UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934



For Quarter Ended September 28, 1996                  Commission File No. 0-6882


                              URT INDUSTRIES, INC.
             (Exact Name of Registrant as Specified in Its Charter)


                 Florida                                      59-1167907
(State or Other Jurisdiction of Incorporation or      (I.R.S. Employer I.D. No.)
              Organization)


1180 E. Hallandale Beach Blvd., Hallandale, FL                          33009
   (Address of Principal Executive Offices)                           (Zip Code)


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


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 and (2) has been subject to the filing  requirements for
at least the past 90 days.


                             YES ___      NO _X_


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date.


At September 28, 1996, there were outstanding:


10,857,068 shares of Class A common stock
 1,301,141 shares of Class B common stock


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES

                                      Index


<TABLE>
<S>                                                                                                           <C>
PART I. FINANCIAL INFORMATION

     Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets-September 28, 1996 
                 (Unaudited) and March 30, 1996                                                                3

              Condensed Consolidated Statements of Operations and Retained 
                 Earnings (Deficit)-Three Months Ended September 28, 1996 and 
                 September 30, 1995 (Unaudited)                                                                4

              Condensed Consolidated Statements of Operations and Retained 
                 Earnings (Deficit)-Six Months Ended September 28, 1996 and 
                 September 30, 1995 (Unaudited)                                                                5

              Condensed Consolidated Statements of Cash Flows-Six Months 
                 Ended September 28, 1996 and September 30, 1995 (Unaudited)                                   6

              Notes to Condensed Consolidated Financial Statements                                             7

     Item 2.  Management's Discussion and Analysis of Financial Condition
              and Results of Operations                                                                       11

PART II. OTHER INFORMATION

     Item 1.  Legal Proceedings                                                                               13

     Item 3.  Defaults Upon Mortgage Payable                                                                  15

     Item 6.  Exhibits and Reports on Form 8-K                                                                15

SIGNATURES                                                                                                    16
</TABLE>


                                     - 2 -


<PAGE>


                         PART I - FINANCIAL INFORMATION

                    Item 1. Consolidated Financial Statements

                      URT INDUSTRIES, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets

                      September 28, 1996 and March 30, 1996

<TABLE>
<CAPTION>
                                                                                                September 28,            March 30,
                              Assets                                                                1996                   1996
                              ------                                                            ------------           ------------
                                                                                                 (unaudited)
<S>                                                                                             <C>                       <C>      
Current assets:
     Cash and cash equivalents                                                                  $  3,566,538              3,258,061
     Marketable investment securities                                                                584,709              1,761,336
     Inventories                                                                                   3,423,745              4,954,260
     Prepaid inventory                                                                               601,886                254,249
     Current portion due from officers/shareholders                                                   30,832                 30,832
     Prepaid expenses and other current assets                                                       337,304                350,197
     Refundable income taxes                                                                           9,838                  9,136
                                                                                                ------------           ------------
                   Total current assets                                                            8,554,852             10,618,071

Property and equipment, net                                                                        1,745,316              1,868,246
Due from officers/shareholders                                                                        91,598                110,722
Other assets                                                                                         177,213                191,879
                                                                                                ------------           ------------

                                                                                                $ 10,568,979             12,788,918
                                                                                                ============           ============
                Liabilities and Shareholders' Equity
                ------------------------------------

Current liabilities:
     Current portion of long-term obligations                                                        114,212                124,774
     Accounts payable                                                                                658,501                103,038
     Accrued liabilities                                                                           1,438,187              1,202,176
                                                                                                ------------           ------------
                   Total current liabilities                                                       2,210,900              1,429,988

Long-term obligations                                                                                753,131                810,367
Deferred rent                                                                                        192,050                200,723
Minority interest in a subsidiary                                                                     31,052                173,005
                                                                                                ------------           ------------
                   Total liabilities not subject to compromise                                     3,187,133              2,614,083

Liabilities subject to compromise                                                                  3,977,622              5,671,434
                                                                                                ------------           ------------
                   Total liabilities                                                               7,164,755              8,285,517
                                                                                                ------------           ------------

Shareholders' equity:
     Common stock, $.01 par value; 30,000,000 shares authorized;
        15,317,454 shares issued                                                                     153,175                153,175
     Additional paid-in capital                                                                    5,542,152              5,542,152
     Retained deficit                                                                             (1,272,768)              (173,591)
                                                                                                ------------           ------------
                                                                                                   4,422,559              5,521,736
     Treasury stock, 3,159,245 and 2,781,253 common shares in 1996
        and 1995, respectively, at cost                                                           (1,018,335)            (1,018,335)
                                                                                                ------------           ------------
                   Total shareholders' equity                                                      3,404,224              4,503,401
Commitments and contingencies                                                                   ------------           ------------
                                                                                                $ 10,568,979             12,788,918
                                                                                                ============           ============
</TABLE>



See accompanying notes to condensed consolidated financial statements.


