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 30, 1995                  Commission File No. 0-12375

                        PEACHES ENTERTAINMENT CORPORATION
-------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

   Florida                                                  59-2166041
--------------------------------                      --------------------------
(STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION)

3451 Executive Way, Miramar, Florida                            33025
------------------------------------                  --------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)

Registrant's telephone number, including area code:         (305) 432-4200
                                                      --------------------------

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 30, 1995, there were outstanding:

         19,781,270 shares of common stock

<PAGE>

                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

                        PEACHES ENTERTAINMENT CORPORATION

                                 BALANCE SHEETS

                       December 30, 1995 and April 1, 1995

<TABLE>
<CAPTION>
                                                                                       December 30,         April 1,
                                                                                           1995               1995
                                                                                       ------------         --------
                                 ASSETS                                                 (Unaudited)
<S>                                                                                 <C>                      <C>
Current assets:

     Cash and cash equivalents                                                      $       2,128,775        1,537,293
     Inventories                                                                            5,344,525        5,578,737
     Prepaid expenses and other current assets                                                305,140          289,413
     Land held for sale                                                                          -             300,000
     Refundable income taxes                                                                  248,194          257,229
                                                                                         ------------     ------------
                   Total current assets                                                     8,026,634        7,962,672

Property and equipment, net                                                                 2,232,963        3,072,869
Other assets                                                                                  148,746          189,348
                                                                                         ------------     ------------

                                                                                    $      10,408,343       11,224,889
                                                                                           ==========       ==========

                     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

     Current portion of long-term obligations                                                  62,726          110,028
     Accounts payable                                                                       4,860,125        4,130,530
     Accrued liabilities                                                                    1,572,627        1,663,930
                                                                                          -----------      -----------
                   Total current liabilities                                                6,495,478        5,904,488

Long-term obligations                                                                         918,180          929,654
Accrued rent                                                                                  489,850          500,470
                                                                                        -------------    -------------

                                                                                            7,903,508        7,334,612

Shareholders' equity:
     Preferred stock (liquidating value is par value plus all accrued and unpaid
        dividends):
           Series A, 11% cumulative, $100 par value.  Authorized, 25,000
               shares; issued and outstanding, 2,500 shares                                   250,000          250,000
           Series B, 13% cumulative, $100 par value.  Authorized, 25,000
               shares; issued and outstanding, 2,500 shares                                   250,000          250,000
     Common stock, $.01 par value.  Authorized 40,000,000 shares; issued
        20,107,850 shares; outstanding 19,781,270 shares at December 30, 1995
        and April 1, 1995                                                                     201,079          201,079
     Capital in excess of par                                                               1,284,471        1,284,471
     Retained earnings                                                                        579,180        1,964,622
                                                                                        -------------      -----------
                                                                                            2,564,730        3,950,172
     Less stock held in treasury, at cost (note 6)                                            (59,895)         (59,895)
                                                                                       --------------    -------------

Commitments and contingencies (note 5)                                                      2,504,835        3,890,277
                                                                                         ------------      -----------

                                                                                    $      10,408,343       11,224,889
                                                                                           ==========       ==========

</TABLE>

See accompanying notes to financial statements.

                                                        - 1 -


<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

            Nine months ended December 30, 1995 and December 31, 1994
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                          1995              1994
                                                                                          ----              ----
<S>                                                                               <C>                      <C>

Net sales                                                                         $      18,911,992        25,360,395
                                                                                         ----------        ----------

Costs and expenses:
     Cost of sales                                                                       12,194,083        16,126,310
     Selling, general and administrative                                                  7,230,527         8,717,680
     Management fee                                                                         562,500           799,386
     Loss on litigation                                                                        -              431,456
     Store closing costs                                                                    191,693            43,707
                                                                                      -------------    --------------

                                                                                         20,178,803        26,118,539
                                                                                      -------------    --------------
                   Loss from operations                                                  (1,266,811)         (758,144)
                                                                                        -----------      ------------

Other (charges) credits:
     Interest expense                                                                       (84,875)          (61,228)
     Interest income                                                                         11,244            35,460
                                                                                      -------------     -------------

                                                                                            (73,631)          (25,768)
                                                                                      -------------     -------------

                   Loss before benefit for income taxes                                  (1,340,442)         (783,912)

Benefit for income taxes (note 4)                                                              -             (190,000)
                                                                                          ---------      ------------

Net loss                                                                                 (1,340,442)         (593,912)
Retained earnings, beginning of period                                                    1,964,622         4,020,030
Preferred stock dividend                                                                    (45,000)          (45,000)
                                                                                      -------------     -------------

Retained earnings, end of period                                                  $         579,180         3,381,118
                                                                                       ============       ===========

Net loss per common share (note 3)                                                      $  (.07)           (.03)
                                                                                            ===             ===

</TABLE>

See accompanying notes to financial statements.

