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 3, 1999              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,
1999, approximately $155,000.

As of June 2, 1999 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 93.5% 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 6.5% of PEC's
issued and outstanding shares of common stock are 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 3, 1999 (the "1999 fiscal year"):

                                       1999     1998     1997     1996     1995
                                       ----     ----     ----     ----     ----


Number of stores:
At beginning of period                   12       13       13       19       20
Opened during period                      1        0        0        0        1
Closed during period                     (1)      (1)      (0)      (6)      (2)
                                        ---      ---      ---      ---      ---

   At end of period                      12       12       13       13       19

     The twelve "Peaches" stores which are in operation are located in the
following four states: Florida (six 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".





                                       -2-

<PAGE>



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, except for PEC's
mall-type store. They have distinct, wood panelled 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.

     As of the last day of the 1999 fiscal year, PEC purchased merchandise from
approximately 60 suppliers, among whom the principal ones during most of fiscal
1999 were BMG, EMI, PGD, SONY, Universal and WEA. Approximately 72% of the
merchandise purchased during the 1999 fiscal year came from such principal
suppliers. In PEC's fourth quarter of fiscal 1999, Seagram Co., Ltd, the owner
of Universal, completed its purchase of PGD. This action has brought PEC's
number of principal suppliers from six to five. Although PEC does not anticipate
an adverse effect as a result of the above, it is unknown what impact, if any,
this acquisition would have on the ongoing results of operations of PEC.

     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 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 limitations, to all of its major suppliers, who charge a net
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.




                                       -3-

<PAGE>



     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 1999 fiscal year, sales between April and June were
approximately 22% of total sales; sales between July and September were
approximately 22% of total sales; sales between October and December were
approximately 31% of total sales; and sales between January and March were
approximately 25% 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. For a discussion of actions taken to
address such competitive factors, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

Employees

     As of the last day of the 1998 fiscal year, PEC had approximately 238
employees. It is not a party to any collective bargaining agreements. Relations
with employees have been satisfactory and there have been no work stoppages.

Intercorporate Agreements

     There are three agreements in place pertaining to the management of PEC.
Two of such agreements are between URT and PEC and the third is between URT and
Allan Wolk, PEC's Chairman, President and Chief Executive Officer. Among the
arrangements which are in place pursuant to such agreements are the following:
for the period from January 1, 1996 through March 31, 2000, URT will continue to
provide to PEC the services of Mr. Wolk as PEC's Chairman, President and Chief
Executive Officer; PEC is required to pay to Mr. Wolk during such period, so
long as he continues to provide such services, a salary in the amount described
below; and URT and PEC will continue to equitably apportion taxes so long as
they continue to file a consolidated federal return. The salary so payable by
PEC to Mr. Wolk pursuant to such arrangements is $500,000 per annum, except that
such amount was reduced to $400,000 per annum, effective March 1, 1997 and
continuing until February 28, 1999, and except further that such amount was
further reduced to $300,000 per annum, effective January 1, 1998 and continuing
until March 28, 1998, and to $250,000 per annum, effective April 1,



                                       -4-

<PAGE>



1998 and continuing until April 3, 1999.

     As a result of the above-described arrangements, the salary required to be
paid by PEC to Allan Wolk was reduced from $375,000 during the 1998 fiscal year
to $250,000 during the 1999 fiscal year. During both the 1999 and 1998 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 to an
institutional lender.

     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".

Item 3.      LEGAL PROCEEDINGS

     In April, 1999, PEC instituted a legal action in the Circuit Court of the
Ninth Judicial Circuit of Orange County, Florida against the landlord with
respect to one of its Orlando, Florida stores. Among the allegations in the
complaint are fraudulent misrepresentations as to the nature of the landlord's
shopping center. PEC is seeking all available remedies in both law and equity.
The action is presently pending.

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

     None.

                                     PART II


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 the National Quotation Bureau, Incorporated:





                                       -5-

<PAGE>



                                                Bid Prices        Asked Prices
                                                ----------        ------------
                                              High      Low     High        Low
1997

        Quarter ended March 31                .005     .001      .05       .05
        Quarter ended June 30,                .001     .001      .05       .05
        Quarter ended Sept. 30,               .001     .001      .05       .05
        Quarter ended Dec. 31,                .001     .001      .05       .05

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 through June 1,               .03      .03       .09       .09

     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").

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 2, 1999, based on
information supplied by PEC's transfer agent:

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

      Common Stock, $.01 par value                              1,452




                                       -6-

<PAGE>




Item 6. SELECTED FINANCIAL DATA


     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 3,         March 28,        March 29,        March 30,         April 1,
                                                       1999              1998            1997             1996             1995
                                                   ------------     ------------     ------------     ------------     ------------
<S>                                                <C>                <C>              <C>              <C>              <C>
Operating Statement Data

Net sales                                          $ 17,480,467       17,077,501       18,109,119       23,626,489       31,960,986

Net loss                                                (89,586)        (468,209)        (865,313)      (2,416,051)      (1,995,408)

Basic and diluted earnings per
    share (1)                                                --            (0.01)           (0.04)           (0.12)           (0.10)

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

Balance Sheet Data

Working capital excluding
    liabilities subject to compromise
    in 1996                                        $    128,620          252,883        1,513,459        6,083,691        2,058,184

Total assets                                          4,582,948        5,353,203        6,170,065        9,442,616       11,224,889

Current portion of long-term
    obligations                                         108,280          732,319          730,239          124,774          110,028

Long-term obligations                                   469,759          578,127        1,337,190          810,367          929,654

Shareholders' equity                                    960,837          760,423          913,913        1,429,226        3,890,277
</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.




                                       -7-

<PAGE>



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

FISCAL YEAR ENDED APRIL 3, 1999 ("1999") COMPARED TO FISCAL YEAR ENDED
MARCH 28, 1998 ("1998")

Net sales for 1999 increased $403,000 or 2.4 percent 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 percent.

