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 June 29, 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                   (I.R.S. Employer I.D. No.)
     Incorporation or 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 (or for such shorter  period that the  registrants  were
required  to file  such  reports),  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 June 29, 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 -
                 June 29, 1996 (Unaudited) and March 30, 1996                  3

               Condensed Consolidated Statements of Operations
                 and Retained Earnings (Deficit) - Three Months Ended
                 June 29, 1996 and July 1, 1995 (Unaudited)                    4

               Condensed Consolidated Statements of Cash Flows -
                 Three Months Ended June 29, 1996 and
                 July 1, 1995 (Unaudited)                                      5

               Notes to Condensed 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.  Default 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
                        June 29, 1996 and March 30, 1996



                     Assets                          June 29,        March 30,
                                                       1996            1996
                                                   ------------    ------------
                                                    (unaudited)
Current assets:
  Cash and cash equivalents                        $  2,079,415       3,258,061
  Marketable investment securities                    2,346,045       1,761,336
  Inventories                                         3,830,275       4,954,260
  Prepaid inventory                                     396,981         254,249
  Current portion due from officers/shareholders         30,832          30,832
  Prepaid expenses and other current assets             276,273         350,197
  Refundable income taxes                                 9,136           9,136
                                                   ------------    ------------
    Total current assets                              8,968,957      10,618,071

Property and equipment, net                           1,821,020       1,868,246
Due from officers/shareholders                           99,228         110,722
Other assets                                            185,167         191,879
                                                   ------------    ------------
                                                   $ 11,074,372      12,788,918
                                                   ============    ============
       Liabilities and Shareholders' Equity

Current liabilities:
  Current portion of long-term obligations              113,785         124,774
  Accounts payable                                      428,651         103,038
  Accrued liabilities                                 1,210,585       1,202,176
                                                   ------------    ------------
    Total current liabilities                         1,753,021       1,429,988

Long-term obligations                                   781,849         810,367
Deferred rent                                           199,860         200,723
Minority interest in a subsidiary                       104,087         173,005
                                                   ------------    ------------
    Total liabilities not subject to compromise       2,838,817       2,614,083

Liabilities subject to compromise                     4,280,167       5,671,434
                                                   ------------    ------------
    Total liabilities                                 7,118,984       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                                     (721,604)       (173,591)
                                                   ------------    ------------
                                                      4,973,723       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                        3,955,388       4,503,401

Commitments and contingencies
                                                   ------------    ------------
                                                   $ 11,074,372      12,788,918
                                                   ============    ============

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 June 29, 1996 and July 1, 1995
                                   (Unaudited)



                                                       June 29,       July 1,
                                                         1996           1995
                                                     -----------    -----------
Net sales                                            $ 4,305,821      6,268,280
                                                     -----------    -----------

Costs and expenses:
  Cost of sales                                        2,824,152      3,997,811
  Selling, general and administrative expenses         2,035,608      2,782,160
                                                     -----------    -----------
                                                       4,859,760      6,779,971
      Loss from operations                              (553,939)      (511,691)
                                                     -----------    -----------
Other (expense) income:
  Interest expense                                       (18,613)       (20,732)
  Interest income                                         53,159         50,468
                                                     -----------    -----------
                                                          34,546         29,736
                                                     -----------    -----------
      Loss before reorganization costs,
        provision for income taxes and
        minority interest in net loss
        of consolidated subsidiary                      (519,393)      (481,955)

Reorganization costs:
  Professional fees                                      (97,538)          --
                                                     -----------    -----------

      Loss before provision for income
        taxes and minority interest in
        net loss of consolidated subsidiary             (616,931)      (481,955)

Provision for income taxes                                  --             --
                                                     -----------    -----------

      Loss before minority interest in net
        loss of consolidated subsidiary                 (616,931)      (481,955)

Minority interest in net loss of
  consolidated subsidiary                                (68,918)       (61,771)
                                                     -----------    -----------
      Net loss                                          (548,013)      (420,184)

Retained earnings (deficit),
  beginning of period                                   (173,591)     1,987,944
                                                     -----------    -----------
Retained earnings (deficit),
  end of period                                      $  (721,604)     1,567,760
                                                     ===========    ===========

      Net loss per common share                      $      (.04)          (.03)
                                                     ===========    ===========

See accompanying notes to condensed consolidated financial statements.



