superstores of
          their own. The Company's  stores  operate in a retail  environment  in
          which many  factors  that are  difficult  to predict  and  outside the
          Company's  control can have a significant  impact on store and Company
          sales and profits.  These  factors  include the timing and strength of
          new  product   offerings  and   technology,   pricing   strategies  of
          competitors,   openings  and  closings  of  competitors'  stores,  the
          Company's  ability to continue to receive  adequate  product  from its
          vendors on  acceptable  credit  terms,  effects of weather and overall
          economic  conditions,   including   inflation,   consumer  confidence,
          spending habits and disposable income.

     Significant Vendors

          The Company purchased approximately 72 percent of its merchandise from
          five principal  suppliers  during each of the fiscal years ended April
          1,  2000  and  April  3,  1999,  respectively.  Purchases  from  given
          suppliers  are, to a greater  extent,  determined  by which of them is
          manufacturing  or  distributing  the most  popular  prerecorded  music
          products  at a given  time,  as well as the credit and other  terms on
          which such  suppliers are willing to sell to the Company.  The Company
          is not obligated to purchase  merchandise from any supplier.  However,
          if the Company  were to lose one of its  principal  suppliers,  it may
          have a material adverse effect on the Company's  results of operations
          and financial position.


                                      F-10
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 3. BUSINESS AND CREDIT CONCENTRATIONS (Continued)

     Cash and Cash Equivalents

          The Company maintains  deposits at financial  institutions  that, from
          time to time, may exceed federally  insured limits.  At April 1, 2000,
          the Company  had  deposits in excess of  federally  insured  limits of
          approximately  $390,000.  The  Company  maintains  its cash  with high
          quality  financial  institutions,  which the Company  believes  limits
          these risks.


NOTE 4. NET LOSS PER COMMON SHARE

     The Company follows the provisions of SFAS No. 128, Earnings Per Share, for
     computing and presenting  earnings per common share.  Basic and diluted net
     loss has been computed by dividing net loss, less preferred  dividends,  by
     the weighted average number of common shares outstanding during the period.

     Basic and diluted net loss per common share was calculated as follows:

<TABLE>
<CAPTION>
                                                       2000               1999               1998
                                                       ----               ----               ----
<S>                                              <C>                <C>                <C>
          Basic and diluted:
             Net loss                            $   (269,521)      $    (89,586)      $   (468,209)
             Preferred dividends                      (60,000)           (60,000)           (60,000)
                                                 ------------       ------------       ------------
                                                 $   (329,521)      $   (149,586)      $   (528,209)
                                                 ============       ============       ============

             Weighted average shares               39,781,270         39,781,270         39,781,270
                                                 ============       ============       ============
             Net loss per common share           $         --       $         --       $      (0.01)
                                                 ============       ============       ============
</TABLE>


NOTE 5. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                          2000               1999
                                                                          ----               ----
<S>                                                                 <C>                 <C>
          Land                                                      $    395,570        $   395,570
          Building                                                       538,093            538,093
          Leasehold improvements                                         502,268          1,166,518
          Furniture and equipment                                        597,019            645,577
          Building under capital lease                                   206,964            206,964
                                                                    ------------        -----------
                                                                       2,239,914          2,952,722
          Less accumulated depreciation and amortization               1,133,297          1,717,152
                                                                    ------------        -----------
                                                                    $  1,106,617        $ 1,235,570
                                                                    ============        ===========
</TABLE>

     Depreciation  expense  attributable to the capital lease was  approximately
     $10,300 for each of the years in the three-year period ended April 1, 2000.


                                      F-11
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 6. LONG-TERM OBLIGATIONS

<TABLE>
<CAPTION>
                                                                                              2000         1999
                                                                                              ----         ----
<S>                                                                                        <C>          <C>
          Capital lease obligation, due in monthly installments of $3,382
          including interest at 17.5%; final payment due March 2005.                       $ 134,622    $ 150,137

          Mortgage payable, due in monthly installments of $2,981, plus interest
          at prime  plus .5% (9.5% at April 1, 2000); collateralized  by the
          mortgaged  property with depreciated cost of approximately $355,000;
          final balloon payment of approximately $263,000 due September 2002.                335,137      370,912

          Settlement agreement with former officer/shareholder; due in monthly
          installments of $5,699; final payment paid January 2000.                                --       56,990
                                                                                           ---------    ---------
                                                                                             469,759      578,039
          Less current portion                                                                54,234      108,280
                                                                                           ---------    ---------
                                                                                           $ 415,525    $ 469,759
                                                                                           =========    =========
</TABLE>

     The capital lease pertains to the building portion of property owned by one
     director and one former  director.  The rent expense on the land portion of
     this lease was approximately $97,000, $129,000 and $113,000,  respectively,
     for each of the years in the three-year period ended April 1, 2000.

     The  following  represents  the future  minimum  lease  payments  under the
     capital lease obligation:

<TABLE>
<S>                                                                                                     <C>
         Fiscal year:
            2001                                                                                        $  40,584
            2002                                                                                           40,584
            2003                                                                                           40,584
            2004                                                                                           40,584
            2005                                                                                           40,584
                                                                                                        ---------
         Total minimum lease payments                                                                     202,920
         Less amount representing interest                                                                 68,298
                                                                                                        ---------
         Present value of minimum lease payments                                                        $ 134,622
                                                                                                        =========
</TABLE>

     Maturities   of  long-term   obligations,   excluding   the  capital  lease
     obligation, are as follows:

<TABLE>
<S>                                                                                                     <C>
         Fiscal year:
            2001                                                                                        $  35,775
            2002                                                                                           35,775
            2003                                                                                          263,587
                                                                                                        ---------
                                                                                                        $ 335,137
                                                                                                        =========
</TABLE>

     The  Company  has a standby  letter of credit  of  $81,000  available  to a
     landlord.  The  standby  letter  of  credit  is fully  collateralized  by a
     certificate of deposit, which is included in other assets. In addition, one
     of the  Company's  banks is obligated to provide an  irrevocable  letter of
     credit of  $150,000.  No letters  of credit  were drawn upon as of April 1,
     2000 and April 3, 1999.


