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 December 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 _X_ NO ___




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



At December 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


PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements

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

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

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

     Condensed Consolidated Statements of Cash Flows-Nine Months 
          Ended December 28, 1996 and December 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


                                     - 2 -


<PAGE>



                         PART I - FINANCIAL INFORMATION

                    Item 1. Consolidated Financial Statements

                      URT INDUSTRIES, INC. AND SUBSIDIARIES

                      Condensed Consolidated Balance Sheets

                      December 28, 1996 and March 30, 1996


<TABLE>
<CAPTION>

                                                                              December 28,               March 30,
                                     Assets                                      1996                      1996
                                     ------                                      ----                      ----
                                                                              (unaudited)
<S>                                                                          <C>                         <C>      
Current assets:
  Cash and cash equivalents                                                  $  5,215,121                3,258,061
  Marketable investment securities                                                   --                  1,761,336
  Inventories                                                                   3,228,724                4,954,260
  Prepaid inventory                                                               131,549                  254,249
  Current portion due from officers/shareholders                                   30,832                   30,832
  Prepaid expenses and other current assets                                       366,925                  350,197
  Refundable income taxes                                                           9,838                    9,136
                                                                             ------------             ------------
             Total current assets                                               8,982,989               10,618,071

Property and equipment, net                                                     1,676,796                1,868,246
Due from officers/shareholders                                                     83,815                  110,722
Other assets                                                                      175,730                  191,879
                                                                             ------------             ------------

                                                                             $ 10,919,330               12,788,918
                                                                             ============             ============
             Liabilities and Shareholders' Equity

Current liabilities:
  Current portion of long-term obligations                                        114,658                  124,774
  Accounts payable                                                                909,473                  103,038
  Accrued liabilities                                                           1,623,040                1,202,176
                                                                             ------------             ------------
             Total current liabilities                                          2,647,171                1,429,988

Long-term obligations                                                             720,274                  810,367
Deferred rent                                                                     185,165                  200,723
Minority interest in a subsidiary                                                  25,165                  173,005
                                                                             ------------             ------------
             Total liabilities not subject to compromise                        3,577,775                2,614,083

Liabilities subject to compromise                                               3,991,976                5,671,434
                                                                             ------------             ------------
             Total liabilities                                                  7,569,751                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                                                             (1,327,413)                (173,591)
                                                                             ------------             ------------
                                                                                4,367,914                5,521,736
  Treasury stock, 3,159,245 common shares at cost                              (1,018,335)              (1,018,335)
                                                                             ------------             ------------
             Total shareholders' equity                                         3,349,579                4,503,401

Commitments and contingencies
                                                                             ------------             ------------
                                                                             $ 10,919,330               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 December 28, 1996 and December 30, 1995
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                             December 28,             December 30,
                                                                                 1996                      1995
                                                                                 ----                      ----

<S>                                                                          <C>                        <C>      
Net sales                                                                    $ 5,360,117                7,316,776
                                                                             -----------              -----------

Costs and expenses:
   Cost of sales                                                               3,368,983                4,812,032
   Selling, general and administrative                                         2,071,976                2,452,532
   Store closing costs                                                              --                    191,693
                                                                             -----------              -----------

                                                                               5,440,959                7,456,257
                                                                             -----------              -----------

      Loss from operations                                                       (80,842)                (139,481)
                                                                             -----------              -----------

Other (charges) credits:
  Interest expense                                                               (17,908)                 (27,458)
  Interest income                                                                145,940                   45,092
                                                                             -----------              -----------

                                                                                 128,032                   17,634
                                                                             -----------              -----------

       Loss before reorganization costs and minority
         interest in net loss of consolidated subsidiary                          47,190                 (121,847)

Reorganization costs:
   Professional fees                                                            (107,722)                    --
                                                                             -----------              -----------

      Loss before minority interest in net loss of
        consolidated subsidiary                                                  (60,532)                (121,847)

Minority interest in net loss of consolidated subsidiary                          (5,887)                 (18,707)
                                                                             -----------              -----------

               Net loss                                                          (54,645)                (103,140)

Retained (deficit) earnings, beginning of period                              (1,272,768)                 942,599
                                                                             -----------              -----------

Retained (deficit) earnings, end of period                                   $(1,327,413)                 839,459
                                                                             ===========              ===========

Net loss per common share                                                    $      (.01)                    (.01)
                                                                             ===========              ===========

</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)

            Nine months ended December 28, 1996 and December 30, 1995
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                               December 28,             December 30,
                                                                                                   1996                     1995
                                                                                                   ----                     ----
<S>                                                                                            <C>                       <C>       
Net sales                                                                                      $ 13,553,987              18,911,992
                                                                                               ------------            ------------

Costs and expenses:
     Cost of sales                                                                                8,672,179              12,194,083
     Selling, general and administrative                                                          6,061,983               7,915,568
     Store closing costs                                                                               --                   191,693
                                                                                               ------------            ------------