                                     - 3 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES

 Condensed Consolidated Statements of Operations and Retained Earnings (Deficit)

          Three months ended September 28, 1996 and September 30, 1995
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                 September 28,         September 30,
                                                                                                     1996                  1995
                                                                                                  -----------          -----------
<S>                                                                                               <C>                    <C>      
Net sales                                                                                         $ 3,888,049            5,326,936
                                                                                                  -----------          -----------

Costs and expenses:
     Cost of sales                                                                                  2,479,044            3,384,239
     Selling, general and administrative                                                            1,954,399            2,678,519
                                                                                                  -----------          -----------

                                                                                                    4,433,443            6,062,758
                                                                                                  -----------          -----------

               Loss from operations                                                                  (545,394)            (735,822)
                                                                                                  -----------          -----------

Other (charges) credits:
     Interest expense                                                                                 (18,318)             (36,685)
     Interest income                                                                                   37,051               55,933
                                                                                                  -----------          -----------

                                                                                                       18,733               19,248
                                                                                                  -----------          -----------

               Loss before reorganization costs, provision for income
                  taxes and minority interest in net loss of
                  consolidated subsidiary                                                            (526,661)            (716,574)

Reorganization costs:
     Professional fees                                                                                (97,538)                --
                                                                                                  -----------          -----------
               Loss before provision for income taxes and minority
                  interest in net loss of consolidated subsidiary
                                                                                                     (624,199)            (716,574)

Provision for income taxes                                                                               --                   --
                                                                                                  -----------          -----------
               Loss before minority interest in net loss of
                  consolidated subsidiary                                                            (624,199)            (716,574)

Minority interest in net loss of consolidated subsidiary                                              (73,035)             (91,413)
                                                                                                  -----------          -----------

               Net loss                                                                              (551,164)            (625,161)

Retained (deficit) earnings, beginning of period                                                     (721,604)           1,567,760
                                                                                                  -----------          -----------

Retained (deficit) earnings, end of period                                                        $(1,272,768)             942,599
                                                                                                  ===========          ===========

Net loss per common share                                                                         $      (.05)                (.06)
                                                                                                  ===========          ===========
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                      - 4-


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES

 Condensed Consolidated Statements of Operations and Retained Earnings (Deficit)

           Six months ended September 28, 1996 and September 30, 1995
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                 September 28,         September 30,
                                                                                                     1996                   1995
                                                                                                 ------------          ------------
<S>                                                                                              <C>                     <C>       
Net sales                                                                                        $  8,193,870            11,595,216
                                                                                                 ------------          ------------
Costs and expenses:
     Cost of sales                                                                                  5,303,196             7,382,051
     Selling, general and administrative                                                            3,990,007             5,463,036
                                                                                                 ------------          ------------

                                                                                                    9,293,203            12,845,087
                                                                                                 ------------          ------------

               Loss from operations                                                                (1,099,333)           (1,249,871)
                                                                                                 ------------          ------------

Other (charges) credits:
     Interest expense                                                                                 (36,931)              (57,417)
     Interest income                                                                                   90,210               106,393
                                                                                                 ------------          ------------

                                                                                                       53,279                48,976
                                                                                                 ------------          ------------

               Loss before reorganization costs, provision and income
                  taxes and minority interest in net loss of
                  consolidated subsidiary                                                          (1,046,054)           (1,200,895)

Reorganization costs:
     Professional fees                                                                               (195,076)                 --
                                                                                                  ------------          -----------
               Loss before provision for income taxes and minority
                  interest in net loss of consolidated subsidiary
                                                                                                   (1,241,130)           (1,200,895)

Provision for income taxes                                                                               --                    --
                                                                                                 ------------          ------------
               Loss before minority interest in net loss of
                  consolidated subsidiary                                                          (1,241,130)           (1,200,895)

Minority interest in net loss of consolidated subsidiary                                             (141,953)             (155,550)
                                                                                                 ------------          ------------

               Net loss                                                                            (1,099,177)           (1,045,345)