                                      F-12
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7. ACCRUED LIABILITIES
                                                             2000         1999
                                                             ----         ----

       Gift certificate and credit slip liability        $ 133,603    $ 156,818
       Payroll and related benefits                         41,970       42,670
       Sales and other taxes payable                       104,303      131,556
       Accrued overhead expenses                           121,559      223,741
       Other                                               214,603      125,408
                                                         ---------    ---------
                                                         $ 616,038    $ 680,193
                                                         =========    =========

NOTE 8. RELATED PARTY TRANSACTIONS

     Due to Parent

          In 1999, the Parent forgave  $350,000,  which  represented the balance
          remaining on an original loan of $700,000 made to the Company in 1997.
          The  forgiveness  has  been  accounted  for as an  additional  capital
          contribution  by the Parent.  The balance at April 1, 2000  represents
          the unpaid  interest on the  original  loan with final  payment due in
          fiscal year 2003.

     Note Payable to Parent

          In April 1999,  the Parent loaned the Company  $275,000.  This loan is
          unsecured and is evidenced by a promissory note that bears no interest
          with an original due date of December 29, 1999. On or about  September
          14, 2000, the Parent and the Company  entered into an agreement  under
          which the following  arrangements were agreed to: The Company will use
          its best  efforts  to obtain the  approval  of the holder of the first
          mortgage on its  Mobile,  Alabama  property to a proposed  arrangement
          under which the Company would transfer such Mobile,  Alabama  property
          to the Parent.  The Parent would forgive the $275,000 debt owed by the
          Company to it pursuant to the April,  1999 loan,  the Parent  would be
          responsible for the amounts owed pursuant to the outstanding loan from
          the holder of such first  mortgage  in  accordance  with the same loan
          repayment  schedule  which is already in place with the  Company.  The
          Company would remain  responsible for the amounts owed pursuant to the
          existing  second and third  mortgages to the Chairman of the Board and
          the Parent. The Parent would lease the Mobile, Alabama property to the
          Company for a period of ten years with a ten year renewal  option at a
          rent of $90,000 per annum ($103,500 per annum during the renewal term,
          if any) and the Parent, upon satisfaction of certain conditions, would
          deed over to the Company a minority  interest in such  property.  Such
          agreement  further provides that if the approval of the holder of such
          first  mortgage is not  obtained by November 1, 2000,  then the Parent
          and the Company  shall not pursue such proposed  arrangements  between
          them,  and the Parent will instead extend the date by which the April,
          1999 loan must be repaid to September 1, 2001. In  anticipation of the
          possible  approval of the holder of such first mortgage the Parent and
          the Company have entered into a lease,  which is expressly  subject to
          such approval and the above described proposed engagements between the
          Parent and the Company, under which the Parent would lease the Mobile,
          Alabama property to the Company on the terms and conditions  described
          above. Such arrangements were approved by the directors.


                                      F-13
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 8. RELATED PARTY TRANSACTIONS (Continued)

     Related Party Loan

          In May 2000,  the  Chairman  of the Board,  who is also an officer and
          director of the Company, loaned the Company $200,000. This loan, which
          bears  interest at 12% and is due December 20, 2000, is evidenced by a
          promissory note and  collateralized by a mortgage on property owned by
          the Company.


NOTE 9. COMMITMENTS AND CONTINGENCIES

     Leases

          The Company is a lessee under  various  operating  leases,  several of
          which  provide  for  percentage  rent.  An  insignificant   amount  of
          percentage  rent was incurred during the years ended April 3, 1999 and
          March 28, 1998,  respectively.  There was no percentage  rent incurred
          during  the year  ended  April 1,  2000.  Most of the  leases  contain
          renewal options.

          The aggregate  minimum  rental  commitments at April 1, 2000 under all
          non-cancelable  operating leases,  which have various expiration dates
          through 2017, are approximately as follows:

             2001                                 $1,097,000
             2002                                    772,000
             2003                                    697,000
             2004                                    537,000
             2005                                    360,000
             Thereafter                            2,697,000
                                                  ----------
                                                  $6,160,000
                                                  ==========

          Rental  expense under  non-cancelable  operating  leases,  included in
          selling,  general  and  administrative  expenses  in the  accompanying
          statements  of  operations,   amounted  to  approximately  $1,320,000,
          $1,380,000 and $1,160,000,  respectively, for each of the years in the
          three-year period ended April 1, 2000.

          Rental  expense on a store owned by one  director and his relative was
          approximately $174,000, $164,000 and $131,000,  respectively, for each
          of the years in the three-year period ended April 1, 2000.

     Legal Matters

          In February 2000, the Company amicably  resolved a lawsuit with one of
          its  landlords  which had been  commenced in the Circuit  Court in the
          Ninth   Judicial   Circuit   of   Orange   County,    Florida,   about
          representations  made by the  landlord to the Company  concerning  the
          shopping center in which one of the Orlando stores is located.