Cost of sales, as a percentage of net sales, decreased from 61.5 percent in 1998
to 59.3 percent in 1999. Such decrease is primarily attributable to an increase
in certain retail prices and increases in purchase discounts.

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.

The Company had a net loss of $90,000 in 1999 compared with a net loss of
$468,000 in 1998. The reduction of net loss is primarily attributable to the
increase in gross profit percentage discussed above, a decrease in interest
expense as well as an approximately $45,000 reduction of net loss due to the
fact that fiscal 1999 was a 53 week year while fiscal 1998 was a 52 week year.



                                       -8-

<PAGE>



FISCAL YEAR ENDED MARCH 28, 1998 ("1998") COMPARED TO FISCAL YEAR
ENDED MARCH 29, 1997 ("1997")

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.

The cost of sales for 1998 was lower than that for 1997 due principally to a
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 conclusion of the Chapter 11 proceeding. Such
decrease is also attributed to increases in other purchase discounts and an
increase in certain retail selling prices.

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.

The Company incurred a net loss of $468,000 in 1998 versus a net loss of
$865,000 in 1997. The significant reduction of net loss is attributed to an
increase in gross profit percentage and a decrease in expenses as discussed
above.

The Company's primary suppliers have taken steps to help protect the retail
marketplace from certain low cost retailers of music. These steps have 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, have helped the Company to
restore itself to a more competitive position. Another factor which has 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.

FISCAL YEAR ENDED MARCH 29, 1997 ("1997") COMPARED TO FISCAL YEAR
ENDED MARCH 30, 1996 ("1996")

Net sales for 1997 decreased 23.4% compared to 1996. 13.3% of such decrease is
attributed to the fact that 1996 included sales for stores that had been open
during 1996 and were closed



                                       -9-

<PAGE>



during or near the end of 1996. The balance of such decrease (10.1%) is
attributed to comparable store sales.

The cost of sales for 1997 was lower than that for 1996 due principally to a
decrease in net sales. Cost of sales as a percentage of net sales decreased from
64.8% in 1996 to 63.2% in 1997 due to increased purchase discounts in 1997 and
the fact that 1996 reflected the effects of buying a portion of PEC's inventory
during the Chapter 11 proceeding from alternate sources with higher prices.

SG&A expenses in 1997 decreased 21.4% compared to 1996. Such decrease is
attributed to a decrease in store operating expenses of stores that had been
open during 1996, but were closed during or near the end of 1996 (15.0%), a
decrease in corporate overhead (0.3%), and a decrease in comparable store
expenses (6.1%). SG&A expenses, as a percentage of net sales, increased from
40.2% in 1996 to 41.8% in 1997 due to the fixed nature of certain expenses and
the decrease in net sales in addition to the aforementioned items.

The Company incurred a net loss of $865,000 in 1997 versus a net loss of
$2,416,000 in 1996. The significant reduction of net loss is attributed to the
success of the Chapter 11 proceeding. However, such success was offset by
professional fees and lost gross profits as a result of not obtaining similar
terms from trade creditors to those that existed prior to the Chapter 11
proceeding until approximately the first quarter of 1998, at which time the
Company's primary suppliers provided terms with respect to purchases and returns
that were the same as those in place prior to the Petition Date. Also, further
overhead reductions were not evident until 1998.

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. Management used
cash on hand as well as funds received from its landlord for the building of the
new store which opened in May 1998. For a discussion of uncertainties affecting
the Company's liquidity and capital resources, see note 3 to the financial
statements accompanying this Form 10-K.

At April 3, 1999, the Company had long-term obligations of $469,759. 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 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.


                                      -10-

<PAGE>



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 Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have data-sensitive software may recognize a date using
"00" as year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations. The Company has
assessed that it is required to upgrade portions of its software which was
originally purchased from outside vendors, so that its computer systems will
properly utilize dates beyond December 31, 1999. The Company has purchased its
upgraded software and expects that testing and implementation will be completed
by August, 1999. The total anticipated cost of the upgrade of the Company's
software is approximately $20,000. However, there can be no absolute assurance
that the Company can successfully implement the necessary upgrades to its
computer systems. Additionally, the Company is dependent on basic public
infrastructure, such as telecommunications and utilities, in order to function
normally. Significant long-term interruptions of this infrastructure could have
an adverse effect on the operations of the Company. Additionally, the Company
must rely on assurances from suppliers and vendors that their information
systems and key services will be Year 2000 compliant, and the Company currently
has no practical alternatives if these major suppliers experience problems.
Therefore, even if the Company, in a timely manner, successfully implements the
necessary changes to its computer systems, some problems may not be identified
or corrected in time to prevent material adverse consequences or business
interruptions to the Company, and there can be no absolute assurance that there
will not be a material adverse effect on the Company's operations, liquidity or
financial condition as a result of the Year 2000 issue.

New Accounting Policies

In June, 1997, the FASB issued Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" ("Statement 130"). Statement 130
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general purpose financial statements and is
effective for fiscal years beginning after December 31, 1997. Adoption of
Statement 130 did not have a material effect on the Company's financial
position, results of operations or cash flows.

In 1997, the FASB issued Statement of Financial Accounting Standard No. 131,
"Disclosure about Segments of an Enterprise and Related Information" ("Statement
131"). Statement 131 establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that these enterprises report selected information about
operating segments in interim financial reports to shareholders. Statement 131
is effective for financial statements for the periods beginning after December
15, 1997. The Company operates as one segment.

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 position or results of operations.


