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 26, 1998                  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)


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 _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 March 8, 1999, there were outstanding:


39,781,170 shares of common stock


<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                                      Index


PART I. FINANCIAL INFORMATION

<TABLE>
<S>                                                                                              <C>
  Item 1.  Financial Statements

           Condensed Balance Sheets - December 26, 1998 (Unaudited) and
               March 28, 1998                                                                     3

           Condensed Statements of Operations and Retained Deficit - Three Months Ended
               December 26, 1998 and December 27, 1997 (Unaudited)                                4

           Condensed Statements of Operations and Retained Deficit - Nine Months Ended
               December 26, 1998 and December 27, 1997 (Unaudited)                                5

           Condensed Statements of Cash Flows - Nine Months Ended December 26, 1998 and
               December 27, 1997 (Unaudited)                                                      6

           Notes to Condensed Financial Statements                                                7

  Item 2.  Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                                          9

PART II. OTHER INFORMATION

  Item 6.  Exhibits and Reports on Form 8-K                                                      12

SIGNATURES                                                                                       13
</TABLE>



<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

                        PEACHES ENTERTAINMENT CORPORATION

                            Condensed Balance Sheets

                      December 26, 1998 and March 28, 1998

<TABLE>
<CAPTION>
                                  Assets                          December 26,     March 28,
                                                                      1998           1998
                                                                  -----------    -----------
                                                                         (unaudited)
<S>                                                               <C>            <C>        
Current assets:
    Cash and cash equivalents                                     $ 1,576,469    $ 1,080,694
    Inventories                                                     2,821,832      2,433,433
    Prepaid expenses and other current assets                         263,578        308,419
                                                                  -----------    -----------

            Total current assets                                    4,661,879      3,822,546

Property and equipment, net                                         1,345,558      1,349,732
Other assets                                                          184,369        180,925
                                                                  -----------    -----------

                                                                  $ 6,191,806    $ 5,353,203
                                                                  ===========    ===========

                   Liabilities and Shareholders' Equity

Current liabilities:
    Current portion of long-term obligations                      $   493,436    $   732,319
    Accounts payable                                                3,033,582      2,014,674
    Accrued liabilities                                             1,019,828        822,670
                                                                  -----------    -----------

            Total current liabilities                               4,546,846      3,569,663

Long-term obligations                                                 488,625        578,127
Due to parent                                                         413,466        382,156
Deferred rent                                                          61,911         62,834
                                                                  -----------    -----------

            Total liabilities                                       5,510,848      4,592,780

Shareholders' equity:
    Preferred stock, $100 par value; 50,000 shares authorized;
       5,000 shares issued and outstanding                            500,000        500,000
    Common stock, $.01 par value; 40,000,000 shares authorized;
       39,781,170 shares issued                                       397,813        397,813
    Additional paid-in capital                                      1,704,190      1,749,190
    Retained deficit                                               (1,921,045)    (1,886,580)
                                                                  -----------    -----------

            Total shareholders' equity                                680,958        760,423
                                                                  -----------    -----------

Commitments and contingencies
                                                                  $ 6,191,806    $ 5,353,203
                                                                  ===========    ===========
</TABLE>

See accompanying notes to condensed financial statements.

                                       3

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

             Condensed Statements of Operations and Retained Deficit

           Three months ended December 26, 1998 and December 27, 1997
                                   (Unaudited)


                                                     December 26,   December 27,
                                                         1998           1997
                                                     -----------    -----------

Net sales                                            $ 5,331,522    $ 5,116,742
                                                     -----------    -----------

Costs and expenses:
    Cost of sales                                      3,141,285      3,156,675
    Selling, general and administrative expenses       1,692,210      1,586,029
    Depreciation and amortization                         58,429         65,700
                                                     -----------    -----------

                                                       4,891,924      4,808,404

            Income from operations                       439,598        308,338
                                                     -----------    -----------

Other (expense) income:
    Interest expense                                     (37,312)       (56,075)
    Interest income                                        1,040          3,707
                                                     -----------    -----------

                                                         (36,272)       (52,368)

            Net income before income taxes               403,326        255,970

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

            Net income                                   403,326        255,970

Retained deficit, beginning of period                 (2,324,371)    (1,984,939)
                                                     -----------    -----------

Retained deficit, end of period                       (1,921,045)    (1,728,969)
                                                     ===========    ===========

Basic and diluted earnings per share                 $      0.01    $      0.01
                                                     ===========    ===========


See accompanying notes to condensed financial statements.