                                                                                                 14,734,162              20,301,344
                                                                                               ------------            ------------

               Loss from operations                                                              (1,180,175)             (1,389,352)
                                                                                               ------------            ------------

Other (charges) credits:
     Interest expense                                                                               (54,839)                (84,875)
     Interest income                                                                                236,150                 151,485
                                                                                               ------------            ------------

                                                                                                    181,311                  66,610
                                                                                               ------------            ------------

               Loss before  reorganization  costs and minority
                 interest in net loss of consolidated subsidiary                                   (998,864)             (1,322,742)

Reorganization costs:
     Professional fees                                                                             (302,798)                   --
                                                                                               ------------            ------------
               Loss before minority interest in net loss of
                  consolidated subsidiary                                                        (1,301,662)             (1,322,742)

Minority interest in net loss of consolidated subsidiary                                           (147,840)               (174,257)
                                                                                               ------------            ------------

               Net loss                                                                          (1,153,822)             (1,148,485)

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

Retained (deficit) earnings, end of period                                                     $ (1,327,413)                839,459
                                                                                               ============            ============

               Net loss per common share                                                       $       (.09)                   (.09)
                                                                                               ============            ============

</TABLE>


See accompanying notes to condensed consolidated financial statements.



                                     - 5 -


<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows

            Nine months ended December 28, 1996 and December 30, 1995
                                   (Unaudited)


<TABLE>
<CAPTION>


                                                                                          December 28,        December 30,
                                                                                              1996                1995
                                                                                              ----                ----
<S>                                                                                      <C>                   <C>        
Cash flows from operating activities:
     Net loss                                                                            $(1,153,822)          (1,148,485)
                                                                                         -----------          -----------
     Adjustments  to reconcile net loss to net cash provided by operating
        activities:
           Depreciation and amortization                                                     222,997              358,171
           Deferred rent                                                                     (15,558)             (10,619)
           Minority interest in net loss of subsidiary                                      (147,840)            (174,257)
           Loss on write-off of leasehold improvements                                          --                190,601
           Changes in assets and liabilities affecting cash flows from
               operating activities:
                  (Increase) decrease in:
                    Inventories                                                               46,078              234,212
                    Prepaid inventory                                                        122,700                 --
                    Prepaid expenses and other current assets                                (16,728)              12,685
                    Other assets                                                              16,149               62,284
                    Refundable income taxes                                                     (702)               9,035
                  Increase (decrease) in:
                    Accounts payable                                                         806,435              729,595
                    Accrued liabilities                                                      420,864                5,031
                    Long-term obligations                                                    (51,291)              51,252
                                                                                         -----------          -----------

                        Net cash provided by operating activities                            249,282              319,505
                                                                                         -----------          -----------

Cash flows from investing activities:
     Purchase of property and equipment                                                      (31,546)            (143,589)
     Repayment of due from officers/shareholders                                              26,907               21,132
     Proceeds from disposition of property and equipment                                        --                615,243
     Purchase of marketable investment securities                                               --                (10,525)
     Sales of marketable investment securities                                             1,761,336                 --
                                                                                         -----------          -----------

                        Net cash provided by investing activities                          1,756,697              482,261
                                                                                         -----------          -----------

Cash flows from financing activities:
     Repayment of long-term obligations                                                      (48,919)            (110,028)
     Acquisition of treasury stock                                                              --                (37,905)
                                                                                          -----------          -----------

                        Net cash used in financing activities                                (48,919)            (147,933)
                                                                                         -----------          -----------

                        Net increase in cash and cash equivalents                          1,957,060              653,833

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

Cash and cash equivalents, ending of period                                              $ 5,215,121            2,667,980
                                                                                         ===========          ===========

Supplemental disclosures of cash flow information:
     Cash paid during the period for interest                                            $    54,839               84,875
                                                                                         ===========          ===========

</TABLE>



See accompanying notes to condensed consolidated financial statements.



                                     - 6 -


<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements

                     December 28, 1996 and December 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  consolidated
     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 nine months ended December 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 30 percent of the Company's sales have occurred
     in the third 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 December 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)  December 30,
     1995 quarterly financial information to conform to the presentation used in
     the (unaudited) December 28, 1996 financial information.

(2)  Reorganization and Emergence From Chapter 11

     On  January  16,  1996  (the  "Petition   Date"),   Peaches   Entertainment
     Corporation  commenced  reorganization  proceedings under Chapter 11 of the
     United  States   Bankruptcy   Code.  On  January  17,  1997,  the  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.  Such claims 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 agreed to by  parties-in-interest)
     of allowed claims for contingencies and disputed amounts.