Retained (deficit) earnings, beginning of period                                                     (173,591)            1,987,944
                                                                                                 ------------          ------------

Retained (deficit) earnings, end of period                                                       $ (1,272,768)              942,599
                                                                                                 ============          ============

               Net loss per common share                                                         $       (.09)                 (.09)
                                                                                                 ============          ============
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                     - 5 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows, Continued


           Six months ended September 28, 1996 and September 30, 1995
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                  September 28,        September 30,
                                                                                                      1996                 1995
                                                                                                  -----------           -----------
<S>                                                                                               <C>                    <C>        
Cash flows from operating activities:
     Net loss                                                                                     $(1,099,177)           (1,045,345)
                                                                                                  -----------           -----------
     Adjustments to reconcile net loss to net cash used in operating
        activities:
           Depreciation and amortization                                                              154,477               247,489
           Deferred rent                                                                               (8,673)               28,919
           Minority interest in net loss of subsidiary                                               (141,953)             (155,550)
           Changes in assets and liabilities affecting cash flows
               from operating activities:
                  (Increase) decrease in:
                    Inventories                                                                     1,530,515               625,601
                    Prepaid inventory                                                                (347,637)                 --
                    Prepaid expenses and other current assets                                          12,893                70,548
                    Other assets                                                                       14,666                55,179
                    Refundable income taxes                                                              (702)                 (631)
                  Increase (decrease) in:
                    Accounts payable                                                                  555,463              (878,926)
                    Accrued liabilities                                                               236,011              (320,737)
                    Long-term obligations                                                             (34,194)               73,848
                    Liabilities subject to compromise                                              (1,693,812)                 --
                                                                                                  -----------           -----------

                        Net cash used in operating activities                                        (822,123)           (1,299,605)
                                                                                                  -----------           -----------

Cash flows from investing activities:
     Purchase of property and equipment                                                               (31,546)             (133,242)
     Repayment of due from officers/shareholders                                                       19,124                13,948
     Proceeds from property and equipment                                                                --                 615,243
     Purchase of marketable investment securities                                                        --                 (62,962)
     Sales of marketable investment securities                                                      1,176,627                  --
                                                                                                  -----------           -----------

                        Net cash provided by investing activities                                   1,164,205               432,987
                                                                                                  -----------           -----------

Cash flows from financing activities:
     Repayment of long-term debt                                                                      (33,605)             (110,028)
     Acquisition of treasury stock                                                                       --                    (528)
                                                                                                  -----------           -----------
                        Net cash used in financing activities                                         (33,605)             (110,556)
                                                                                                  -----------           -----------

                        Net (decrease) increase in cash and cash equivalents                          308,477              (977,174)

Cash and cash equivalents, beginning of period                                                      3,258,061             2,014,147
                                                                                                  -----------           -----------

Cash and cash equivalents, ending of period                                                       $ 3,566,538             1,036,973
                                                                                                  ===========           ===========

Supplemental disclosures of cash flow information:
     Cash paid during the period for interest                                                     $    36,931                48,976
                                                                                                  ===========           ===========
</TABLE>



See accompanying notes to condensed consolidated financial statements.


                                     - 6 -


<PAGE>




                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements

                    September 28, 1996 and September 30, 1995
                                   (Unaudited)


(1)  Basis of Financial Statement Presentation

     The accompanying unaudited condensed consolidated financial statements have
     been  prepared  in  accordance  with the  instructions  to Form  10-Q  and,
     therefore,  do not include all  footnotes and  information  necessary for a
     fair presentation of financial  position,  results of operations,  and cash
     flows in conformity with generally accepted accounting principles. However,
     in the opinion of management,  all adjustments  (consisting  only of normal
     recurring accruals) necessary for a fair presentation have been made.

     It  is  suggested  that  the  accompanying  unaudited  condensed  financial
     statements  be  read  in  conjunction  with  the   consolidated   financial
     statements and notes  included in the Company's  annual report on Form 10-K
     for the year ended March 30, 1996.

     The results of operations for the six months ended  September 28, 1996, are
     not necessarily  indicative of the operating results to be expected for the
     year  ending  March  29,  1997.   The   Company's   business  is  seasonal.
     Historically, approximately 24 percent of the Company's sales have occurred
     in the second fiscal quarter.