                                                        - 2 -
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

           Three months ended December 30, 1995 and December 31, 1994
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                          1995              1994
                                                                                          ----              ----
<S>                                                                               <C>                      <C>
Net sales                                                                         $       7,316,776        10,350,602
                                                                                          ---------        ----------

Costs and expenses:
     Cost of sales                                                                        4,812,032         6,780,453
     Selling, general and administrative                                                  2,241,997         2,917,976
     Management fee                                                                         187,500           275,000
     Loss on litigation                                                                        -              431,456
     Store closing costs                                                                    191,693            43,707
                                                                                        -----------    --------------
                                                                                          7,433,222        10,448,592
                                                                                        -----------    --------------
                   Loss from operations                                                    (116,446)          (97,990)
                                                                                        -----------     -------------

Other (charges) credits:
     Interest expense                                                                       (27,458)          (20,088)
     Interest income                                                                          1,847            11,365
                                                                                     --------------      ------------

                                                                                            (25,611)           (8,723)
                                                                                      -------------     -------------

                   Loss before provision for income taxes                                  (142,057)         (106,713)

Provision for income taxes (note 4)                                                            -                1,000
                                                                                          ---------     -------------

Net loss                                                                                   (142,057)         (107,713)
Retained earnings, beginning of period                                                      736,237         3,503,831
Preferred stock dividend                                                                    (15,000)          (15,000)
                                                                                      -------------     -------------

Retained earnings, end of period                                                  $         579,180         3,381,118
                                                                                       ============       ===========

Net loss per common share (note 3)                                                      $  (.01)           (.01)
                                                                                            ===             ===

</TABLE>

See accompanying notes to financial statements.

                                                        - 4 -
<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                            STATEMENTS OF CASH FLOWS

            Nine months ended December 30, 1995 and December 31, 1994
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                           1995            1994
                                                                                           ----            ----
<S>                                                                                <C>                      <C>
Cash flows from operating activities:

     Net loss                                                                      $      (1,340,442)       (593,912)
     Adjustments to reconcile net loss to net cash provided by operating
        activities:
           Depreciation and amortization                                                     354,266         419,961
           Loss on write-off of leasehold improvements                                       190,601            -
           Changes in operating assets and liabilities:
               (Increase) decrease in:
                  Marketable securities                                                         -           (498,457)
                  Inventories                                                                234,212        (560,701)
                  Prepaid expenses and other current assets                                  (15,727)        (21,057)
                  Other assets                                                                40,602          98,157
                  Refundable income taxes                                                      9,035        (204,000)
               Increase (decrease) in:
                  Accounts payable                                                           729,595       1,740,718
                  Accrued liabilities                                                         32,082         539,275
                  Accrued rent                                                               (10,620)         41,281
                  Long-term obligations                                                       51,252            -
                                                                                         -----------        -----
                        Total adjustments                                                  1,615,298       1,555,177
                                                                                           ---------       ---------
                        Net cash provided by operating activities                            274,856         961,265
                                                                                          ----------      ----------

Cash flows from investing activities:

     Purchase of property and equipment                                                     (143,589)       (900,806)
     Proceeds from sale of land, property and equipment                                      615,243            -
                                                                                          ----------        -----

                        Net cash provided by (used in) investing
                            activities                                                       471,654        (900,806)
                                                                                          ----------      ----------

Cash flows from financing activities:
     Repayment of note payable                                                                  -            (56,250)
     Repayment of long-term debt                                                            (110,028)       (120,495)
     Dividends paid                                                                          (45,000)        (45,000)
                                                                                         -----------     -----------

                        Net cash used in financing activities                               (155,028)       (221,745)

                        Net increase (decrease) in cash                                      591,482        (161,286)

Cash, beginning of period                                                                  1,537,293       3,610,205
                                                                                           ---------       ---------

Cash, end of period                                                                $       2,128,775       3,448,919
                                                                                           =========       =========

Supplemental disclosures of cash flow information:
     Cash paid during the period for interest                                      $          84,875          61,228
                                                                                         ===========     ===========

</TABLE>

See accompanying notes to financial statements.