                                      -11-

<PAGE>



Item 8.         FINANCIAL STATEMENTS



                        PEACHES ENTERTAINMENT CORPORATION

                              Financial Statements

                        April 3, 1999 and March 28, 1998

                   (With Independent Auditors' Report Thereon)



                                      -12-

<PAGE>



                        PEACHES ENTERTAINMENT CORPORATION

                                Table of Contents


                                                                            Page
                                                                            ----

Independent Auditors' Report                                                 F-2

Financial Statements:
     Balance Sheets as of April 3, 1999 and March 28, 1998                   F-3

     Statements of Operations for each of the years in the
        three-year  period ended April 3, 1999                               F-4

     Statements of Shareholders'  Equity for each of the
       years in the three-year period ended April 3, 1999                    F-5

     Statements of Cash Flows for each of the years in the
        three-year  period ended April 3, 1999                               F-7

     Notes to Financial Statements                                           F-9



                                      -13-

<PAGE>


                          Independent Auditors' Report


Directors and Shareholders
Peaches Entertainment Corporation
Hallandale, Florida:

We have  audited  the  accompanying  balance  sheets  of  Peaches  Entertainment
Corporation  (the  "Company")  as of April 3, 1999 and March 28,  1998,  and the
related statements of operations,  shareholders'  equity and cash flows for each
of the years in the  three-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  March 28,  1998,  and the  results  of its
operations  and its cash  flows for each of the years in the  three-year  period
ended April 3, 1999 in conformity with generally accepted accounting principles.


May 28, 1999
Ft. Lauderdale, Florida

                                                                        KPMG LLP



                                      -14-

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                                 Balance Sheets

                        April 3, 1999 and March 28, 1998


<TABLE>
<CAPTION>
                                                                                   1999                   1998
                                                                                -----------            -----------
<S>                                                                             <C>                      <C>
                                   Assets
Current assets:
    Cash and cash equivalents                                                   $   615,665              1,080,694
    Inventories                                                                   2,309,600              2,433,433
    Prepaid expenses and other current assets                                       247,122                308,419
                                                                                -----------            -----------

            Total current assets                                                  3,172,387              3,822,546

Property and equipment, net                                                       1,235,570              1,349,732
Other assets                                                                        174,991                180,925
                                                                                -----------            -----------
                                                                                $ 4,582,948              5,353,203
                                                                                ===========            ===========
                    Liabilities and Shareholders' Equity

Current liabilities:
    Current portion of long-term obligations                                    $   108,280                732,319
    Current portion of due to Parent                                                 15,185                   --
    Accounts payable                                                              2,240,109              2,014,674
    Accured liabilities                                                             680,193                822,670
                                                                                -----------            -----------
            Total current liabilities                                             3,043,767              3,569,663

Long-term obligations                                                               469,759                578,127
Due to Parent                                                                        45,555                382,156
Deferred rent                                                                        63,030                 62,834
                                                                                -----------            -----------
            Total liabilities                                                     3,622,111              4,592,780
                                                                                -----------            -----------
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 3, 1999 and
       March 28, 1998                                                               397,813                397,813
    Additional paid-in capital                                                    2,039,190              1,749,190
    Retained deficit                                                             (1,976,166)            (1,886,580)
                                                                                -----------            -----------

            Total shareholders' equity                                              960,837                760,423

Commitments and contingencies
                                                                                -----------            -----------
                                                                                $ 4,582,948              5,353,203
                                                                                ===========            ===========
</TABLE>


See accompanying notes to financial statements.


                                      -15-
                                      (F-3)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                            Statements of Operations

       For each of the years in the three-year period ended April 3, 1999

<TABLE>
<CAPTION>
                                                                                   1999                1998                1997
                                                                               ------------        ------------        ------------
<S>                                                                            <C>                   <C>                 <C>
Net sales                                                                      $ 17,480,467          17,077,501          18,109,119
                                                                               ------------        ------------        ------------

Cost and expenses:
    Cost of sales                                                                10,361,351          10,501,123          11,453,125
    Selling, general and administrative expenses                                  6,781,522           6,538,377           7,121,666
    Depreciation and amortization                                                   304,344             270,191             448,862
                                                                               ------------        ------------        ------------
                                                                                 17,447,217          17,309,691          19,023,653
                                                                               ------------        ------------        ------------

          Income (loss) from operations                                              33,250            (232,190)           (914,534)
                                                                               ------------        ------------        ------------
Other (expense) income:
    Interest expense                                                               (135,765)           (219,148)            (88,345)
    Interest income                                                                  12,929              27,129              30,832
                                                                               ------------        ------------        ------------
                                                                                   (122,836)           (192,019)            (57,513)
                                                                               ------------        ------------        ------------
          Loss before reorganization costs, income taxes
            and extraordinary gain                                                  (89,586)           (424,209)           (972,047)
                                                                               ------------        ------------        ------------
Reorganization costs:
    Professional fees                                                                  --               (44,000)           (379,645)
                                                                               ------------        ------------        ------------
                                                                                       --               (44,000)           (379,645)
                                                                               ------------        ------------        ------------
          Loss before income taxes and extraordinary gain                           (89,586)           (468,209)         (1,351,692)

Provision for income taxes                                                             --                  --                  --
                                                                               ------------        ------------        ------------
          Loss before extraordinary gain                                            (89,586)           (468,209)         (1,351,692)

Extraordinary gain due to reorganization (note 2)                                      --                  --               486,379
                                                                               ------------        ------------        ------------
          Net loss                                                             $    (89,586)           (468,209)           (865,313)
                                                                               ============        ============        ============
Basic and diluted earnings per common share:
    Loss before extraordinary gain                                             $       --                 (0.01)              (0.07)
    Extraordinary gain                                                                 --                  --                  0.03
                                                                               ------------        ------------        ------------
          Net loss                                                             $       --                 (0.01)              (0.04)
                                                                               ============        ============        ============
</TABLE>


See accompanying notes to financial statements.