     The  consolidated   financial   statements  include  the  accounts  of  URT
     Industries,   Inc.  (the  "Parent")  and  its  wholly  owned   nonoperating
     subsidiary,   and  its   majority-owned   operating   subsidiary,   Peaches
     Entertainment  Corporation ("Peaches") (87 percent of the outstanding stock
     of  which  was  owned  by  the  Parent,  as of  September  28,  1996).  All
     significant  intercompany  accounts have been eliminated.  Reference to the
     Company encompasses any or all of the aforementioned entities.

     Certain  reclassifications  have been made to the (unaudited) September 30,
     1995 quarterly financial information to conform to the presentation used in
     the (unaudited) September 28, 1996 financial information.

(2)  Reorganization and Emergence From Chapter 11

     On January 16, 1996 (the "Petition Date"), Peaches commenced reorganization
     proceedings  under  Chapter 11 of the United  States  Bankruptcy  Code.  On
     January 17, 1997,  Peaches'  plan of  reorganization  was  confirmed by the
     Bankruptcy Court for the Southern District of Florida ("Bankruptcy Court").
     In Chapter  11,  Peaches  continued  to manage its  affairs and operate its
     business   as   debtor-in-possession   while   it   developed   a  plan  of
     reorganization  to restructure  and allow its emergence from Chapter 11. As
     debtor-in-possession   in  Chapter   11,   Peaches   could  not  engage  in
     transactions  outside of the ordinary course of business without  approval,
     after notice and hearing, of the Bankruptcy Court.

     Under  Chapter 11  proceedings,  litigation  and  actions by  creditors  to
     collect  certain  claims in existence at the petition date  ("prepetition")
     are stayed,  absent specific  bankruptcy  court  authorization  to pay such
     claims. The Company believes that appropriate  provisions have been made in
     the accompanying financial statements for the prepetition claims that could
     be estimated at the date of these financial statements, which are reflected
     as "liabilities  subject to  compromise."  Additional  claims  (liabilities
     subject to  compromise)  may arise  subsequent to the filing date resulting
     from the rejection of executory  contracts,  including leases, and from the
     determination  of the court (or as  agreed  to by  parties-in-interest)  of
     allowed claims for contingencies and disputed amounts.


                                     - 7 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements


     As debtor-in-possession, Peaches has the right, subject to Bankruptcy Court
     approval  and  certain  other  limitations,  to assume  or  reject  certain
     executory  contracts,  including  unexpired  leases.  Any claim for damages
     resulting from the rejection of an executory contract or an unexpired lease
     is  treated as a general  unsecured  claim in the  Chapter 11  proceedings.
     Peaches  affirmed  13  leases  (5 of which  were  modified  on  terms  more
     favorable to Peaches) and rejected 8 leases.

     On August  5,  1996,  Peaches  filed  its plan of  reorganization  with the
     Bankruptcy  Court. An amended plan of  reorganization  was filed on October
     23, 1996. The amended plan of reorganization, as modified by the Bankruptcy
     Court's order of January 17, 1997, was confirmed by the Bankruptcy Court on
     such date (the "confirmation  date"), and became effective February 3, 1997
     (the "effective date"), subject to satisfaction of certain conditions which
     were  satisfied  by February  19, 1997.  Among the  principal  terms of the
     confirmed plan are the following:

     o    All  unsecured   creditors,   including  all  of  Peaches'   inventory
          suppliers,  but excluding  landlords under leases rejected by Peaches,
          are  entitled  to 100  percent of their  allowed  claims (the total of
          which is approximately $4,922,000). Peaches' seven principal suppliers
          (whose  allowed  claims  total  approximately  $4,372,000  out of such
          $4,922,000)  were  entitled  to and  received  payment  and  inventory
          returns equal to  approximately 70 percent of their allowed claims (80
          percent in the case of one such supplier) within approximately 60 days
          after the effective date, and the balance  (approximately  $1,284,000)
          is  payable  with  interest  at  prime  over  a  period  of 24  months
          commencing  March  1997.  The  remaining  unsecured  creditors  (whose
          allowed  claims total  approximately  $550,000)  were  entitled to and
          received  the full  amount of their  allowed  claims on the  effective
          date.  The amounts owed to the  principal  suppliers  are secured by a
          perfected first lien and security interest in the inventory originally
          distributed by the secured parties which was sold to the Company or is
          otherwise in possession and owned by the Company.

     o    Landlords  under the leases rejected by Peaches in connection with the
          bankruptcy  filing were  entitled to 30 percent of the allowed  claims
          with respect to such leases,  all of which was paid on  the  effective
          date.