                                      F-14
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9. COMMITMENTS AND CONTINGENCIES (Continued)

     Legal Matters (Continued)

          In addition,  the Company is a party to various  other  claims,  legal
          actions and complaints arising in the ordinary course of its business.
          In the opinion of  management,  all such matters are without  merit or
          involve such amounts that an unfavorable  disposition would not have a
          material  adverse  effect on the  financial  position  or  results  of
          operations of the Company.

     Management Agreements

          During the 2000 fiscal year,  as in the prior fiscal year,  there were
          three agreements in place pertaining to the management of the Company.
          Two of such agreements were between the Company and the Parent and the
          third was between the Parent and the Parent's Chairman,  President and
          Chief  Executive  Officer.  Pursuant to such  agreements  (hereinafter
          collectively  referred  to  as  the  "Management   Agreements"),   the
          following  arrangements  were in effect:  the Parent was  required  to
          provide to the Company during such period the services of the Parent's
          Chairman,  President  and Chief  Executive  Officer;  the  Company was
          required to pay the executive's  compensation  during such period,  so
          long as he continued to provide such  services;  the amount so paid by
          the Company  pursuant to such  arrangements  was credited  against the
          amount payable by the Parent  pursuant to the employment  agreement in
          effect and the Parent and the  Company  were  required  to continue to
          equitably  apportion  taxes  so  long  as  they  continue  to  file  a
          consolidated federal return.

          The  Management  Agreements  expired on March 31, 2000,  but have been
          extended on a  month-to-month  basis  during the  current  fiscal year
          pending  the  negotiation  and  preparation  of  proposed  replacement
          agreements.  Such  extension  has  been  on  the  same  terms  as  the
          Management  Agreements,  except that the  compensation  payable by the
          Company has been reduced during the period of such negotiations.


NOTE 10. SHAREHOLDERS' EQUITY

     For each of the years in the  three-year  period  ended April 1, 2000,  the
     Company had 2,500 shares of $100 par,  11%,  Series A Cumulative  Preferred
     Stock and 2,500  shares of $100 par,  13%,  Series B  Cumulative  Preferred
     Stock  authorized,  issued and outstanding.  The Parent is the owner of all
     outstanding  shares of Preferred  Stock. The Company can issue up to 50,000
     shares of preferred  stock,  and the directors  have the authority to issue
     such shares in one or more  additional  series.  Each share of Series A and
     Series B  Cumulative  Preferred  Stock is  entitled to one vote and has the
     same voting  powers as the common  stock,  except that all matters on which
     the vote of shareholders is required must, in order to be approved, receive
     the requisite  vote of either (i) both the Series A and Series B, voting as
     separate classes or (ii) the common stock and either the Series A or Series
     B, voting as separate classes.  The liquidating value for both the Series A
     and Series B shares is par value plus all accrued and unpaid dividends.


                                      F-15
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 11. INCOME TAXES

                                            2000          1999         1998
                                            ----          ----         ----
           Current:
             Federal                        $ --          $ --         $ --
             State                            --            --           --
                                            ----          ----         ----
                                              --            --           --
                                            ----          ----         ----

          Deferred:
             Federal                          --            --           --
             State                            --            --           --
                                            ----          ----         ----
                                            $ --          $ --         $ --
                                            ====          ====         ====

     Differences  between the income tax  provision  and the amount  computed by
     applying the statutory  federal  income tax rate of 34% to pretax loss were
     as follows:

<TABLE>
<CAPTION>
                                                                               2000             1999              1998
                                                                               ----             ----              ----
<S>                                                                       <C>               <C>               <C>
          Income tax benefit at applicable statutory tax
             rate of loss before income taxes                             $   (92,000)      $   (30,500)      $  (159,000)

          Add:
             State income tax benefit, net of federal benefit                 (15,000)           (2,500)          (16,000)
             Change in valuation allowance                                    246,000           119,000           126,000
             Adjustments to net operating loss carryovers
                and other deferred tax assets                                (177,000)         (102,000)           23,000
             Other                                                             38,000            16,000            26,000
                                                                          -----------       -----------       -----------
          Income tax provision for the year                               $        --       $        --       $        --
                                                                          ===========       ===========       ===========
</TABLE>

     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the deferred tax assets at April 1, 2000 and April 3, 1999, are
     presented below:

<TABLE>
<CAPTION>
                                                                                                2000               1999
                                                                                                ----               ----
<S>                                                                                         <C>               <C>
          Deferred tax assets:
             Inventories, principally due to additional costs
                capitalized for tax purposes                                                $    61,000       $    64,000
             Property and equipment, net, principally due to
                differences in depreciation                                                     298,000           280,000
             Accrued rent, principally due to accrual for
                financial reporting purposes                                                     44,000            25,000
             NOL carryforward                                                                 1,952,000         1,692,000
             Accrued expenses                                                                     7,000            48,000
             Other                                                                               30,000            37,000
                                                                                            -----------       -----------
                   Total gross deferred tax assets                                            2,392,000         2,146,000
                   Less valuation allowance                                                  (2,392,000)       (2,146,000)
                                                                                            -----------       -----------
                      Net deferred tax assets                                               $        --       $        --
                                                                                            ===========       ===========
</TABLE>

     At April 1, 2000,  the Company has a net operating  loss  carryforward  for
     federal income tax purposes of approximately  $4,500,000 which is available
     to offset future federal taxable income, if any, through 2014.