                                                     - 4 -

<PAGE>
                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

                     December 30, 1995 and December 31, 1994
                                   (Unaudited)

 
(1)      BASIS OF FINANCIAL STATEMENT PRESENTATION

         The accompanying condensed financial statements of Peaches
         Entertainment Corporation have been prepared without audit, 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.

         The Company is an 87%-owned subsidiary of URT Industries, Inc. (the
         "Parent").

         The results of operations for the nine months ended December 30, 1995,
         are not necessarily indicative of the operating results to be expected
         for the year ending March 30, 1996. The Company's business is seasonal.
         Historically, approximately 30% of the Company's sales have occurred in
         the third fiscal quarter.

         Inventories, which consist of compact discs, tapes and accessories, are
         stated at the lower of cost (principally average) or market.

(2)      PETITION FOR RELIEF UNDER CHAPTER 11

         On January 16, 1996 (the "Petition Date"), Peaches Entertainment
         Corporation filed a voluntary petition for relief under Chapter 11 of
         Title 11 of the United States Code in the United States Bankruptcy
         Court for the Southern District of Florida, seeking to reorganize under
         Chapter 11. In Chapter 11, the Company will continue to manage its
         affairs and operate its business as debtor-in-possession while it
         attempts to develop a reorganization plan that will restructure and
         allow its emergence from Chapter 11. As debtor-in-possession in Chapter
         11, the Company may not engage in transactions outside of the ordinary
         course of business without approval, after notice and hearing, of the
         Bankruptcy Court.

         As of the Petition Date, payment of pre-petition liabilities of
         unsecured creditors of the Company, and pending litigation against the
         Company are stayed while the Company continues its business operations
         as debtor-in-possession.

         As a result of the Chapter 11 filing on January 16, 1996, payments with
         respect to the mortgage payable have become accelerated, not
         withstanding the fact that the Company is continuing to make and will
         continue to make all payments due under the mortgage in accordance with
         the terms of the note. It is currently the Company's intent to
         reinstate the mortgage on terms no less favorable to the Company than
         the original mortgage note upon confirmation of the reorganization
         plan.

         In accordance with the Bankruptcy Code, the Company can seek court
         approval for the rejection of pre-petition executory contracts,
         including real property leases. Any such rejection may give rise to a
         pre-petition claim for damages pursuant to the Bankruptcy Code.

                                                     - 5 -

<PAGE>


         In connection with the Chapter 11 proceeding, the Company is seeking
         approval to reject 5 store leases consisting of 2 stores which were
         closed previous to January 16, 1996 and 3 stores which were closed on
         January 16, 1996 and one office lease. The Company is also seeking
         rejection of an employment contract with a former officer/director.
         Refer to Employment Agreement in the Company's April 1, 1995 Form 10-K.
         Other real property leases may be rejected in the future subject to
         Bankruptcy Court approval.

         In connection with the Company's Chapter 11 case, the United States
         trustee has appointed a committee for the Company's general unsecured
         creditors.

         As a result of the reorganization proceedings, the Company may sell or
         otherwise realize assets and liquidate or settle liabilities for
         amounts other than those reflected in the financial statements.
         Further, a plan of reorganization could materially change the amounts
         currently recorded in the financial statements. The financial
         statements do not give effect to any adjustments to the carrying value
         of assets, or amounts and classification of liabilities that might be
         necessary as a consequence of these matters.

(3)      LOSS PER COMMON SHARE

         Net loss per common share was computed by dividing net loss less
         preferred stock dividends, 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
         109) "Accounting for Income Taxes" and files a consolidated tax return
         with its Parent. Any applicable tax charge or credits are allocated on
         a separate return basis.