                                      -16-
                                      (F-4)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                Consolidated Statements of Shareholders' Equity

       For each of the years in the three-year period ended April 3, 1999

<TABLE>
<CAPTION>

                                              Preferred stock          Common stock subscribed             Common stock
                                          -------------------------   -------------------------     --------------------------
                                             Shares        Amount       Shares          Amount        Shares        Amount
                                          -----------   -----------   -----------    -----------    -----------    -----------
<S>                                        <C>          <C>            <C>           <C>             <C>               <C>
Balance, March 30, 1996                         5,000   $   500,000          --      $      --       20,107,850        201,079

    Net loss                                     --            --            --             --             --             --

    Contributed capital                          --            --      20,000,000        350,000       (218,730)        (2,187)
                                          -----------   -----------   -----------    -----------    -----------    -----------
Balance, March 29, 1997                         5,000       500,000    20,000,000        350,000     19,889,120        198,892

    Net loss                                     --            --            --             --             --             --

    Contributed capital                          --            --     (20,000,000)      (350,000)    20,000,000        200,000

    Payment of preferred stock                   --            --            --             --             --             --
       dividend to parent

    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                                 --            --            --             --             --             --
                                          -----------   -----------   -----------    -----------    -----------    -----------
Balance, April 3, 1999                          5,000       500,000          --             --       39,781,270        397,813
                                          ===========   ===========   ===========    ===========    ===========    ===========
</TABLE>


                                      -17-
                                      (F-5)
<PAGE>

<TABLE>
<CAPTION>

                                             Treasury stock          Additional
                                        -------------------------      paid-in        Retained
                                          Shares         Amount        capital         deficit         Total
                                        -----------    -----------    -----------    -----------    -----------
<S>                                       <C>            <C>            <C>             <C>           <C>
Balance, March 30, 1996                     326,580        (59,895)     1,284,471       (496,429)     1,429,226

    Net loss                                   --             --             --         (865,313)      (865,313)

    Contributed capital                    (218,730)        40,115           --          (37,928)       350,000
                                        -----------    -----------    -----------    -----------    -----------
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                 --             --          (60,000)          --          (60,000)
       dividend to parent

    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                               --             --          (60,000)          --          (60,000)
                                        -----------    -----------    -----------    -----------    -----------
Balance, April 3, 1999                         --             --        2,039,190     (1,976,166)       960,837
                                        ===========    ===========    ===========    ===========    ===========
</TABLE>


See accompanying notes to financial statements.


                                      -18-
                                      (F-6)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                            Statements of Cash Flows

       For each of the years in the three-year period ended April 3, 1999

<TABLE>
<CAPTION>
                                                                                      1999          1998          1997
                                                                                   ----------    ----------    ----------
<S>                                                                                <C>             <C>           <C>
Cash flows from operating activities:
    Net loss                                                                       $  (89,586)     (468,209)     (865,313)
    Adjustments to reconcile net loss to net cash (used in)
       provided by operating activities:
          Extraordinary gain                                                             --            --        (486,379)
          Depreciation and amortization                                               304,344       270,191       448,862
          Deferred rent                                                                   196       (93,202)      (44,687)
          Changes in assets and liabilities  affecting cash flows from operating
            activities:
               (Increase) decrease in:
                   Inventories                                                        123,833       422,061        25,200
                   Prepaid  expenses and other current assets                          61,297       (48,411)      273,587
                   Refundable income taxes                                               --            --           9,136
                   Other assets                                                         5,934       (22,163)       25,589
               Increase (decrease) in:
                   Accounts payable                                                   225,435       642,805     1,268,831
                   Accrued liabilities                                               (142,477)     (133,335)     (147,049)
                   Liabilities subject to compromise                                     --            --      (1,854,514)
                                                                                   ----------    ----------    ----------
                   Net cash provided by (used in) operating
                      activities                                                      488,976       569,737    (1,346,737)
                                                                                   ----------    ----------    ----------
Cash flows from investing activities:
    Purchases of property and equipment                                              (190,182)     (180,192)      (44,885)
                                                                                   ----------    ----------    ----------
                   Net cash (used in) provided by investing
                      activities                                                     (190,182)     (180,192)      (44,885)
                                                                                   ----------    ----------    ----------
Cash flows from financing activities:
    Due to Parent                                                                      28,584        52,062       704,813
    Capital contribution                                                                 --            --         350,000
    Repayment of long-term obligations                                               (732,407)     (756,983)     (124,687)
    Dividends paid                                                                    (60,000)      (60,000)         --
                                                                                   ----------    ----------    ----------
                   Net cash (used in) provided by financing
                      activities                                                     (763,823)     (764,921)      930,126
                                                                                   ----------    ----------    ----------
</TABLE>




                                      -19-
                                      (F-7)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                            Statements of Cash Flows

       For each of the years in the three-year period ended April 3, 1999

<TABLE>
<CAPTION>
                                                                1999           1998            1997
                                                             -----------    -----------    -----------
<S>                                                            <C>            <C>            <C>
               Net (decrease) increase in cash and cash
                   equivalents                                  (465,029)      (375,376)      (461,496)

Cash and cash equivalents, beginning of year                   1,080,694      1,456,070      1,917,566
                                                             -----------    -----------    -----------
Cash and cash equivalents, end of year                       $   615,665      1,080,694      1,456,070
                                                             ===========    ===========    ===========
Supplemental  disclosures of cash flow information:
    Cash paid (received) during the period for:
       Interest                                              $   107,181        171,365         88,345
                                                             ===========    ===========    ===========
       Income tax payments (refund), net                     $      --             --             --
                                                             ===========    ===========    ===========

Supplemental schedule of non-cash operating and investing
activities relating to the reorganization:

    Liabilities subject to compromise, March 30, 1996        $ 5,671,434
       Less:
          Inventory returns for credit                         2,073,566
       Cash paid                                               1,854,514
       Extraordinary gain [(primarily as a result of lease
          rejection claims (note 2)]                             486,379
                                                             -----------

    Long-term obligations, March 29, 1997                    $ 1,256,975
                                                             ===========
</TABLE>


In 1998, the Parent forgave $374,719 of the Due to Parent, which is reflected as
a capital contribution in the accompanying financial statements.