                                      F-16
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)


NOTE 11. INCOME TAXES (Continued)

     A valuation  allowance is provided to reduce deferred tax assets to a level
     which,  more likely than not,  will be realized.  The net  deferred  assets
     reflect  management's  estimate of the amount  which will be realized  from
     future profitability, which can be predicted with reasonable certainty. The
     valuation  allowance  for deferred tax assets as of April 1, 2000 and April
     3, 1999 was $2,392,000 and $2,146,000,  respectively. The net change in the
     total  valuation  allowance  for the years ended April 1, 2000 and April 3,
     1999 was an increase of approximately $246,000 and $119,000, respectively.


                                      F-17
<PAGE>

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     In March, 2000, PEC selected Rachlin Cohen & Holtz LLP ("RCH") to replace
KPMG LLP ("KPMG") as its independent public accountants. The decision to change
auditors was approved by resolution of the full board of directors.

     There were no disagreements with KPMG, during either of the two most recent
fiscal years, on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of KPMG, would have caused KPMG to make
reference to the subject matter of the disagreements in connection with its
audit report with respect to financial statements of PEC and there was no
disagreement or difference of opinion with KPMG regarding any "reportable
event," as that term is defined in Item 304(a)(1)(v) of Regulation S-K. KPMG's
report on the financial statements of PEC for each of the past two fiscal years
did not contain any adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.

     Neither PEC nor anyone on behalf of PEC consulted RCH, during either of the
two most recent fiscal years, regarding either the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the financial statements of PEC or
any matter that was either the subject of a disagreement, within the meaning of
Item 304(a)(1)(iv) of Regulation S-K, or any reportable event, as that term is
defined in Item 304 (a)(1)(v) of Regulation S-K.

                                    PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     As of the date of this filing, the directors and executive officers of PEC
are:

           Name                 Position                                  Age
           ----                 --------                                  ---
        Allan Wolk     Chairman of the Board,
                        President (Chief Executive
                        Officer),  Director                               62

        Brian Wolk     Executive Vice-President, Chief Legal              35
                        Officer, General Manager-Store
                        Operations and Merchandising, Director


                                  -11-
<PAGE>



        Jason Wolk     Executive Vice-President, Chief Financial Officer
                        (Principal Financial and Accounting Officer),
                        General Manager-Internet Operations,
                        Treasurer, Director                               33

     Allan Wolk has been the Chief Executive Officer and a director of PEC since
its formation in 1982. He has also been the Chief Executive Officer of URT since
its formation. He has been engaged in the prerecorded music business for more
than 40 years, principally in the rack merchandising and retail segments
thereof.

     Brian Wolk, an attorney, has been employed by PEC in various capacities and
at various times since 1982 and has been employed by it, full time, since 1992.
He is a son of Allan Wolk. He has been a director of PEC and URT since 1994 and
a vice-president of both companies since June, 1995. He was appointed Executive
Vice-President and Chief Legal Officer of both companies in March, 1996.

     Jason Wolk, a certified public accountant, has been employed by PEC in
various capacities and at various times since 1983 and has been employed by it,
full time, since 1994. He is a son of Allan Wolk. Prior to his full time
employment by PEC, he had been employed by KPMG Peat Marwick LLP, an
international accounting and consulting firm. He has been a director of PEC and
URT since 1994 and a vice-president and the secretary of both companies since
June, 1995. He was appointed Treasurer and Chief Financial Officer (Principal
Financial and Accounting Officer) of both companies in September, 1995, and was
appointed Executive Vice-President of both companies in March, 1996.

     The term of office of each director continues until the next annual meeting
of the stockholders and until his or her successor is elected. Allan Wolk has an
employment agreement with URT. Under the management agreements referred to
above, PEC has the right to use the services of Mr. Wolk (See
"BUSINESS-Intercorporate Agreements").

Item 11. EXECUTIVE COMPENSATION

     The following table sets forth compensation paid or accrued by PEC for
services rendered in all capacities to it during the 2000 fiscal year and the
two prior fiscal years to (i) PEC's chief executive officer ("CEO") and (ii)
each of the other most highly compensated executive officers of PEC whose cash
compensation exceeded $100,000 and who served as executive officers during the
2000 fiscal year:


                                      -12-
<PAGE>

Summary Compensation Table

<TABLE>
<CAPTION>
               Annual Compensation                                 Long Term Compensation
               -------------------                                 ----------------------
                                                                  Awards             Payouts
                                                                  ------             -------

                                                                                             Long
                                                                                             Term
                                                                                             Incen.
                                            Other              Restricted    Options/Stock   Plan           All
Name and      Fiscal   Salary((1))  Bonus   Annual             stock         App.            Pay-outs       Other
position       Year    ($)           ($)    Compensation ($)   award(s)($)   Rights (#)      ($)            Compensation($)
-----------    ----    ---           ---    ----------------   -----------   ----------      ------------   ---------------
<S>            <C>     <C>            <C>    <C>                <C>           <C>             <C>            <C>
Allan Wolk,    2000    248,000       -0-    -0-                -0-           -0-             -0-            -0-
Chairman,      1999    250,000       -0-    -0-                -0            -0-             -0-            -0-
Pres. & CEO    1998    375,000       -0-    -0-                -0-           -0-             -0-            -0-
</TABLE>

----------

(1) Mr. Wolk is an employee of URT. PEC receives the services of Mr. Wolk under
the Management Agreements described above. Pursuant to such agreements, PEC is
required to pay a salary to Mr. Wolk, and the amount so paid by PEC to Mr. Wolk
is credited against the amount payable by URT to Mr. Wolk pursuant to the
employment agreement between them (See "BUSINESS- Management Agreements").