         Based upon current operations of the Company and other factors, the
         Company did not record an income tax benefit for the quarter ended
         December 30, 1995, and does not anticipate doing so for the remainder
         of the current fiscal year. The Company anticipates that pre-tax
         losses, if any, which may be realized during the fiscal year ending
         March 30, 1996 will not result in the recording of any additional tax
         benefit by the Company. Further, any net operating loss carryforwards
         prior to, and subsequent to the filing date, may be severely reduced by
         the bankruptcy case. Under certain circumstances, the Company could
         incur significant tax liabilities from the forgiveness of indebtedness
         as a result of the bankruptcy case, the eventual outcome of which is
         unknown at this time.

(5)      COMMITMENTS AND CONTINGENCIES

         (A)    The Company is a lessee under various operating leases. Several
                of them contain escalation clauses principally tied to the
                Consumer Price Index. Several of the leases contain renewal
                options. See note 2 for discussion of petition for relief under
                Chapter 11 with respect to 5 store leases.

                                                     - 6 -

<PAGE>




                        PEACHES ENTERTAINMENT CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

 
                The aggregate minimum rental commitments provided for in such
                leases at December 31, 1995, are as follows:

                             FISCAL YEAR ENDING                      AMOUNT
                             ------------------                      ------
                                    1996                       $         443,649
                                    1997                               1,664,207
                                    1998                               1,543,502
                                    1999                               1,340,440
                                    2000                               1,181,966
                                 Thereafter                            5,799,015
                                                               -----------------
                                                               $      11,972,779
                                                               =================

                Rent expense under operating leases amounted to $1,440,768 and
                $1,809,000 for the nine months ended December 30, 1995 and
                December 31, 1994, respectively.

         (B)    The Company has been notified with respect to a Florida sales
                and use tax audit for the periods January 1990 through January
                1996 with respect to use tax and ad valorem tax. As of the date
                of these financial statements, no assessments have been made.

         (C)    The Management and Intercorporate Agreement dated as of March
                29, 1993, as amended, between the Company and the Parent was
                terminated effective as of the close of business on December 31,
                1995.

         (D)    Effective January 1, 1996 through March 31, 2000, the Parent
                will provide the Company with the services of its President at
                an annual base salary of $500,000 per annum.

(6)      TREASURY STOCK

         At December 30, 1995 and April 1, 1995, treasury stock consists of
326,580 shares of common stock.

                                                     - 7 -

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

Item 2.       MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION
              AND RESULTS OF  OPERATIONS  FOR THE NINE MONTHS ENDED DECEMBER 30,
              1995, COMPARED TO THE NINE MONTHS ENDED DECEMBER 31, 1994

INTRODUCTION

This discussion should be read in conjunction with the financial statements,
related notes and Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in the Company's Annual Report on Form 10-K
for the year ended April 1, 1995.

PETITION FOR RELIEF UNDER CHAPTER 11

On January 16, 1996 (the "Petition Date"), Peaches Entertainment Corporation
filed a voluntary petition for relief under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the Southern District of
Florida, seeking to reorganize under Chapter 11. In Chapter 11, the Company will
continue to manage its affairs and operate its business as debtor-in-possession
while it attempts to develop a reorganization plan that will restructure and
allow its emergence from Chapter 11. As debtor-in-possession in Chapter 11, the
Company may not engage in transactions outside the ordinary course of business
without approval, after notice and hearing, of the Bankruptcy Court.

As of the Petition Date, payment of pre-petition liabilities of unsecured
creditors of the Company, and pending litigation against the Company are stayed
while the Company continues its business operations as debtor-in-possession.

As a result of the Chapter 11 filing on January 16, 1996, payments with respect
to the mortgage payable have become accelerated, not withstanding the fact that
the Company is continuing to make and will continue to make all payments due
under the mortgage in accordance with the terms of the note. It is currently the
Company's intent to reinstate the mortgage on terms no less favorable to the
Company than the original mortgage note upon confirmation of the reorganization
plan.

In accordance with the Bankruptcy Code, the Company can seek court approval for
the rejection of pre-petition executory contracts, including real property
leases. Any such rejection may give rise to a pre-petition claim for damages
pursuant to the Bankruptcy Code. In connection with the Chapter 11 proceeding,
the Company is seeking approval to reject 5 store leases consisting of 2 stores
which were closed previous to January 16, 1996 and 3 stores which were closed on
January 16, 1996 and one office lease. The Company is also seeking rejection of
an employment contract with a former officer/director. Refer to Employment
Agreement in the Company, April 1, 1995 Form 10-K. Other real property leases
may be rejected in the future subject to Bankruptcy Court approval.