                                       4


<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

             Condensed Statements of Operations and Retained Deficit

            Nine months ended December 26, 1998 and December 27, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                December 26,    December 27,
                                                                    1998             1997
                                                                ------------    ------------

<S>                                                             <C>             <C>         
Net sales                                                       $ 13,126,196    $ 13,049,605
                                                                ------------    ------------

Costs and expenses:
    Cost of sales                                                  7,796,882       8,057,685
    Selling, general and administrative expenses                   5,086,526       4,888,051
    Depreciation and amortization                                    174,768         197,100
                                                                ------------    ------------

                                                                  13,058,176      13,142,836
                                                                ------------    ------------

            Income (loss) from operations                             68,020         (93,231)
                                                                ------------    ------------

Other (expense) income:
    Interest expense                                                (109,574)       (175,217)
    Interest income                                                    7,089          13,149
                                                                ------------    ------------

                                                                    (102,485)       (162,068)

            Loss before reorganization costs and income taxes        (34,465)       (255,299)

Reorganization costs:
    Professional fees                                                     --         (44,000)
                                                                ------------    ------------

            Loss before income taxes                                 (34,465)       (299,299)

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

            Net loss                                                 (34,465)       (299,299)

Retained deficit, beginning of period                             (1,886,580)     (1,399,670)
                                                                ------------    ------------

Retained deficit, end of period                                 $ (1,921,045)   $ (1,698,969)
                                                                ============    ============

Basic and diluted loss per share                                $         --    $      (0.01)
                                                                ============    ============
</TABLE>


See accompanying notes to condensed financial statements.

                                       5

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                       Condensed Statements of Cash Flows

            Nine months ended December 26, 1998 and December 27, 1997
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                      December 26,   December 27,
                                                                          1998           1997
                                                                      -----------    -----------
<S>                                                                   <C>            <C>         
Cash flows from operating activities:
    Net loss                                                          $   (34,465)   $  (299,299)
                                                                      -----------    -----------
    Adjustments to reconcile net loss to net cash
       provided by operating activities:
          Depreciation and amortization                                   174,768        197,100
          Deferred rent                                                      (923)       (87,491)
          Changes in assets and liabilities affecting
            cash flows from operating activities:
               (Increase) decrease in:
                   Inventories                                           (388,399)        92,665
                   Prepaid expenses and other current assets               44,841         35,202
                   Other assets                                            (3,444)         7,461
               Increase (decrease) in:
                   Accounts payable                                     1,018,908      1,047,229
                   Accrued liabilities                                    197,158        135,427
                                                                      -----------    -----------

                     Net cash provided by operating activities          1,008,444      1,128,294
                                                                      -----------    -----------

Cash flows from investing activities:
    Purchase of property and equipment                                   (170,594)       (61,385)
                                                                      -----------    -----------

                     Net cash used in investing activities               (170,594)       (61,385)
                                                                      -----------    -----------

Cash flows from financing activities:
    Repayment of long-term obligations                                   (328,385)      (326,858)
    Dividends paid                                                        (45,000)       (45,000)
    Due to parent                                                          31,310       (330,094)
    Capital contribution                                                       --        374,719
                                                                      -----------    -----------

                     Net cash used in financing activities               (342,075)      (327,233)
                                                                      -----------    -----------

                     Net increase in cash and cash equivalents            495,775        739,676

Cash and cash equivalents, beginning of period                          1,080,694      1,456,070
                                                                      -----------    -----------

Cash and cash equivalents, end of period                              $ 1,576,469    $ 2,195,746
                                                                      ===========    ===========

Supplemental disclosures of cash flow information:
Cash paid during the period for interest                              $    28,600    $   115,722
                                                                      ===========    ===========
</TABLE>


See accompanying notes to condensed financial statements.

                                       6

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                     Notes to Condensed Financial Statements

(1)  Basis of Financial Statement Presentation

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

     It  is  suggested  that  the  accompanying  unaudited  condensed  financial
     statements be read in conjunction  with the financial  statements and notes
     included in the Peaches  Entertainment  Corporation (the "Company")  annual
     report on Form 10-K for the year ended March 28, 1998.

     As of December 26, 1998, the Company was a 87.5 percent-owned subsidiary of
     URT Industries, Inc. (the "Parent").

