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)
- 13 -
EXHIBIT 10.61
January 1, 1996
It is the purpose of this letter to confirm the following agreement between
our two companies, URT Industries, Inc. ("URT") and Peaches Entertainment
Corp. ("PEC"):
1. The Management and Intercorporate Agreement dated as of March 29,
1993, as heretofore amended (the "Management Agreement"), between
URT and PEC terminated effective as of the close of business on
December 31, 1995 and has no further force or effect.
2. So long as URT and PEC file a consolidated Federal Tax Return:
(a) If such consolidated return shows a tax to be payable and if
both PEC and URT and its subsidiaries other that PEC ("URT
Consolidated") would have paid taxes if they had filed
separate returns, then the gross savings resulting from
filing a consolidated return ("Tax Saving") shall be
computed and each party shall pay a tax equal to the amount
which it would have paid if it had filed separately less its
pro-rata share of the Tax Saving.
(b) If such consolidated return shows a tax to be payable and if
only either URT Consolidated or PEC (but not both) would
have paid a tax if they had filed separate returns, then the
party which would have had to pay a tax if it had filed a
separate return shall pay the entire tax and, in addition,
pay to the other party the amount of the Tax Saving which it
realized as a result of the filing of the consolidated tax
return.
(c) If such consolidated return shows no tax to be payable but
if either PEC or URT consolidated would have had to pay a
tax if it had filed separately, then no tax shall be paid by
either party and the party which would have had to pay a tax
shall pay to the other party the amount of the Tax Saving
which it realized as a result of the filing of the
consolidated tax return.
(d) All state taxes shall be similarly adjusted.
(e) All determinations provided for hereunder shall be made by
the independent public accountants who are hired by the
parties to prepare the consolidated tax return and such
determinations by such accountants shall be final and
binding upon the parties.
<PAGE>
(f) URT will use its best efforts to timely prepare and file the
consolidated tax return for URT and subsidiaries and PEC
hereby agrees that it will cooperate with URT in the
preparation and filing of same. PEC shall provide to URT
promptly upon request, all financial and other information
required by URT for such purpose.
Please sign below to evidence our agreement.
Very truly yours,
URT INDUSTRIES, INC.
BY:
/s/ Brian Wolk
- ------------------------------------------------------------
Brian Wolk, Vice President
AGREED AND APPROVED:
PEACHES ENTERTAINMENT CORPORATION
BY:
/s/ Jason Wolk
- ------------------------------------------------------------
Jason Wolk, Vice President
EXHIBIT 10.62
January 1, 1996
It is the purpose of this letter agreement to confirm that for the period from
January 1, 1995 through March 31, 2000, URT Industries, inc. ("URT") will
provide to Peaches Entertainment Corporation ("PEC") the services of Allan Wolk
("Wolk"), as PEC's Chairman, President and Chief Executive Officer and that, in
consideration thereof, PEC agrees to:
(a) pay to Wolk during such period, so long as he continues to provide
such services, a salary at the rate of Five Hundred Thousand
Dollars ($500,000) per annum, payable monthly, on the first day of
each month;
(b) issue to Wolk annually a form W-2 with respect thereto; and
(c) make all other required filings with all governmental authorities
which relate thereto.
Please sign below to evidence our agreement.
Very truly yours,
URT INDUSTRIES, INC.
BY:
/s/ Brian Wolk
- -------------------------------------------------------------
Brian Wolk, Vice President
AGREED AND APPROVED:
PEACHES ENTERTAINMENT CORPORATION
BY:
/s/ Jason Wolk
- -------------------------------------------------------------
Jason Wolk, Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH PERIOD
ENDED DECEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-30-1996
<PERIOD-END> DEC-30-1995
<CASH> 2,128,775
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 5,344,525
<CURRENT-ASSETS> 8,026,634
<PP&E> 5,204,698
<DEPRECIATION> 2,971,735
<TOTAL-ASSETS> 10,408,343
<CURRENT-LIABILITIES> 6,495,478
<BONDS> 0
0
500,000
<COMMON> 201,079
<OTHER-SE> 1,803,756
<TOTAL-LIABILITY-AND-EQUITY> 10,408,343
<SALES> 18,911,992
<TOTAL-REVENUES> 18,911,992
<CGS> 12,194,083
<TOTAL-COSTS> 12,194,083
<OTHER-EXPENSES> 7,984,720
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,875
<INCOME-PRETAX> (1,340,442)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,340,442)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,340,442)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