In 1999, the Parent forgave $350,000 of the Due to Parent, which is reflected as
a capital contribution in the accompanying financial statements.


See accompanying notes to financial statements.


                                      -20-
                                      (F-8)
<PAGE>



                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


(1)  Organization and Basis of Presentation

     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 a 87.5  percent-owned  subsidiary of URT Industries,
     Inc. (the "Parent").

(2)  Confirmation of Amended Plan of Reorganization

     On  January  16,  1996  (the  "Petition   Date"),   the  Company  commenced
     reorganization proceedings under Chapter 11 of the United States Bankruptcy
     Code. An amended plan of  reorganization  was  confirmed by the  Bankruptcy
     Court on January 17, 1997 (the  "confirmation  date"), and became effective
     February 3, 1997 (the "effective date"), subject to satisfaction of certain
     conditions  which were satisfied  February 19, 1997. All trade and nontrade
     suppliers  received 100 percent of their  allowed  claims which were either
     paid on the  effective  date or are  reflected  in  current  and  long-term
     obligations in the financial statements,  payable primarily over a two-year
     period  from the  effective  date.  As of  April 3,  1999,  all  trade  and
     non-trade suppliers have been paid 100 percent of their allowed claims. The
     mortgage  holder  will  receive  100  percent of the  allowed  claim,  with
     interest,  except the balloon  payment was extended from  September 1997 to
     September  2002.  Landlords,  under the leases  rejected  by the Company in
     connection with the bankruptcy  filing,  were entitled to 30 percent of the
     allowed  claims with respect to such leases,  all of which were paid on the
     effective  date.  The  Company  recorded in 1997 an  extraordinary  gain of
     $486,379 primarily as a result of the settlement of lease rejection claims.

(3)  Liquidity

     As of April 3,  1999,  the  Company  has a net  worth of  approximately  $1
     million.  Since 1993, the Company has incurred  operating losses and has an
     accumulated  deficit balance of  approximately $2 million at April 3, 1999.
     In 1996, the Company commenced reorganization  proceedings under Chapter 11
     and in the last quarter of 1997 the Company's  plan of  reorganization  was
     confirmed.   The  Company   believes  that  it  has   benefited   from  its
     reorganization,  which includes 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 warehouses, and the termination of
     other unprofitable business arrangements.

     Additionally,  the  Company's  primary  suppliers  have taken steps to help
     protect the retail  marketplace  from certain  low-cost  retailers of music
     including  non-traditional  music outlets,  such as appliance retailers and
     super book stores,  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.  These steps have
     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
     above,  have  helped the  Company to restore  itself to a more  competitive
     position.  Other factors which have had a positive  effect on the Company's
     performance  are the increase in  gross-profit  percentage and reduction of
     certain expenses. The Company's ability to achieve substained profitable


                                      -21-
                                      (F-9)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


     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.

(4)  Summary of Significant Accounting Policies

     (a)  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 years ended April 3,
          1999 consisted of 53 weeks.  The fiscal years ended March 28, 1998 and
          March 29, 1997 consisted of 52 weeks, respectively.

     (b)  Cash Equivalents

          The  Company  considers  highly  liquid  investments   purchased  with
          original  maturities  of three months or less to be cash  equivalents.
          Cash equivalents totaled approximately  $337,000 and $399,000 at April
          3,  1999  and  March  28,  1998,  respectively.  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.

     (c)  Inventories

          Inventories,  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.

     (d)  Property and Equipment

          Property and equipment are stated at cost. The assets are  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.

     (e)  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  than  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.

                                      -22-
                                     (F-10)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


          The  Company  accounts  for  income  taxes  under  the  provisions  of
          Financial   Accounting  Standards  Board's  ("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.

     (f)  Reorganization Costs

          Reorganization  costs  include  professional  fees  relating to legal,
          accounting and  consulting  services  provided in connection  with the
          Chapter 11 proceedings.

     (g)  Use of Estimates by Management

          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.

     (h)  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
          provisions  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
          intangibles be reviewed for impairment  whenever  events or changes in
          circumstances indicate that 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  exceed 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.  The
          adoption  of this  Statement  did not have a  material  impact  on the
          Company's financial position, results of operations or liquidity.


                                      -23-
                                     (F-11)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


     (i)  Reclassifications

          Certain  amounts in the 1998 and 1997 financial  statements  have been
          reclassified to conform with the 1999 presentation.

(5)  Earnings Per Share

     In December  1997,  the Company  adopted  the  provisions  of SFAS No. 128,
     Earnings Per Share,  which  establishes  new  standards  for  computing and
     presenting  earnings per share.  Earnings  per share for all prior  periods
     have been restated to reflect the provisions of this Statement.

     Basic and diluted  earnings  per share have been  computed by dividing  net
     loss,  less  preferred  dividends by the weighted  average number of shares
     outstanding during the period.