Employment Contracts

     There are no employment contracts or severance agreements in place between
PEC and any of its executive officers. However, pursuant to the arrangements
described above, PEC is entitled to the services of Allan Wolk, its Chairman,
President and Chief Executive Officer, and PEC is obligated to pay a salary to
him.

Compensation Committee Interlocks and Insider Participation

     PEC does not have a compensation committee or other board committee
performing equivalent functions. During the 1999 fiscal year, all deliberations
concerning executive officer compensation or any other arrangements between PEC
and any executive officers were conducted by PEC's full board of directors,
provided, however, that no director voted on compensation payable to him as an
executive officer or any other arrangement between him and PEC.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     As of June 1, 2000, URT and its directors and officers owned approximately
94% of


                                      -13-
<PAGE>

the issued and outstanding shares of the PEC common stock, and URT owned all of
PEC's issued and outstanding shares of Series A and Series B preferred stock.
All of such shares of PEC stock are owned directly with voting and investment
power.

     The following table contains information concerning the number of shares of
each class of URT's common stock which was owned by each person who, as of June
1, 2000, owned, beneficially, more than 5% thereof, and the number of shares of
each class of such stock owned beneficially, directly or indirectly, by each
executive officer and director and by all directors and executive officers as a
group on such date:

                                                 Amount & Nature
                                                   of Beneficial        Percent
Title of Class          Name                         Ownership          of Class
--------------          ----                     ----------------       --------
Class A Common          Executive Officers
Stock, par value        and Directors
$.01 per share
                        Allan Wolk               3,194,186(1)            29.4%
                        Allan Wolk and
                        Lawrence Strauss,
                        as Trustees                 33,072(2)             *

                        Brian Wolk                  12,980(3)             *

                        Jason Wolk                  17,480(3)             *

                        All officers and
                        directors as a
                        group (3 persons)        3,257,718               30.0%

                        Other

                        Scorpio Music, Inc.
                        P. O. Box A
                        Trenton, N.J. 08691      1,195,550(4)            11.0%

Class B Common          Executive Officers

----------

     (1) Includes 3,150,786 shares owned by Allan Wolk, 25,920 shares owned by
his wife and 17,480 shares held by him for his daughter. However, Mr. Wolk has
renounced all voting and investment power with respect to those shares of URT
which are held by him for his daughter. He believes that his wife will vote the
shares owned by her in favor of proposals which he favors, but disclaims
beneficial ownership of any shares owned by her or held for the benefit of his
daughter.

     (2) Such shares are held by Lawrence Strauss and Allan Wolk as trustees for
the benefit of children of Sheffield Wolk, Mr. Wolk's brother. Allan Wolk has
renounced all voting and investment power with respect to those shares of URT
which are so held in trust for the benefit of children of Mr. Wolk's brother.
All such powers as trustee are exercised exclusively by the co-trustee, and Mr.
Wolk disclaims beneficial ownership of such shares.

     (3) Such shares are held in the name of Allan Wolk, as custodian. However,
Mr. Wolk has renounced all voting and investment power with respect to those
shares of URT which are held by him for his two sons, and disclaims beneficial
ownership of such shares. Such shares, being listed separately here, are not
included under the shares listed as beneficially owned by Allan Wolk.

     (4) Based on information supplied by URT's transfer agent. Does not include
160,000 shares reported in a Schedule 13D, dated June 14, 1989, as owned by John
T. Gervasoni, Scorpio Music, Inc.'s reported president and 100% shareholder, as
to which no confirmation of ownership has been made by URT's transfer agent. The
total of such 160,000 shares reported as owned by John T. Gervasoni and the
1,195,550 shares reported as owned by Scorpio Music Inc. is 1,355,550, or
approximately 12.5% of the outstanding URT Common A shares.


                                      -14-
<PAGE>

Stock, par value        and Directors
$.01 per share
                        Allan Wolk                  786,654(5)           58.4%
                                                 ----------------
                        All officers and
                        directors as a group
                        (1 person)                  786,654              58.4%

*Less than one percent.


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     As a result of their purchase in 1983 from an unaffiliated third party
seller, Allan Wolk and his brother, Sheffield Wolk, a former director of PEC,
are the owners of the land and building on which the PEC store in Fort
Lauderdale, Florida is located. Such property was and continues to be subject to
a lease with PEC as tenant, which had been negotiated by the prior owner. In
September 1998, PEC entered in an addendum to lease with Allan Wolk and
Sheffield Wolk under which the following lease changes were agreed to: the
expiration date of such lease was extended for a period of five years, until
March 31, 2008, at an increased rental rate during such five year period; PEC
obtained an option to renew the lease for up to two successive five-year renewal
terms (until March 31, 2018), at further increased rental rates, if such options
are exercised; and the repair and fire insurance provisions were modified. The
lease addendum was approved by the directors who had no direct personal interest
in the transaction. In the opinion of management, the terms were as reasonable
as those which could have been obtained from unaffiliated third parties.

     In December, 1984, PEC entered into a long-term lease with Allan Wolk and
Sheffield Wolk for premises owned by them in Orlando, Florida. The lease term
commenced in December, 1984, and is for a period of twenty years with two
additional five year terms. The lease is a triple net lease. The lease provides
for a net minimum rental rate of $125,000 per annum from the rental commencement
date through March 31, 1985; a rate of $140,000 per annum during the following
five year period; a rate of $145,000 per annum during the next five year period;
a rate of $160,000 during the next five year period; and increases of $5,000
during every five year period thereafter. Notwithstanding the foregoing,
commencing with the sixth rental year, if net sales at the store during any
rental year are less than $1,800,000, the annual net minimum rental rate for
such year will be the same as that which had been in effect during the preceding
five year period. The lease was approved by disinterested directors and, in the
opinion of management, is as reasonable as those which could have been obtained
from unaffiliated third parties.