                                      -4-
<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows

                Three months ended June 29, 1996 and July 1, 1995
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                       June 29,            July 1,
                                                                                                         1996               1995
                                                                                                     -----------        -----------
<S>                                                                                                  <C>                   <C>      
Cash flows from operating activities:
     Net loss                                                                                        $  (548,013)          (420,184)
                                                                                                     -----------        -----------
     Adjustments to reconcile net loss to net cash used in provided by operating
        activities:
           Depreciation and amortization                                                                  75,663            136,825
           Deferred rent                                                                                    (863)            15,215
           Minority interest in net loss of consolidated
               subsidiary                                                                                (68,918)           (61,771)
           Change in assets and liabilities affecting cash flows
               from operating activities:
                  (Increase) decrease in:
                    Inventories                                                                        1,123,985            221,573
                    Prepaid inventory                                                                   (142,732)              --
                    Prepaid expenses and other current assets                                             73,924            (19,146)
                    Other assets                                                                           6,712             41,849
                  Increase (decrease) in:
                    Accounts payable                                                                     325,613           (400,388)
                    Accrued liabilities                                                                    8,409           (350,894)
                    Long-term obligations                                                                (17,097)              --
                    Liabilities subject to compromise                                                 (1,391,267)              --
                                                                                                     -----------        -----------
                        Net cash used in operating activities                                           (554,584)          (836,921)
                                                                                                     -----------        -----------
Cash flows from investing activities:
     Purchase of marketable investment securities                                                       (584,709)            (4,876)
     Purchases of property and equipment                                                                 (28,437)           (64,885)
     Due from officers/shareholders                                                                       11,494              6,905
     Proceeds from sale of land                                                                             --              300,000
                                                                                                     -----------        -----------
                        Net cash (used in) provided by investing
                            activities                                                                  (601,652)           237,144
                                                                                                     -----------        -----------
</TABLE>



                                      -5-
<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES

           Condensed Consolidated Statements of Cash Flows (Continued)



<TABLE>
<CAPTION>
                                                                                                       June 29,            July 1,
                                                                                                         1996               1995
                                                                                                     -----------        -----------
<S>                                                                                                  <C>                   <C>      
                                                                                                              (Unaudited)
Cash flows from financing activities:
     Repayment of long-term obligations                                                                  (22,410)           (21,776)
     Acquisition of treasury stock                                                                          --                 (528)
                                                                                                     -----------        -----------
                        Net cash used in financing activities                                            (22,410)           (22,304)
                                                                                                     -----------        -----------

                        Net decrease in cash and cash equivalents                                     (1,178,646)          (622,081)

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

Cash and cash equivalents, end of year                                                               $ 2,079,415          1,392,066
                                                                                                     ===========        ===========

Supplemental disclosures of cash flow information:
        Cash paid during the period for interest                                                     $    18,613             20,732
                                                                                                     ===========        ===========
</TABLE>



See accompanying notes to condensed consolidated financial statements.


                                      -6-
<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements

                         June 29, 1996 and July 1, 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 three months ended June 29, 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  23 percent of the Company's sales have occurred in the first
     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 June 29,  1996).  All  significant
     intercompany  accounts  have  been  eliminated.  Reference  to the  Company
     encompasses all or any of the aforementioned entities.

     Certain  reclassifications  have been made to the (unaudited)  July 1, 1995
     quarterly consolidated financial information to conform to the presentation
     used in the (unaudited) June 29, 1996 consolidated 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 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.



                                      -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.




                                      -9-
<PAGE>



                      URT INDUSTRIES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements


(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.

(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  three-month  period ended June 29,
     1996, there was no (benefit)  provision for income taxes as the Company had
     net operating loss carryforwards for federal income tax purposes.

(5)  Liabilities Subject to Compromise

     Liabilities subject to compromise include the following:

                                                      June 29,         March 30,
                                                        1996             1996
                                                     ----------       ----------
                                                     (unaudited)
         Lease rejection claims                      $  600,000          600,000
         Trade and other miscellaneous claims         3,680,167        5,071,434
                                                     ----------       ----------
                                                     $4,280,167        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  Three  Months  Ended  June 29,  1996,
         Compared to the Three Months ended July 1, 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 three  months  ended June 29, 1996 (such three month period is
hereafter  referred  to as  "1996")  decreased  by  approximately  31.3  percent
compared to the three  months  ended July 1, 1995 (such  three  month  period is
hereafter  referred to as "1995").  Such decrease is attributed to a decrease in
comparable  store sales (12.1 percent),  and a decrease in sales in those stores
that closed during 1996 versus 1995 (19.2 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 63.8  percent in 1995 to 65.6  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 alternate sources with higher prices.


                                     - 11 -


<PAGE>


                      URT INDUSTRIES, INC. AND SUBSIDIARIES


Selling,  general and  administrative  (SG&A) expenses in 1996 decreased by 26.8
percent  compared  to 1995.  Such  decrease  is  attributable  to an increase in
comparable store expenses (.2 percent),  a decrease in store operating  expenses
of stores that opened or closed  during  1996 versus 1995 (21.1  percent)  and a
decrease in corporate  overhead (.6  percent).  SG&A expenses as a percentage of
net sales  increased from 47.3 percent in 1995 to 4.7 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  $548,000 in 1996 versus a net
loss of  approximately  $420,000 in 1995 due  principally to the costs allocated
with the  reorganization  proceeding  and the  reduction  in net sales and gross
profit as described above, in addition to reorganization  costs of approximately
$97,000.

Liquidity and Capital Resources

The Company  had  working  capital of  $7,257,936  at June 29,  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 5.1 to 1 at June 29, 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 June
29, 1996 is $4,280,167.

At June 29, 1996, the Company had long-term  obligations of $781,849  (excluding
liabilities  subject to compromise of $4,280,167).  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 from 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  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



                                      -13-
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                      URT INDUSTRIES, INC. AND SUBSIDIARIES


               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  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 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.

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  three-month   period  ended  June  29,  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: 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)