     Basic and diluted earnings per share were calculated as follows:

<TABLE>
<CAPTION>
                                             April 3,         March 28,      March 29,
                                              1999              1998           1997
                                         ----------------    ----------    -----------
<S>                                      <C>                   <C>            <C>
Basic and diluted:
     Net loss plus preferred dividends   $       (149,586)     (528,209)      (865,313)
                                         ================    ==========    ===========

     Weighted average shares                   39,781,270    39,781,270     20,055,243
                                         ================    ==========    ===========

Net loss per share                       $             --          (.01)          (.04)
                                         ================    ==========    ===========
</TABLE>

(6)  Property and Equipment, Net

     Property and equipment  consist of the following at April 3, 1999 and March
     28, 1998:

                                                         1999           1998
                                                     -----------    -----------

Land                                                 $   395,570        395,570
Building                                                 538,093        538,093
Leasehold improvements                                 1,166,518      1,456,260
Furniture and equipment                                  645,577        677,333
Building under capitalized lease                         206,964        206,964
                                                     -----------    -----------
                                                       2,952,722      3,274,220
Less accumulated depreciation and amortization        (1,717,152)    (1,924,488)
                                                     -----------    -----------

                                                     $ 1,235,570      1,349,732
                                                     ===========    ===========


                                      -24-
                                     (F-12)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


(7)  Long-term Obligations

     Long-term  obligations  consist of the following at April 3, 1999 and March
     28, 1998:

<TABLE>
<CAPTION>
                                                                          1999            1998
                                                                       -----------    -----------
<S>                                                                    <C>                <C>
Capitl lease  obligation,  due in monthly  installments  of
     $3,382, including interest at 17.5%; final payment due
     March 2005                                                        $   150,137        163,178

Mortgage payable,  due in equal  installments of $2,981
     per month, plus interest  at  prime  plus 0.5%;
     collateralized  by  the  mortgaged  property  with
     depreciated cost of $768,088; final balloon payment of
     $245,700 due September 2002 (note 2)                                  370,912        406,688

Settlement  agreement with former  officer/shareholder,  due
     in monthly  installments of $5,699,  final payments due
     January 2000                                                           56,990        125,465

Promissory notes,  due in  installments of $26,744 for
      21 months and one payment of $347,675 (paid in February 1999),
      plus interest at prime; collateralized by inventory (note 2)            --          615,115
                                                                       -----------    -----------
                                                                           578,039      1,310,446
Less current portion                                                      (108,280)      (732,319)
                                                                       -----------    -----------
                                                                       $   469,759        578,127
                                                                       ===========    ===========
</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 $113,000 for 1999, 1998 and 1997.

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

            Fiscal year                                                  Amount
            -----------                                                  ------
              2000                                                      $ 40,600
              2001                                                        40,600
              2002                                                        40,600
              2003                                                        40,600
              2004                                                        40,600
            Thereafter                                                    40,600
                                                                        --------
Total minimum lease payments                                             243,600

Less amount representing interest                                         93,463
                                                                        --------

Present value of minimum lease payments                                 $150,137
                                                                        ========



                                      -25-
                                     (F-13)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


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

            Fiscal year                                                  Amount
            -----------                                                  ------
              2000                                                      $ 92,765
              2001                                                        35,775
              2002                                                        35,775
              2003                                                       263,587
              2004                                                          --
            Thereafter                                                      --
                                                                        --------

                                                                        $427,902
                                                                        ========

     The  Company  has a standby  letter of credit  of  $75,600  available  to a
     landlord that was not drawn upon as of April 3, 1999. 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 3, 1999.

(8)  Accrued Liabilities

     Accrued liabilities consist of the following at April 3, 1999 and March 28,
     1998:

                                                            1999          1998
                                                          --------      --------

Gift certificate and credit slip liability                $156,818       155,873
Payroll and related benefits                                42,670       102,244
Sales and real estate taxes payable                        131,556       141,446
Accrued overhead expenses                                  223,741       259,017
Other                                                      125,408       164,090
                                                          --------      --------

                                                          $680,193       822,670
                                                          ========      ========

(9)  Due to Parent

     In order for the  Company to be able to effect the plan of  reorganization,
     the Parent,  in exchange for the issuance to it of 20 million shares of the
     Company's  authorized  common stock (including  218,730  treasury  shares),
     contributed $350,000 to the capital of the Company,  waived an aggregate of
     $75,000 of  dividends  payable by the  Company to the  Parent,  guaranteed,
     subject to the terms of the Plan, the approximately $1,284,000 which is due
     the principal  suppliers  (all of which have been paid as of April 3, 1999)
     in accordance with the foregoing,  and loaned $700,000 to the Company.  The
     loan was  required  be repaid to the Parent  with  interest at prime over a
     period of four years  beginning on the third  anniversary  of the effective
     date and is subordinate  to the amounts owed to principal  suppliers and is
     secured by inventory and all the assets of the Company. In 1998, the Parent
     forgave $350,000 of principal and $24,719 of accrued interest. In 1999, the
     Parent  forgave  $350,000.  The  forgiveness  has been  accounted for as an
     additional capital contribution by the Parent.



                                      -26-
                                     (F-14)
<PAGE>


                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


(10) Commitments and Contingencies

     (a)  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 in each of the years in the  three-year
          period  ended  April  3,  1999.  Most of the  leases  contain  renewal
          options.

          The  aggregate  minimum  rental  commitments  under all  noncancelable
          operating leases at April 3, 1999 are as follows:

                     Fiscal year                                        Amount
                     -----------                                     -----------
                       2000                                          $ 1,229,827
                       2001                                            1,148,775
                       2002                                              986,891
                       2003                                              948,733
                       2004                                              901,761
                    Thereafter                                         5,246,565
                                                                     -----------

                                                                     $10,462,552
                                                                     ===========

          Rental  expense  under  noncancelable  operating  leases,  included in
          selling,  general  and  administrative  expenses  in the  accompanying
          statements of  operations,  amounted to $1,380,000  and $1,160,000 and
          $1,217,000,  respectively,  for each of the  years  in the  three-year
          period ended April 3, 1999.

          Rental expense on stores owned by two directors and/or their relatives
          was $164,062,  $131,250, and $131,250,  respectively,  for each of the
          years in the three-year period ended April 3, 1999.