     In April, 2000, PEC's landlord, Allan Wolk and Sheffield Wolk, agreed with
PEC to extend the above-described Orlando, Florida lease to March 31, 2010, to
reduce the rent payable under the lease to $145,000 per year from April 1, 2000
through such revised expiration date, and to grant PEC the option to re-new the
lease for up to two successive five-year periods at a reduced rent of $152,250
per annum during the first five-year period and at a reduced rent of $159,862
per annum during the second five-year period. Such arrangements were approved by
the directors (Allan Wolk abstaining).

     In April, 1989, PEC's board of directors authorized PEC to enter into
agreements with

----------

     (5) Includes 780,174 shares owned by Allan Wolk and 6,480 shares owned by
his wife. Mr. Wolk believes that his wife will vote the shares owned by her in
favor of proposals which he favors, but disclaims beneficial ownership of such
shares.


                                      -15-
<PAGE>

its officers and directors under which they would be entitled to be indemnified
by PEC and have their expenses advanced to them in the event of any claim
against them in their capacities as officers and directors. Such agreements were
entered into with all then-existing officers and directors of PEC on or about
May 22, 1989. On or about July 14, 1995, and pursuant to the further
authorization of the board of directors on such date, PEC entered into
indemnification agreements with the two additional officers and directors, Brian
Wolk and Jason Wolk, who were appointed to their respective positions subsequent
to 1989. The indemnification agreements so entered into with Brian Wolk and
Jason Wolk are in the same form as the indemnification agreements entered into
in 1989 with the then-existing officers and directors.

     In order to enable PEC to effect its Chapter 11 Plan of Reorganization in
February, 1997, URT, in exchange for the issuance to it of 20,000,000 shares of
PEC's authorized common stock (including 218,730 treasury shares), took the
following steps: contributed $350,000 to the capital of PEC; waived an aggregate
of $75,000 of dividends payable by PEC to URT with respect to the period running
from January 1, 1996 to March 31, 1997; loaned $700,000 to PEC; and agreed that,
subject to the terms of the Plan of Reorganization, it would guarantee the
approximately $1,284,000 then payable to PEC's principal suppliers. In order to
facilitate the issuance of such shares to URT, URT also waived its right to
convert to common stock the Series A preferred stock of PEC which is owned by
URT. PEC agreed to reimburse to URT any amounts for which URT might become
liable pursuant to such guaranty on the part of URT. The loan from URT and the
agreement to reimburse URT for any guaranty- related liabilities were secured by
a mortgage on PEC's Mobile, Alabama store.

     On or about November 29, 1997, URT, in order to further strengthen PEC's
financial condition, agreed to forgive repayment of one-half of the $700,000
which was loaned by URT to PEC, together with the interest then accrued on the
$350,000 so forgiven. On or about March 31, 1999, URT, in order to further
strengthen PEC's financial condition, agreed to forgive the remaining $350,000
principal balance, excluding interest. Such interest is payable at the prime
rate charged by Chase Manhattan Bank, N.A.

     On or about September 15, 1998, URT loaned the sum of $150,000 to PEC. Such
amounts were repaid by PEC to URT on or about December 24, 1998. On or about
April 20, 1999, URT loaned the sum of $275,000 to PEC (the "April, 1999 loan").
Such amounts had been required to be repaid on or before December 29, 1999. On
or about August 1, 2000, URT and PEC entered into an agreement under which the
following arrangements were agreed to: PEC will use its best efforts to obtain
the approval of the holder of the first mortgage on its Mobile, Alabama property
to a proposed arrangement under which PEC would transfer such Mobile, Alabama
property to URT, URT would forgive the $275,000 debt owed by PEC to it pursuant
to the April, 1999 loan, URT would be responsible for the amounts owed pursuant
to the outstanding loan from the holder of such first mortgage in accordance
with the same loan repayment schedule which is already in place with PEC, PEC
would remain responsible for the amounts owed pursuant to the existing second
and third mortgages to Allan Wolk and URT, URT would lease the Mobile, Alabama
property to PEC for a period of ten years with a ten year renewal option at a
rent of $90,000 per annum ($103,500 per annum during the renewal term, if any)
and URT, upon satisfaction of certain conditions, would deed over to Peaches a
minority interest in such property. As revised on October 30, 2000, such
agreement further provides that if the approval of the holder of


                                      -16-
<PAGE>

such first mortgage is not obtained by December 1, 2000, then URT and PEC shall
not pursue such proposed arrangements between them, and URT will instead extend
the date by which the April, 1999 loan must be repaid to September 1, 2001. In
anticipation of the possible approval of the holder of such first mortgage URT
and PEC have entered into a lease, which is expressly subject to such approval
and the above described proposed arrangements between URT and PEC, under which
URT would lease the Mobile, Alabama property to PEC on the terms and conditions
described above. Such arrangements were approved by the directors.