     o    The  mortgage  holder will  receive 100 percent of the allowed  claim,
          with interest, in accordance with the amortization schedule previously
          in effect,  except that the  balloon  payment on such  mortgage  which
          would  otherwise  have  been due in  September  1997 was  extended  to
          September 2002. All mortgage payments under the amortization  schedule
          were paid timely during the Chapter 11 proceedings.

     o    The priority tax claim in the approximate amount of $118,000, which is
          owed to the  Florida  Department  of  Revenue,  will be  payable  with
          interest at 8 percent over 2 years from the effective date.

     o    The priority administrative claims, including professional fees in the
          approximate  amount of $200,000 which have been incurred in connection
          with the reorganization, were paid on the effective date.


                                     - 8 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements


     In order for Peaches to be able to effect the Plan of Reorganization on the
     terms described above, the Parent, in exchange for the issuance to it of 20
     million shares of Peaches authorized common stock has contributed  $350,000
     to the  capital of Peaches,  waived an  aggregate  of $75,000 of  dividends
     payable by Peaches to the Parent,  guaranteed,  subject to the terms of the
     Plan, the approximately  $1,284,000 which is due the principal suppliers in
     accordance  with the foregoing,  and loaned  $700,000 to Peaches.  The loan
     will be repaid to the Parent  with  interest at prime over a period of four
     years  beginning  on the  third  anniversary  of  the  effective  date,  is
     subordinate to the amounts owed to the principal suppliers,  and is secured
     by  inventory  and all of the assets of  Peaches.  As a result of the above
     transactions,  the Parent is the  beneficial  owner of  approximately  93.5
     percent of Peaches' issued and  outstanding  shares of common stock and all
     of its issued and outstanding shares of preferred stock.

     In March  1997,  the Parent and Peaches  agreed that if Peaches'  financial
     statements for its 1997 fiscal year show total shareholders' equity of less
     than $1,000,000,  the above-described  $700,000 loan would be reduced by an
     amount equal to the lesser of $200,000 or the difference between $1,000,000
     and the total  shareholders'  equity of  Peaches  as of the end of its 1997
     fiscal year, without taking such debt reduction into account, and cause the
     amount of such  aggregate  debt  reduction to be transferred to the capital
     account  of  Peaches in  exchange  for shares of a new class of  cumulative
     preferred  stock,  entitled Series C preferred stock, in an amount as shall
     be determined by dividing the amount of such  aggregate  debt  reduction by
     $100.  Any  Series C  preferred  stock  to be so  issued  pursuant  to such
     arrangement  will  have a par  value  of $100  and a  cumulative  preferred
     dividend of 10% per annum. The approval of the holders of a majority of the
     shares of Series C preferred  stock,  voting as a separate class,  would be
     required with respect to all matters on which the shareholders have a right
     to vote.

(3)  Net Loss Per Common Share

     Net loss per common share was computed by dividing net loss by the weighted
     average number of total common shares outstanding during the periods.


                                     - 9 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements


(4)  Income Taxes

     The Company follows Statement of Financial Accounting Standard ("SFAS") No.
     109  "Accounting  for Income Taxes." The Company files a  consolidated  tax
     return with its subsidiaries.  For the six-month period ended September 28,
     1996, there was no provision  (benefit) for income taxes as the Company has
     net operating loss carryforwards for federal income tax purposes.

(5)  Liabilities Subject to Compromise

     Liabilities subject to compromise include the following:

                                                    September 28,      March 30,
                                                        1996             1996
                                                     ----------       ----------
                                                     (unaudited)

     Lease rejection claims                          $  600,000          600,000
     Trade and other miscellaneous claims             3,377,622        5,071,434
                                                     ----------       ----------
                                                     $3,977,622        5,671,434
                                                     ==========       ==========

     Subsequent to the petition date, the Company negotiated agreements with all
     of its major suppliers,  with the approval of the Bankruptcy  Court,  which
     permitted  the  Company to make  returns of unneeded  inventory  for credit
     against prepetition  indebtedness.  On January 17, 1997, the Company's plan
     of  reorganization  was  confirmed  by the  Bankruptcy  Court.  The Company
     recorded an extraordinary  gain of approximately  $488,000,  primarily as a
     result of the  settlement  of lease  rejection  claims  (note 2) during the
     fourth quarter of fiscal 1997.