     The results of operations  for the nine months ended December 26, 1998, are
     not necessarily  indicative of the operating results to be expected for the
     year ending April 3, 1999.  The  Company's  business is seasonal in nature,
     with the highest  sales and  earnings  historically  occurring in the third
     quarter of its fiscal year, which includes the holiday selling season.

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

     Certain  reclassifications  have been made to the (unaudited)  December 27,
     1997 quarterly financial information to conform to the presentation used in
     the (unaudited) December 26, 1998 financial information.

(2)  Earnings Per Share

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

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

                                                                     (Continued)
                                       7

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                     Notes to Condensed Financial Statements

     Basic and diluted loss per share were calculated as follows:

                                                      Nine months   Nine months
                                                         Ended         Ended
                                                      December 26,  December 27,
                                                          1998          1997
                                                      -----------   -----------

     Basic and diluted:
          Net income (loss) less preferred dividends  $   (79,465)  $  (344,299)
                                                      ===========   ===========

          Weighted average shares                      39,781,170    39,781,170
                                                      ===========   ===========

     Basic and diluted loss per share                         (--)         (.01)
                                                      ===========   ===========

(3)  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 Parent.  Any applicable tax charge or credits are allocated
     on a separate  return basis.  For the nine month period ended  December 26,
     1998, there was no (benefit)  provision for income taxes as the Company has
     excess net operating loss carryforwards for federal income tax purposes.

(4)  New Accounting Pronouncements

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

     In 1997,  the FASB issued  Statement of Financial  Accounting  Standard No.
     131,  "Disclosure about Segments of an Enterprise and Related  Information"
     ("Statement  131").  Statement 131  establishes  standards for the way that
     public business  enterprises report information about operating segments in
     annual  financial  statements  and requires that these  enterprises  report
     selected  information about operating segments in interim financial reports
     to  shareholders.  Statement 131 is effective for financial  statements for
     the periods  beginning  after  December 15, 1997. The adoption of Statement
     131 is not expected to have an effect on the Company because it operates in
     a single segment.

                                                                     (Continued)
                                       8

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

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

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  sections  of this  Report or other  filings.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  which speak only as of their  respective  dates, and are subject to
certain risks, uncertainties and assumptions.  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

Sales. The Company's net sales increased during the third quarter ended December
26, 1998 of the  Company's  fiscal year ending  April 3, 1999 by $214,780 or 4.2
percent compared to the third quarter of fiscal 1998. Comparable store sales for
the third quarter were down 1.3 percent.  Sales for the thirty-nine  weeks ended
December 26, 1998  increased by $76,591 or .6 percent  which is primarily due to
the fact the Company operated one more store in the third quarter of fiscal 1999
offset  by the fact  that  comparable  sales  for the  thirty-nine  weeks  ended
December 26, 1998 were down 2.3 percent.

Cost of  Sales.  The  Company's  cost of sales  as a  percentage  of net  sales,
decreased from 61.7 percent in the previous year's third quarter to 58.9 percent
for the third quarter  ended  December 26, 1998, as well as from 61.8 percent in
the previous year first  thirty-nine  weeks to 59.4 percent in the current years
thirty-nine  weeks ended  December 26, 1998. The decreases in cost of sales as a
percentage of sales are primarily  attributable  to increases in certain  retail
prices and increases in purchase discounts.

Selling,  General  and  Administrative.   Selling,  general  and  administrative
expenses  including  depreciation,  expressed  as  a  percentage  of  net  sales
increased to 32.8 percent for the third quarter ended December 26, 1998 compared
to 32.2  percent in the prior year third  quarter.  The  increase  is  primarily
attributable  to a decrease in  comparable  store  expenses of .53 percent and a
decrease in corporate overhead of 1.5 percent,  offset by an increase in expense
associated  with the  opening  of the new store in  Orlando,  Florida.  Selling,
general and  administrative  expenses  including  depreciation,  expressed  as a
percentage  of net sales  increased  to 40.1 percent for the  thirty-nine  weeks
ended  December 26, 1998  compared to 38.9 percent the  thirty-nine  weeks ended
December 27, 1997.  The increase is  primarily  attributable  expenses  incurred
throughout  the Company's  first quarter of 1999 fiscal year relating to the new
store that did not actually  open until late in the  Company's  first quarter of
1999 fiscal year.