     On or about May 11, 2000, URT's Chairman, Allan Wolk, loaned the sum of
$200,000 to PEC. Such loan is required to be repaid by PEC by no later than
December 20, 2000 with interest at the rate of 12% per annum. As security for
such loan, PEC agreed to provide a mortgage on its Mobile, Alabama store, and
URT, as an inducement to the loan of such funds on such terms, agreed to
subordinate its second mortgage with respect to such store to the mortgage so
granted to Mr. Wolk. Such arrangements were approved by the directors (Allan
Wolk abstaining).


                                      -17-
<PAGE>

                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this report.

                                                                          Page

          1.   Financial Statements

               Table of Contents                                          F-1

               Independent Auditors' Reports                              F-1

               Peaches Entertainment Corporation
               Financial Statements:

               Balance sheets as of April 1, 2000 and
               April 3, 1999                                              F-3

               Statements of operations for each of
               the years in the three year period
               ended April 1, 2000                                        F-4

               Statements of shareholders' equity for each of the
               years in the three year period ended April 1, 2000         F-5

               Statements  of cash flows for each of the years in
               the three year period ended April 1, 2000                  F-6

               Notes to financial statements.                             F-7

          2.   Financial Statement Schedules

               Schedules have been omitted which are not
               applicable or where the required information is
               shown in the financial statements or the notes
               thereto.

          3.   Exhibits


                                      -18-
<PAGE>

Exhibit No.

3.1       Articles of Incorporation of Peaches Entertainment Corporation ("PEC")
          dated March 3, 1982, incorporated by reference to Exhibit No. 3.3 to
          URT Industries, Inc. ("URT") and PEC's Registration Statement No.
          2-81065.

3.1-1     Amendment to PEC's Articles of Incorporation dated January 17, 1983,
          incorporated by reference to Exhibit No. 3.3-1 to URT's and PEC's
          Registration Statement No. 2-81065.

3.2       By-Laws of PEC incorporated by reference to Exhibit No. 3.4 to URT's
          and PEC's Registration Statement No. 2-81065.

3.3       Form of Amendment to PEC's Articles of Incorporation, incorporated by
          reference to Exhibit No. 3.5 to PEC's Registration Statement No.
          2-81065.

10.35     Lease dated July 1, 1984 between Shirley Wolk and PEC applicable to
          North Miami Beach, Florida premises, incorporated by reference to
          Exhibit No. 13.46 to URT's Registration Statement No. 2-63747.

10.36     Lease dated December 13, 1984 between Allan Wolk and Sheffield Wolk
          and PEC applicable to Orlando, Florida premises, incorporated by
          reference to Exhibit No. 13.47 to URT's Registration Statement No.
          2-63747.

10.40     Amendment to Lease dated February 25, 1986 between Allan Wolk and
          Sheffield Wolk and PEC applicable to Orlando, Florida premises,
          incorporated by reference to Exhibit No. 10(ss) to URT's Form 10-K
          Annual Report for the year ended March 29, 1986.

10.47     Indemnification Agreement dated May 22, 1989 between Allan Wolk and
          PEC, incorporated by reference to Exhibit 10.47 to PEC's Form 10-K
          Annual Report dated June 27, 1989.

10.48     Indemnification Agreement dated May 22, 1989 between David Jackowitz
          and PEC, incorporated by reference to Exhibit 10.48 to PEC's Form 10-K
          Annual Report dated June 27, 1989.

10.54     Lease dated December 22, 1989 between Sunbeam Properties, Inc. and PEC
          applicable to Miramar, Florida premises, incorporated by reference to
          Exhibit 10.54 to PEC's Form 10-K Annual Report dated June 27, 1991.

10.60     Letter Agreement dated January 1, 1996 between URT and PEC pertaining
          to termination of Management and Intercorporate Agreement dated March
          29, 1993, incorporated by reference to Exhibit 10(jjjj) to URT's Form
          10-K Annual Report dated April. 25, 1997.


                                      -19-
<PAGE>

10.61     Letter Agreement dated January 1, 1996 between URT and PEC pertaining
          to services of Allan Wolk, incorporated by reference to Exhibit
          10(kkkk) to URT's Form 10-K Annual Report dated April 25, 1997.

10.62     Indemnification Agreement dated July 14, 1995 between Brian Wolk and
          PEC, incorporated by reference to Exhibit 10.67 to PEC's 10-K Annual
          Report dated April 25, 1997.

10.63     Indemnification Agreement dated July 14, 1995 between Jason Wolk and
          PEC, incorporated by reference to Exhibit 10.63 to PEC's 10-K Annual
          Report dated April 25, 1997.

10.64     PEC's Amended Plan of Reorganization, dated October 23, 1996,
          incorporated by reference to Exhibit 1 to PEC's Form 8-K dated April
          7, 1997.

10.65     Order Confirming PEC's Amended Plan of Reorganization, as Modified,
          dated January 17, 1997, incorporated by reference to Exhibit 2 to
          PEC's Form 8-K dated April 7, 1997.

10.66     URT Promissory Note dated January 27, 1997 made by PEC to URT,
          incorporated by reference to Exhibit 10.66 to PEC's 10-K Annual Report
          dated April 25, 1997.

10.67     Security Agreement dated January 27, 1997 between PEC and URT,
          incorporated by reference to Exhibit 10.67 to PEC's 10-K Annual Report
          dated April 25, 1997.

10.68     Mortgage Agreement with Assignment of Rents, Security Agreement and
          Fixture Filing dated January 27, 1997 by PEC in favor of URT,
          incorporated by reference to Exhibit 10.68 to PEC's 10-K Annual Report
          dated April 25, 1997.