                                     - 10 -


<PAGE>

                      URT INDUSTRIES, INC. AND SUBSIDIARIES


Item 2. Management's   Discussions  and  Analysis of  Financial  Condition  and
        Results of  Operations  for the Six Months  Ended  September  28,  1996,
        Compared to the Six Months ended September 30, 1995.

From  time to  time,  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  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.  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

Net sales for the six months ended  September 28, 1996 (such six month period is
hereafter  referred  to as  "1996")  decreased  by  approximately  29.3  percent
compared to the six months  ended  September  30, 1995 (such six month period is
hereafter  referred to as "1995").  Such decrease is attributed to a decrease in
comparable  store sales (11.8 percent),  and a decrease in sales in those stores
that closed during 1996 versus 1995 (17.5 percent).

During the last few years,  nontraditional music retailers such as appliance and
computer retailers and super bookstores have begun to sell prerecorded music and
video products.  They have adopted  policies of selling music product at near or
below wholesale cost as a means of attracting  customers to sell other products.
Peaches continued to suffer the effect of such competition during 1996 and, as a
result,  filed  its  voluntary  petition  for  relief  under  Chapter  11 of the
Bankruptcy Code on January 16, 1996.

Recently,  Peaches primary suppliers have taken steps to help protect the retail
marketplace  from certain low cost  retailers of music.  These steps include 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,  should  help the  Company to
restore  itself to a  competitive  position in subsequent  fiscal  years.  Other
factors  which,  in  management's  opinion,  should  help the Company to restore
itself to a  competitive  position  in the  future  are the  closing  of the six
unprofitable  stores which were closed  during  1996,  the closing of the former
headquarters  and  warehouse,  the  termination of other  unprofitable  business
arrangements as described  herein and  concentration on advantages which Peaches
has over certain of its competitors, including large inventory, convenient store
locations and a high level of customer service.

The cost of sales for 1996 was lower  than  that for 1995 due  principally  to a
decrease in net sales.  Cost of sales as a percentage of net sales has increased
from 63.7  percent in 1995 to 64.7  percent in 1996 due to a reduction in retail
prices in an effort to meet the  increased  competition,  a change in terms with
Peaches principal  suppliers during the Chapter 11 proceeding and the effects of
buying a portion of the  Company's  inventory  during the Chapter 11  proceeding
from alternative sources with higher prices.



                                      -11-
<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES


Selling, general and administrative (SG&A) expenses in 1996 decreased 27 percent
compared to 1995.  Such  decrease is  attributable  to a decrease in  comparable
store expenses (1.2 percent),  a decrease in store operating  expenses of stores
that opened or closed  during 1996 versus 1995 (18.2  percent) and a decrease in
corporate  overhead  (7.6  percent).  SG&A expenses as a percentage of net sales
increased  from 47.1  percent  in 1995 to 48.7  percent in 1996 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 approximately $1,099,000 in 1996 versus a net
loss of  approximately  $1,045,000 in 1995 due to the reduction in net sales and
gross  profit  as  described  above,  in  addition  to  reorganization  costs of
approximately $195,000.

Liquidity and Capital Resources

The Company had working  capital of $6,301,952 at September 28, 1996  (excluding
liabilities  subject to  compromise  in 1996)  compared  to  working  capital of
$9,188,083  at March 30,  1996 and a current  ratio (the ratio of total  current
assets  to  total  current  liabilities)  of  3.9  to 1 at  September  28,  1996
(excluding  liabilities  subject to  compromise  in 1996)  compared to a current
ratio of 7.4 to 1 at March 30, 1996.  The amount of the  liabilities  subject to
compromise at September 28, 1996 is $3,977,622.

At  September  28,  1996,  the Company  had  long-term  obligations  of $753,131
(excluding   liabilities  subject  to  compromise  of  $3,977,622).   Management
anticipates  that  its  ability  to  repay  its  long-term  obligations  will be
satisfied primarily through funds generated from its operations.

Management  anticipates that cash generated from operations and cash equivalents
on hand will provide  sufficient  liquidity to maintain adequate working capital
for operations.  Management would attempt to obtain financing for the opening of
any new stores during the next few years.

Inflation trends have not had an impact upon revenue because  increases in costs
have been passed along to customers.

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

For  a  discussion  of  recent  developments  and  uncertainties  affecting  the
Company's  liquidity  and  capital  resources,  see  note  2  to  the  condensed
consolidated financial statements (Reorganization and Emergence for Chapter 11).