     (b)  Legal Matters

          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 will not have a material
          impact on the  financial  position  or  results of  operations  of the
          Company.



                                      -27-
                                     (F-15)
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


     (c)  Employment Agreement

          On March  18,  1996,  the  United  States  Bankruptcy  Court  Southern
          District of Florida approved the settlement of an employment agreement
          with a former  officer.  The  Company is to pay an amount of  $273,550
          over a period of four  years  (note 7).  Under the  original  terms of
          employment,  the  officer  would  have been  entitled  to in excess of
          $870,000 in aggregate.

     (d)  Management Agreement

          On March 29, 1993, as amended,  the Company  entered into a management
          and  intercorporate  agreement (the  "Management  Agreement") with the
          Parent  whereby the  Company was  required to pay the Parent an annual
          fee;  the Parent was required to provide the Company with the services
          of the  person  who is the  president  and  chairman;  the  Parent was
          required to pay the Company for certain  accounting and administrative
          services  performed by the Company;  and so long as the Parent and the
          Company  filed  consolidated  income  tax  returns,  their  respective
          liabilities for such taxes would be equitably  apportioned as provided
          in such  agreement.  Effective as of the close of business on December
          31, 1995,  the  Management  Agreement was terminated and replaced with
          three new agreements  which became  effective  January 1, 1996 through
          March 31, 2000. In lieu of paying a management fee to the Parent,  the
          three new  agreements  require  payment to the Parent's  president and
          chairman as long as he continues to provide  services similar to those
          performed under the original Management Agreement.

(11) Shareholders' Equity

     For each of the years in the  three-year  period  ended April 3, 1999,  the
     Company  had 2,500  shares of $100 par,  11  percent,  Series A  Cumulative
     Preferred  Stock  and  2,500  shares  of $100  par,  13  percent,  Series B
     Cumulative Preferred Stock authorized,  issued and outstanding.  The Parent
     is the owner of all  outstanding  shares of Preferred  Stock. In connection
     with the reorganization, the Parent agreed to waive dividends in its shares
     for the period  beginning  January 1, 1996 and ending March 29,  1997.  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 shares of Series
     A stock may be convertible  into shares of the Company's  common stock upon
     the holders'  compliance with certain surrender and notice  provisions.  In
     March 1997, the conversion  feature was eliminated.  The liquidating  value
     for both the Series A and Series B shares is par value plus all accrued and
     unpaid dividends.



                                      -28-
                                     (F-16)
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997



(12) Income Taxes

     The provision for income taxes consists of:

<TABLE>
<CAPTION>
                                              1999          1998          1997
                                             -------       -------       -------
<S>                                          <C>          <C>            <C>
Current:
     Federal                                 $  --            --            --
     State                                      --            --            --
                                             -------       -------       -------
Deferred:
     Federal                                    --            --            --
     State                                      --            --            --
                                             -------       -------       -------

                                                --            --            --
                                             -------       -------       -------

                                             $  --           --             --
                                             =======       =======       =======
</TABLE>


     Reasons  for  differences  between  income  tax  provision  and the  amount
     computed by applying the statutory federal income tax rate of 34 percent to
     pretax loss were:

<TABLE>
<CAPTION>
                                                 1999         1998          1997
                                               ---------    ---------    ---------
<S>                                            <C>           <C>          <C>
Income tax benefit at  applicable  statutory
     tax rate of loss before income taxes
                                               $ (30,500)    (159,000)    (294,000)
Add:
     State  income  tax benefit,  net of
        federal benefit                           (2,500)     (16,000)     (31,000)
     Change in valuation allowance               119,000      126,000      185,000
     Capitalized reorganization expenses
        and other permanent differences             --           --         50,000
     Adjustments to net  operating loss
        carryovers  and other  deferred  tax
        assets                                  (102,000)      23,000       76,000
     Other                                        16,000       26,000       14,000
                                               ---------    ---------    ---------

Income tax provision for the year              $    --           --           --
                                               =========    =========    =========
</TABLE>


                                      -29-
                                     (F-17)
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                          Notes to Financial Statements

                April 3, 1999, March 28, 1998 and March 29, 1997


     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the  deferred  tax assets at April 3, 1999 and March 28,  1998,
     are presented below.

<TABLE>
<CAPTION>
                                                               1999            1998
                                                            -----------    -----------
<S>                                                          <C>            <C>
Deferred tax assets:
     Inventories,  principally  due  to additional  costs
        capitalized for tax purposes                        $    64,000         80,000
     Property  and  equipment,  net, principally due to
        differences in depreciation                             280,000        233,000
     Accrued rent, principally  due  to accrual for
        financial reporting purposes                             25,000         23,000
     NOL carryforward                                         1,692,000      1,608,000
     Accrued expenses                                            48,000         46,000
     Other                                                       37,000         37,000
                                                            -----------    -----------

           Total gross deferred tax assets                    2,146,000      2,027,000

     Less valuation allowance                                (2,146,000)    (2,027,000)
                                                            -----------    -----------

           Net deferred tax assets                          $      --             --
                                                            ===========    ===========
</TABLE>

     At April 3, 1999,  the Company has a net operating  loss  carryforward  for
     federal income tax purposes of approximately  $4,291,120 which is available
     to offset future federal taxable income, if any, through 2013.

     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 3, 1999 and March
     28, 1998 was $2,146,000 and $2,027,000, respectively. The net change in the
     total  valuation  allowance for the years ended April 3, 1999 and March 28,
     1998 was an increase of approximately $119,000 and $126,000, respectively.

(13) Fair Value of Financial Instruments

     The fair  value  of the  Company's  long-term  debt  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.



                                      -30-
                                     (F-18)
<PAGE>


(14) Business and Credit Concentrations

     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  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.