Net Income (Loss). The Company had net income of approximately  $403,000 for the
third  quarter ended  December 26, 1998 compared to net income of  approximately
$256,000 for the third  quarter  ended  December  27, 1997.  The increase in net
income is primarily  attributable  to the  increase in gross  profit  percentage
discussed above. The net loss for the thirty-nine  weeks ended December 26, 1998
was approximately  $34,000 compared to a net loss of approximately  $299,000 for
the  thirty-nine  weeks ended  December  27,  1997.  The decrease in net loss is
primarily attributable to the increase in gross profit discussed above.

                                                                     (Continued)
                                       9

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                         LIQUIDITY AND CAPITAL RESOURCES

Liquidity  and  Capital  Resources.  Cash  generated  from  operations  and cash
equivalents   are  the  Company's   primary  source  of  liquidity.   Management
anticipates  that the cash generated from  operations,  cash equivalents on hand
and financing will provide  sufficient  liquidity to maintain  adequate  working
capital for  operations.  Management used cash on hand as well as funds received
from its  landlord  for the  building of the new store which opened in May 1998.
For a discussion of uncertainties  affecting the Company's liquidity and capital
resources,  see note 3 to the  financial  statements  on Form  10-K for the year
ended March 28, 1998.

Long-Term  Obligations.   At  December  26,  1998,  the  Company  had  long-term
obligations of $488,625.  Management  anticipates  that its ability to repay its
long-term  obligations will be satisfied  primarily through funds generated from
its operations or from possible financing.

                                  OTHER MATTERS

Impact of  Inflation.  Although  the Company  cannot  accurately  determine  the
precise  effect of  inflation  on its  operations,  management  does not believe
inflation  has had a material  effect on the results of  operations  in the last
three  fiscal  years.  When the cost of  merchandise  items has  increased,  the
Company has been able to pass the increase on to its customers.

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

Year 2000  Compliance.  The Year 2000 Issue is the result of  computer  programs
being written using two digits rather than four to define the  applicable  year.
Any of the Company's  computer  programs that have  data-sensitive  software may
recognize a date using "00" as year 1900  rather than the year 2000.  This could
result in a system failure or miscalculations causing disruptions of operations.
The Company  has  assessed  that it will be required to upgrade  portions of its
software  which was  originally  purchased  from  outside  vendors,  so that its
computer  systems will  properly  utilize  dates beyond  December 31, 1999.  The
Company has not incurred any costs as of December 26, 1998 relating to year 2000
compliance. The Company anticipates that the cost of the upgrade of its software
from  outside  vendors will be  approximately  $20,000.  The Company  expects to
purchase  its  upgraded   software  in  April,   1999,   and  that  testing  and
implementation  will be  completed  by June,  1999.  The  Company is also in the
process of  completing  its  inventory of computer  information  technology  and
noninformation  technology hardware systems to assess year 2000 compliance.  The
Company's five largest music suppliers dominate the music distribution industry.
The  Company  believes  that  those  five major  suppliers  will be 2000  ready.
However,  the Company  currently  has no practical  alternatives  if these major
suppliers  experience  problems.  Thus, there can be no absolute  assurance that
there  will  not be a  material  adverse  effect  on the  Company's  operations,
liquidity or financial  condition,  if Year 2000  modifications are not properly
completed in a timely manner by either the Company,  or its suppliers,  banks or
any other entity with whom the Company conducts business.


                                                                     (Continued)
                                       10

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION


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

In 1997,  the FASB issued  Statement of Financial  Accounting  Standard No. 131,
"Disclosure about Segments of an Enterprise and Related Information" ("Statement
131").  Statement 131  establishes  standards  for the way that public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that these enterprises report selected information about
operating  segments in interim financial reports to shareholders.  Statement 131
is effective for financial  statements for the periods  beginning after December
15, 1997. The adoption of Statement 131 is not expected to have an effect on the
Company because it operates in a single segment.




                                                                     (Continued)
                                       11

<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION

                                OTHER INFORMATION

PART II

Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

               27.0 Financial Data Schedule

          (b)  Reports on Form 8-K

               On or about February 16, 1999, the Company filed a Form 8-K dated
               February 16, 1999 for the purpose of  reporting on the  projected
               date of this filing.



                                                                     (Continued)
                                       12


<PAGE>

                        PEACHES ENTERTAINMENT CORPORATION


                                   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: 3/12/99                       /s/ Allan Wolk
                                    --------------------------------------------
                                    Allan Wolk, Chairman of the Board, President
                                    (Principal Executive Officer)




Date: 3/12/99                       /s/ Jason Wolk 
                                    --------------------------------------------
                                    Jason Wolk, Executive Vice President,
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       13