                                      -12-

<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES


                                OTHER INFORMATION


PART II

Item 1.   Legal Proceedings

          (i)  Bankruptcy filings

               On January 16, 1996 (the "Petition Date"),  Peaches Entertainment
               Corporation  ("Peaches")  commenced  reorganization   proceedings
               under Chapter 11 of the United States Bankruptcy Code. On January
               17, 1997,  Peaches' plan of  reorganization  was confirmed by the
               Bankruptcy   Court  for  the   Southern   District   of   Florida
               ("Bankruptcy  Court"). In Chapter 11, Peaches continued to manage
               its  affairs and  operate  its  business as  debtor-in-possession
               while it developed a plan of  reorganization  to restructure  and
               allow its emergence from Chapter 11. As  debtor-in-possession  in
               Chapter 11, Peaches could not engage in  transactions  outside of
               the ordinary course of business  without  approval,  after notice
               and hearing, of the Bankruptcy Court.

               Under Chapter 11 proceedings, litigation and actions by creditors
               to collect  certain  claims in  existence  at the  petition  date
               ("prepetition")  are stayed,  absent  specific  Bankruptcy  Court
               authorization  to pay such  claims.  The  Company  believes  that
               appropriate   provisions  have  been  made  in  the  accompanying
               financial  statements  for the  prepetition  claims that could be
               estimated at the date of these  financial  statements,  which are
               reflected  as  "liabilities  subject to  compromise."  Additional
               claims  (liabilities  subject to compromise) may arise subsequent
               to the filing date  resulting  from the  rejection  of  executory
               contracts,  including  leases,  and from the determination of the
               court (or as agreed to by  parties-in-interest) of allowed claims
               for contingencies and disputed amounts.

               As  debtor-in-possession,  Peaches  has  the  right,  subject  to
               Bankruptcy  Court  approval  and certain  other  limitations,  to
               assume or reject certain executory contracts, including unexpired
               leases.  Any claim for damages resulting from the rejection of an
               executory  contract or an unexpired lease is treated as a general
               unsecured claim in the Chapter 11 proceedings.  Peaches  affirmed
               13 leases (5 of which were  modified on terms more  favorable  to
               Peaches) and rejected 8 leases.

               On August 5, 1996, Peaches filed its plan of reorganization  with
               the Bankruptcy Court. An amended plan of reorganization was filed
               on October 23,  1996.  The  amended  plan of  reorganization,  as
               modified by the Bankruptcy Court's order of January 17, 1997, was
               confirmed by the Bankruptcy Court on such date (the "confirmation
               date")  and became  effective  February  3, 1997 (the  "effective
               date"),  subject to satisfaction of certain conditions which were
               satisfied by February 19, 1997.  Among the principal terms of the
               confirmed plan are the following:

               o    All unsecured creditors, including all of Peaches' inventory
                    suppliers,  but excluding landlords under leases rejected by
                    Peaches, are entitled to 100 percent of their allowed claims
                    (the total of which is approximately  


                                     - 13 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES


                    $4,922,000).   Peaches'  seven  principal  suppliers  (whose
                    allowed  claims total  approximately  $4,372,000 out of such
                    $4,922,000)  were  entitled  to  and  received  payment  and
                    inventory returns equal to approximately 70 percent of their
                    allowed claims (80 percent in the case of one such supplier)
                    within  approximately  60 days after the effective date, and
                    the  balance  (approximately  $1,284,000)  is  payable  with
                    interest  at prime  over a period  of 24  months  commencing
                    March 1997. The remaining unsecured creditors (whose allowed
                    claims total  approximately  $550,000)  were entitled to and
                    received  the full  amount  of their  allowed  claims on the
                    effective date. The amounts owed to the principal  suppliers
                    are secured by a perfected first lien and security  interest
                    in the  inventory  originally  distributed  by  the  secured
                    parties  which was sold to the  Company or is  otherwise  in
                    possession and owned by the Company.

               o    Landlords under the leases rejected by Peaches in connection
                    with the bankruptcy filing were entitled to 30 percent of
                    the allowed claims with respect to such leases, all of which
                    was paid on the effective date.

               o    The mortgage  holder will receive 100 percent of the allowed
                    claim,  with interest,  in accordance with the  amortization
                    schedule  previously  in  effect,  except  that the  balloon
                    payment on such mortgage which would otherwise have been due
                    in  September  1997 was  extended  to  September  2002.  All
                    mortgage payments under the amortization  schedule were paid
                    timely during Chapter 11 proceedings.

               o    The  priority  tax  claim  in  the  approximate   amount  of
                    $118,000,  which  is  owed  to  the  Florida  Department  of
                    Revenue, will be payable with interest at 8 percent over two
                    years from the effective date.

               o    The priority  administrative claims,  including professional
                    fees in the  approximate  amount of $200,000 which have been
                    incurred in connection with the reorganization, were paid on
                    the effective date.