                                      - 7 -                          (Continued)


<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  was confirmed on January 17,
     1997, (the "confirmation date"), and became effective February 3, 1997 (the
     "effective date"),  subject to all conditions  precedent being satisfied in
     which all conditions  precedent were satisfied on February 19, 1997.  Among
     the  principle  terms of the  confirmed  plan,  subject to certain  changes
     contained in the order of approval, 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)  are entitled to 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 principal suppliers
          will be secured by a perfected first lien and security interest in the
          inventory  originally  distributed by the secured party which was sold
          to the  Company or is  otherwise  in the  possession  and owned by the
          Company.

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


                                      - 8 -                          (Continued)



<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 the assets of Peaches.

     In March  1997,  the Parent and  Peaches  agreed  that 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. The Series C preferred  stock to
     be so  issued  shall  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,  shall be
     required with respect to all matters on which the shareholders have a right
     to vote. On June 9, 1997, the above agreement was rescinded.

(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 nine-month period ended December 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:

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

Lease rejection claims                               $  600,000          600,000
Trade and other miscellaneous claims                  3,391,976        5,071,434
                                                     ----------       ----------
                                                     $3,991,976        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  $486,000  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 Nine Months Ended December 28, 1996,  Compared to the
     Nine Months ended December 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 nine months ended December 28, 1996 (such nine month period is
hereafter  referred  to as  "1996")  decreased  by  approximately  28.3  percent
compared to the nine months  ended  December 30, 1995 (such nine month period is
hereafter  referred to as "1995").  Such decrease is attributed to a decrease in
comparable  store sales  (15.9  percent),  and a decrease  in those  stores that
closed during 1996 versus 1995 (12.4 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  larger  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 decreased
from 64.7  percent  in 1995 to 64.0  percent in 1996 due to  increased  purchase
discounts in 1996.





                                     - 11 -
<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES


Selling,  general and  administrative  (SG&A)  expenses in 1996  decreased  23.4
percent  compared  to 1995.  Such  decrease  is  attributable  to a decrease  in
comparable store expenses (.1 percent),  a decrease in store operating  expenses
of stores that opened or closed  during  1996 versus 1995 (17.2  percent)  and a
decrease in corporate  overhead (6.2 percent).  SG&A expenses as a percentage of
net sales increased from 41.9 percent in 1995 to 44.7 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 $1,153,000 in 1996 versus a net
loss of  approximately  $1,148,000 in 1995 due to the reduction in net sales and
gross  profit  as  described  above,  in  addition  to  reorganization  costs of
approximately $303,000.

The decrease in inventory is mainly due to the decrease in the number of stores,
as well as, inventory  returns as a result of the Chapter 11 filing,  which also
caused the  decrease  in  liabilities  subject to  compromise.  The  increase in
accounts payable and accrued  liabilities is due to the reduction of prepayments
due to the Chapter 11 filing.

Liquidity and Capital Resources

The Company had working  capital of $6,335,818  at December 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 3.4 to 1 at December 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
December 28, 1996 is $3,991,976.

At  December  28,  1996,  the  Company  had  long-term  obligations  of $720,274
(excluding   liabilities  subject  to  compromise  of  $3,991,976).   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).



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                      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 commenced  reorganization  proceedings under Chapter 11 of
          the United States  Bankruptcy  Code. On January 17, 1997,  the 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.  Such  claims 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   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  was confirmed on
          January 17, 1997,  (the  "confirmation  date"),  and became  effective
          February 3, 1997 (the  "effective  date"),  subject to all  conditions
          precedent  being  satisfied  in which all  conditions  precedent  were
          satisfied  on February  19,  1997.  Among the  principle  terms of the
          confirmed plan,  subject to certain changes  contained in the order of
          approval, 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)  are entitled to payment and
               inventory  returns  equal to 



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                      URT INDUSTRIES, INC. AND SUBSIDIARIES


               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  principal  suppliers  will be secured by a  perfected
               first lien and  security  interest  in the  inventory  originally
               distributed by the secured party which was sold to the Company or
               is otherwise in the possession and owned by the Company.

          o    Landlords under the leases rejected by Peaches in connection with
               the  bankruptcy  filing  will be  entitled  to 30  percent of the
               allowed claims with respect to such leases,  all of which will be
               payable 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 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,  are payable 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 the
          assets of Peaches.

          In March 1997, the Parent and Peaches agreed that 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. The Series C preferred  stock to be so issued shall
          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,  shall be
          required with respect to all matters on which the shareholders  have a
          right to vote. On June 9, 1997, the above agreement was rescinded.




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                      URT INDUSTRIES, INC. AND SUBSIDIARIES


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 nine-month
     period ended December 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

          None



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                      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: June 27, 1997                /s/ Allan Wolk
                                   --------------------------------------------
                                   Allan Wolk, Chairman of the Board, President
                                   (Principal Executive Officer)


Date: June 27, 1997                /s/ Jason Wolk
                                   --------------------------------------------
                                   Jason Wolk, Executive Vice President,
                                   Chief Financial Officer
                                   (Principal Financial and Accounting
                                   Officer)