As a result of the reorganization proceedings, the Company may sell or otherwise
realize assets and liquidate or settle liabilities for amounts other than those
reflected in the financial statements. Further, a plan of reorganization could
materially change the amounts currently recorded in the financial statements.
The financial statements do not give effect to any adjustments to the carrying
value of assets, or amounts and classification of liabilities that might be
necessary as a consequence of these matters.

                                                     - 8 -
<PAGE>

Upon commencement of the filing, the Company sought and received authorization
from the Bankruptcy Court to continue certain employee and customer related
policies which the Company deemed necessary for its survival. These included its
policies related to employee wages, benefits and out-of-pocket business
expenses. They also included its customer benefit programs, including the
Company's gift certificate program and its merchandise return program. To date,
the Company does not believe that it has experienced any material negative
impact from its customers or employees because of the filing.

Since the filing WEA and Polygram Distribution Group ("PGD"), two of the
Company's six major distributors (PGD, WEA, BMG, Sony, UNI and CEMA) are
shipping merchandise on a cash in advance basis to the Company. However, many of
the Company's vendors have requested changes in the trade credit terms offered
to the Company. Where previously the Company was paying for most vendor
shipments on an average of 60-75 days, it now finds that it is being required in
a majority of its shipments to make payment on a cash-in-advance basis. The
Company is currently involved in negotiations with its vendors to set up normal
terms for post-petition shipments and services. In addition, the Company is
negotiating with both major suppliers and non major suppliers to enter into
vendor agreements under 546(g) of the Bankruptcy Reform Act of 1994 which permit
returns of inventory for credit against pre-petition indebtedness in exchange
for the granting of normal terms on a post-petition basis which requires court
approval. As of February 13, 1996, the Company completed an agreement with PGD
which provides for a credit facility of up to $200,000. The agreement also
requires returns for inventory to PGD of up to $200,000 for credit against
pre-petition indebtedness. This agreement will require approval by the court as
set forth under 546(g) of the Bankruptcy Reform Act of 1994. Since the filing
the Company has had to purchase a majority of its inventory from alternative
sources which are more costly to the Company. Changes in credit terms have had a
material impact on the Company's liquidity, and there can be no assurance as to
the effect which any future changes in trade credit terms imposed by the
Company's or change in vendors could have on the Company's liquidity or its
operations.

On January 16, 1996, the Company closed 3 stores.  Total store count as of
February 13, 1996 is 13.

RESULTS OF OPERATIONS

Net sales for the nine months ended December 30, 1995 ("1995") decreased by
approximately 25.4% compared to the nine months ended December 31, 1994
("1994"). Such decrease is attributed to a decrease in comparable store sales
(19%), and a decrease in sales in those stores that opened or closed during 1995
versus 1994 (6.4%), principally due to decreased customer traffic caused by a
lack of continued new "hit" release music products and competitive and economic
pressures in certain of the Company's markets.

During the last few years, non-traditional music retailers such as appliance and
computer retailers and super bookstores have began to sell prerecorded music and
video products. They have adopted policies of selling music products at near or
below wholesale cost as a means of attracting customers to sell other products.
During the current fiscal year, the effect of this competition was encountered
in some of our markets and it is anticipated to be expanded to some other
markets in the future. The Company has reduced prices which has resulted in
lower sales and lower gross profit. The Company believes that it will remain
competitive due to its locations, selection of product and superior customer
service.

                                                     - 9 -

<PAGE>

The cost of sales for 1995 was lower than that for 1994 due to decreased net
sales. Cost of sales as a percentage of net sales has increased from 63.6% in
1994 to 64.5% in 1995 principally due to a reduction in retail pricing in an
effort to meet the increased competition as discussed above.

Selling, general and administrative (SG&A) expenses in 1995 decreased by
approximately 17.1% compared to 1994. Such decrease is primarily attributable to
a decrease in comparable store expenses (6.5%), a decrease in store expenses of
stores that opened or closed during 1995 versus 1994 (8.8%), and a decrease in
corporate expenses (1.8%). As a percentage of net sales, SG&A expenses increased
from 34.4% in 1994 to 38.3% in 1995 due to the fixed nature of certain expenses
and the decrease in net sales. Reductions in rent and occupancy costs may occur
during the bankruptcy case as a result of the rejection of certain real property
leases.