               In  order  for   Peaches  to  be  able  to  effect  the  Plan  of
               Reorganization  on the terms  described  above,  the  Parent,  in
               exchange for the  issuance to it of 20 million  shares of Peaches
               authorized  common stock has contributed  $350,000 to the capital
               of Peaches,  waived an aggregate of $75,000 of dividends  payable
               by Peaches to the Parent, guaranteed, subject to the terms of the
               Plan,  the  approximately  $1,284,000  which is due the principal
               suppliers in accordance  with the foregoing,  and loaned $700,000
               to Peaches.  The loan will be repaid to the Parent with  interest
               at prime  over a period  of four  years  beginning  on the  third
               anniversary of the effective  date, is subordinate to the amounts
               owed to the principal suppliers,  and is secured by inventory and
               all  of  the  assets  of  Peaches.  As  a  result  of  the  above
               transactions, the Parent is the beneficial owner of approximately
               93.5 percent of Peaches issued and  outstanding  shares of common
               stock and all of its issued and  outstanding  shares of preferred
               stock.

               In March  1997,  the Parent and  Peaches  agreed that if Peaches'
               financial   statements  for  its  1997  fiscal  year  show  total
               shareholders' equity of less than $1,000,000, the above-described
               $700,000  loan would be reduced by an amount  equal to the lesser
               of $200,000 or the  difference  between  $1,000,000 and the total
               shareholders'  equity of Peaches as of the end of its 1997 fiscal
               year, without taking such debt reduction into account,  and cause
               the amount of such  aggregate debt reduction to be transferred to
               the capital  account of Peaches in  exchange  for shares of a new
               class of cumulative preferred stock,  entitled Series C preferred
               stock, in an amount as shall be determined by dividing the amount
               of such  aggregate debt reduction by $100. Any Series C preferred
               stock to be so


                                     - 14 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES


               issued purusant to such arrangement will have a par value of $100
               and a cumulative  preferred dividend of 10 percent per annum. The
               approval  of the  holders of a majority of the shares of Series C
               preferred  stock,  voting as a separate class,  would be required
               with  respect  to all  matters on which the  shareholders  have a
               right to vote.

Item 3.   Defaults Upon Mortgage Payable

          As a result of the bankruptcy filing, the Company was in default under
          the indentures  governing the mortgage payable. As discussed in note 2
          of the notes to the  condensed  financial  statements on Form 10-Q for
          the  six-month  period  ended  September  28, 1996,  under  Chapter 11
          proceedings,  litigation  and actions by creditors to collect  certain
          claims in existence at the petition date are stayed,  absent  specific
          Bankruptcy  Court  authorizations  to pay such claims.  On January 17,
          1997, the plan of reorganization was confirmed by the Bankruptcy court
          and became  effective  February 3, 1997,  subject to  satisfaction  of
          certain  conditions  which were  satisfied by February  19, 1997.  The
          confirmed  plan of  reorganization  provided for the  repayment of the
          mortgage payable under the original note  provisions,  except that the
          balloon  payment was extended to September  2002. 

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

               27.0 Financial Data Schedule

          (b)  Reports on Form 8-K

          Reports on Form 8-K dated July 12, 1996 and August 23, 1996 were filed
          by the  Company on or about such dates to report  that the Company did
          not file its Form 10-K for the year ended  March 30, 1996 and its Form
          10-Q for the  quarter  ended June 29,  1996 by the dates by which they
          were  scheduled to be filed due to the  Company's  petition for relief
          under Chapter 11 of the U.S.  Bankruptcy Code and delays in finalizing
          the plan of reorganization.


                                     - 15 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES


                                   SIGNATURES


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


                                    URT INDUSTRIES, INC.
                                    Registrant


Date:  5/29/97                      /s/ Allan Wolk
                                    --------------------------------------------
                                    Allan Wolk, Chairman of the Board, President
                                    (Principal Executive Officer)


Date:  5/29/97                      /s/ Jason Wolk
                                    --------------------------------------------
                                    Jason Wolk, Executive Vice President,
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                     - 16 -