     The  Company  purchased  approximately  77  percent  and 74  percent of its
     merchandise  from seven  principal  suppliers  during the fiscal year ended
     April 3,  1999 and March  28,  1998,  respectively.  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 the Company.  The Company is not obligated
     to purchase  merchandise from any supplier.  However, if the Company was to
     lose one of its principal suppliers,  it may have a material adverse effect
     on the Company's results of operations and financial position.


                                      -31-
                                     (F-19)

<PAGE>



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

           None.

                                    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) and Director                                  61

   Brian Wolk        Executive Vice-President, Chief Legal                  34
                     Officer, General Manager-Store Operations
                     and Merchandising, and Director

   Jason Wolk        Executive Vice-President, Chief Financial Officer
                     (Principal Financial and Accounting Officer),
                     Treasurer and Director                                 32


     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 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 as an accountant by KPMG Peat Marwick
LLP. 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


                                      -32-

<PAGE>



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. Mr. 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 1999 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
1999 fiscal year:

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,      1999      250,000          -0-          -0-            -0-            -0-             -0-             -0-
    Chairman,       1998      375,000          -0-          -0-            -0-            -0-             -0-             -0-
     Pres. & CEO    1997      491,667          -0-          -0-            -0-            -0-             -0-             -0-

</TABLE>

----------
(1)  Mr. Wolk is employed and compensated under an employment agreement with URT
     which continues in effect until March 31, 2000. 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- Intercorporate 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

                                      -33-

<PAGE>



is entitled to the services of Allan Wolk, its Chairman, President and Chief
Executive Officer, through March 31, 2000, 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 2, 1999, URT and its directors and officers owned approximately
93.5% of 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.

     As set forth in the following table, Allan Wolk and members of his
immediate family own approximately 30% of URT's Class A common stock and
approximately 58% of URT's Class B common stock. The two classes of URT's common
stock are identical except that each class votes separately so that all matters
requiring the vote of stockholders require the approval of both classes of
common stock voting as separate classes. By reason of such ownership and his
position as Chairman of URT and Chairman of PEC, Mr. Wolk may be deemed to have
effective control of PEC.

     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
2, 1999, 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:











                                      -34-

<PAGE>

<TABLE>
<CAPTION>
                                                             Amount & Nature
                                                              of Beneficial               Percent
Title of Class                    Name                          Ownership                 of Class
--------------                    ----                          ---------                 --------
<S>                               <C>                           <C>                          <C>
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
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%
</TABLE>

*Less than one percent.

--------
     (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.

     (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.

                                      -35-

<PAGE>



     As set forth in the above table and footnotes, Allan Wolk and members of
his immediate family own approximately 30% or URT's Class A common stock and
approximately 58% of URT's Class B common stock. The two classes of URT's common
stock are identical except that each class votes separately so that all matters
requiring the vote of stockholders require the approval of both classes of
common stock voting as separate classes. By reason of such ownership and his
position as Chairman of URT, Mr. Wolk may be deemed to have effective control of
URT.

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. During
the 1995 fiscal year, PEC made and paid for certain renovations to the premises.
Based on the provisions of the lease, the owners agreed to be responsible for
$26,225 of the cost of such renovations which, with interest, is being deducted
by PEC over a period of 36 months.

     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 a specified amount, 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, 1989, PEC's board of directors authorized PEC to enter into
agreements with 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.

                                      -36-

<PAGE>



     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. The loan from URT was required to be paid back by PEC with interest at the
prime rate charged by Chase Manhattan Bank, N.A..

     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 required to be repaid in
accordance with the terms of the original loan documents described above.

     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. Such amounts are required
to be repaid on or before December 29, 1999.

     On or about July 22, 1998, two of the directors and officers of URT and
PEC, Brian Wolk and Jason Wolk, each received from URT, in recognition of
substantial services provided to URT and PEC, 1,200,000 shares of the PEC common
stock owned by URT. Such shares were transferred subject to the condition that
if either such individual should voluntarily leave the employ of PEC, or his
employment is terminated by PEC for cause, during the 24 month period ending
July 21, 2000, then such individual would be required to sell his 1,200,000
shares back to URT for the amount which the parties agreed to be the value of
such 1,200,000 shares upon execution of the agreement. Such arrangements were
approved by the directors of URT (with the affected individual abstaining as to
the vote with respect to the arrangements with him).


                                      -37-

<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 .......................................13

                    Independent Auditors' Report ............................14

                    Peaches Entertainment Corporation Financial
                    Statements:

                    Balance sheets as of March 28, 1998 and March 29,
                    1997 ....................................................15

                    Statements of operations for each of the years in
                    the three year period ended March 28, 1998 ..............16

                    Statements of shareholders' equity for each of the
                    years in the three year period ended March 28,
                    1998 ....................................................17

                    Statements of cash flows for each of the years in
                    the three year period ended March 28, 1998 ..............19

                    Notes to financial statements. ..........................21

               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



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<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.

10.36     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.

10.60     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.

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<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.

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<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.

10.82     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.


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<PAGE>



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.

27        Financial Data Schedule

          (b) Reports on Form 8-K.

          The Company filed a report on Form 8-K on or about February 16, 1999
          for the purpose of reporting a filing delay with respect to a Report
          on Form 10-Q which has since been filed.


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<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:          July 26, 1999

     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                                            July 26, 1999
        --------------------------------
        Allan Wolk,
        Chairman of the Board,
        President (Principal
        Executive Officer) and Director


By:     s/Brian Wolk                                            July 26, 1999
        --------------------------------
        Brian Wolk, Executive
        Vice President, Chief Legal
        Officer, General Manager-Store
        Operations & Merchanising,
        and Director

By:     s/Jason Wolk                                            July 26, 1999
        --------------------------------
        Jason Wolk, Executive
        Vice President, Chief Financial
        Officer (Principal Financial and
        Accounting Officer), Treasurer
        Secretary and Director







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