10.69     Reimbursement Agreement dated January 27, 1997 between PEC and URT,
          incorporated by reference to Exhibit 10.69 to PEC's 10-K Annual Report
          dated April 25, 1997.

10.70     Subordination Agreement dated January 27, 1997 between PEC, URT and
          selected creditors, incorporated by reference to Exhibit 10.70 to
          PEC's 10-K Annual Report dated April 25, 1997.

10.71     Subordination Agreement dated January 27, 1997 between PEC, URT and
          creditor, incorporated by reference to Exhibit 10.71 to PEC's 10-K
          Annual Report dated April 25, 1997.

10.72     Surrender and Waiver Agreement dated January 27, 1997 between PEC and
          URT, incorporated by reference to Exhibit 10.72 to PEC's 10-K Annual
          Report dated April 25, 1997.


                                      -20-
<PAGE>

10.73     Waiver Agreement dated March 1, 1997 between PEC and URT, incorporated
          by reference to Exhibit 10.73 to PEC's 10-K Annual Report dated April
          25, 1997.

10.74     Stock Purchase Agreement dated March 24, 1997 between PEC and URT,
          incorporated by reference to Exhibit 10.74 to PEC's 10-K Annual Report
          dated April 25, 1997.

10.75     Letter agreement dated March 17, 1997 between URT and PEC pertaining
          to salary of Allan Wolk, incorporated by reference to Exhibit 10(zzzz)
          to URT's 10- K Annual Report dated June 26, 1998.

10.76     Loan Forgiveness Agreement dated November 29, 1997 between URT and
          PEC, incorporated by reference to Exhibit 10.2 to URT's 10-K Annual
          Report dated June 26, 1998.

10.77     Letter agreement dated May 26, 1998 between URT and PEC pertaining to
          salary of Allan Wolk, incorporated by reference to Exhibit 10.3 to
          URT's 10-K Annual Report dated June 26, 1998.

10.78     Promissory Note dated September 15, 1998 made by PEC to URT, as payee,
          incorporated by reference to Exhibit 10.9 of URT's 10-K Annual Report
          dated July 19, 1999.

10.79     First Addendum to Lease dated September 30, 1998 between Allan Wolk
          and Sheffield Wolk, as Landlord, and PEC, as tenant, pertaining to Ft.
          Lauderdale Store, incorporated by reference to Exhibit 10.10 of URT's
          10-K Annual Report dated July 19, 1999.

10.80     Loan Forgiveness Agreement dated November 29, 1998 between URT and
          PEC, incorporated by reference to Exhibit 10.11 of URT's 10-K Annual
          Report dated July 19, 1999.

10.81     Letter Agreement dated December 23, 1998 between URT and PEC
          pertaining to services of Allan Wolk, incorporated by reference to
          Exhibit 10.12 of URT's 10- K Annual Report dated July 19, 1999.

10.83     Promissory Note dated April 19, 1999 made by PEC to URT, as payee,
          incorporated by reference to Exhibit 10.15 of URT's 10-K Annual Report
          dated July 19, 1999.

10.84     Letter Agreement dated July 9, 1999 between URT and PEC pertaining to
          salary of Allan Wolk, incorporated by reference to Exhibit 10.16 of
          URT's 10-K Annual Report dated July 19, 1999.


                                      -21-
<PAGE>

10.85     Second Amendment to Lease dated April 1, 2000 between Allan Wolk and
          Sheffield Wolk, as landlord, and PEC, as tenant, pertaining to Orlando
          store.

10.86     Promissory Note dated May 11, 2000 from PEC in favor of Allan Wolk
          Individual Retirement Account Rollover.

10.87     Mortgage with Assignment of Rents, Security Agreement and Fixture
          Filing dated May 11, 2000 between PEC, as mortgagor, and Allan Wolk
          Individual Retirement Account Rollover, as mortgagee.

10.88     Subordination Agreement dated May 11, 2000 between PEC, URT and Allan
          Wolk Individual Retirement Account Rollover.

10.89     Letter Agreement dated August 1, 2000 between URT and PEC pertaining
          to Mobile, Alabama property and 1999 loan from URT to PEC.

10.90     Letter Agreement dated April 14, 2000 between URT and PEC pertaining
          to fiscal 2000 compensation payable by PEC to Allan Wolk.

10.91     Lease Agreement dated August 1, 2000 between URT and PEC pertaining to
          Mobile, Alabama property.

10.92     Letter Agreement dated October 30, 2000 between URT and PEC pertaining
          to extension of deadline in August 1, 2000 letter agreement.

27        Financial Data Schedule

          (b) Reports on Form 8-K

          A Form 8-K dated March 29, 2000 was filed by PEC on or about such date
for the purpose of reporting on PEC's change of accountants.


                                      -22-
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                            PEACHES ENTERTAINMENT CORPORATION

                                            By: /s/ Allan Wolk
                                                ---------------------------
                                                Allan Wolk,
                                                Chairman of the Board

Dated: November 22, 2000

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

               Title                                            Date

By: /s/ Allan Wolk                                       November 22, 2000
    -------------------------------
    Allan Wolk,
    Chairman of the Board ,
    President (Principal
    Executive Officer) and Director


By: /s/ Brian Wolk                                       November 22, 2000
    -------------------------------
    Brian Wolk, Executive
    Vice President, Chief Legal
    Officer and Director

By: /s/ Jason Wolk                                       November 22, 2000
    --------------------------------
    Jason Wolk, Executive
    Vice President, Chief Financial
    Officer (Principal Financial and
    Accounting Officer), Treasurer
    Secretary and Director


                                      -23-