Management fees decreased in 1995 from 1994 due to a reduction in the management
fee percentage effective April 1, 1994.

The Company incurred a net loss of approximately $1,340,000 in 1995 versus a net
loss of approximately $594,000 in 1994 due to the decrease in net sales and
gross profit as described above.

Based upon current operations of the Company and other factors, the Company did
not record an income tax benefit for the quarter ended December 30, 1995, and
does not anticipate doing so for the remainder of the current fiscal year. The
Company anticipates that pre-tax losses, if any, which may be realized during
the fiscal year ending March 30, 1996 will not result in the recording of any
additional tax benefit by the Company. Further, any net operating loss
carryforwards prior to, and subsequent to the filing date, may be severely
reduced by the bankruptcy case. Under certain circumstances, the Company could
incur significant tax liabilities from the forgiveness of indebtedness as a
result of the bankruptcy case, the eventual outcome of which is unknown at this
time.

LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $1,531,156 at December 30, 1995 compared to
working capital of $2,058,184 at April 1, 1995 and a current ratio (the ratio of
total current assets to total current liabilities) of 1.24 to 1 at December 30,
1995 compared to a current ratio of 1.35 to 1 at April 1, 1995.

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. The Company believes that in the future its business will
continue to be impacted by various competitive and economic factors, including,
but not limited to, consumer tastes, new releases of music available for sale
and general economic tends impacting retailers and consumers. In addition, in
more recent years the Company's revenues have been influenced by increased
competition from other music and video specialty retail chains, as well as
discounters and mass merchandisers. Further, any possible store closures that
may be approved by the court during the bankruptcy case would impact future
revenues.

Management anticipates that cash generated from operations and cash equivalent
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.

                                                     - 10 -
<PAGE>

The Company has 2,500 shares of $100 par, 11%, Series A Cumulative Preferred
Stock and 2,500 shares of $100 par 13%, Series B Cumulative Preferred Stock,
issued and outstanding. On an annual basis, the Company pays dividends of
$60,000 to its preferred shareholders based on its dividend requirements.

For a discussion of recent developments and uncertainties effecting the
Company's liquidity and capital resources, see note 2 to the condensed financial
statements and "Petition for Relief Under Chapter 11" above.

                                                       - 11 -


<PAGE>

PART II  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

(A)      BANKRUPTCY PROCEEDINGS

On January 16, 1996 (the "Petition Date"), Peaches Entertainment Corporation
filed a voluntary petition for relief under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the Southern District of
Florida, seeking to reorganize under Chapter 11. In Chapter 11, the Company will
continue to manage its affairs and operate its business as debtor-in-possession
while it attempts to develop a reorganization plan that will restructure and
allow its emergence from Chapter 11. As debtor-in-possession in Chapter 11, the
Company may not engage in transactions outside the ordinary course of business
without approval, after notice and hearing, of the Bankruptcy Court.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(A)      EXHIBIT NO.                                       DESCRIPTION

              10.61        Termination of Management Fee Agreement,  dated
                           January 1, 1996,  between URT  Industries,
                           Inc. and the Company,

              10.62        Agreement letter between URT Industries,  Inc. and
                           the Company, dated January 1, 1996, for services to
                           be performed by Allan Wolk and paid by the Company.

              27.0         Financial Data Schedule

(B)      CURRENT REPORTS ON FORM 8-K

A Current Report on Form 8-K, dated January 16, 1996 was filed by the Company
with the Securities and Exchange Commission on January 26, 1996 to report under
"Item 3 - Bankruptcy or Reorganization" and "Item 5 - Other Events" the
Company's filing of Chapter 11 and the closing of 3 stores, respectively.
       
                                                     - 12 -
<PAGE>

                                   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.

                                              PEACHES ENTERTAINMENT CORPORATION
                                              ----------------------------------
                                                         Registrant

Date:     February 13, 1996                          /s/ Allan Wolk
---------------------------                   ----------------------------------
                                              Allan Wolk, Chairman of the Board
                                               (PRINCIPAL EXECUTIVE OFFICER)

Date:     February 13, 1996                          /s/ Jason Wolk
---------------------------                    ---------------------------------
                                                Jason Wolk, Vice President
                                                 (PRINCIPAL FINANCIAL AND
                                                    ACCOUNTING OFFICER)

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