UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


                                   (Mark One)
        [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2000
                                     OR

       [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       For the transition period from __________________ to ______________


                          Commission File Number 0-2380

                               SPORTS ARENAS, INC.
                               -------------------
             (Exact name of registrant as specified in its charter)


                               Delaware 13-1944249
                               -------- ----------
               (State of Incorporation) (I.R.S. Employer I.D. No.)


        5230 Carroll Canyon Road, Suite 310, San Diego, California 92121
        ----------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (858) 587-1060




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
registrant was required to file such reports);  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _

The number of shares  outstanding  of the  issuer's  only class of common  stock
($.01 par value) as of January 31, 2000 was 27,250,000 shares.

<PAGE>
                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                         QUARTER ENDED DECEMBER 31, 2000

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of December 31, 2000 (unaudited) and June 30,      1-2
      2000

      Unaudited Statements of Operations for the Three Months Ended
             December 31, 2000 and 1999                                     3

      Unaudited Statements of Operations for the Six Months Ended
             December 31, 2000 and 1999                                     4

      Unaudited Statements of Cash Flows for the Six Months Ended
             December 31, 2000 and 1999                                     5

      Notes to Financial Statements                                        6-10


Item 2.- Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                    11-15

Item 3.- Quantitative and Qualitative Disclosures about Market Risk         15

Part II - Other Information                                                 16


Signatures                                                                  17



<PAGE>


                       SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                      ASSETS

                                                       December 31    June 30,
                                                          2000         2000
                                                      ------------  ----------
                                                       (Unaudited)

Current assets:
   Cash and cash equivalents                            $ 702,609     $ 13,961
   Current portion of notes receivable- affiliate               -       50,000
   Other receivables                                      185,679      193,510
   Inventories                                            283,846      304,906
   Prepaid expenses                                       126,008      238,719
                                                      ------------  ----------
      Total current assets                              1,298,142      801,096
                                                      ------------  ----------

Receivables due after one year:
   Note receivable- affiliate, net                              -       73,866
   Less current portion                                         -      (50,000)
                                                      ------------  ----------
                                                                -       23,866
                                                      ------------  ----------
Property and equipment, at cost:
   Land                                                         -      678,000
   Buildings                                                    -    2,461,327
   Equipment and leasehold and tenant improvements      2,079,029    2,347,767
                                                      ------------  ----------
                                                        2,079,029    5,487,094
      Less accumulated depreciation and amortization     (979,145)  (2,160,132)
                                                      ------------  ----------
       Net property and equipment                       1,099,884    3,326,962
                                                      ------------  ----------

Other assets:
   Undeveloped land, at cost                            1,513,845    1,501,318
   Intangible assets, net                                 170,247      246,123
   Investments                                            534,446      564,446
   Other                                                  120,999      137,425
                                                      ------------  ----------
                                                        2,339,537    2,449,312
                                                      ------------  ----------

                                                       $4,737,563   $6,601,236
                                                      ============  ==========




                                       1
<PAGE>



                       SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND SHAREHOLDERS' DEFICIT


                                                     December 31,   June 30,
                                                         2000         2000
                                                     ------------  ----------
                                                      (Unaudited)
Current liabilities:
   Assessment district obligation- in default         $2,961,459    $2,831,180
   Notes payable-short term                            2,050,000     1,350,000
   Current portion of long-term debt                      98,000     1,874,000
   Accounts payable                                      683,942       796,483
   Accrued payroll and related expenses                  218,153       164,170
   Accrued property taxes- in default                    408,917       356,178
   Accrued interest                                      125,955        41,079
   Other liabilities                                     222,787       216,009
                                                     ------------   ----------
      Total current liabilities                        6,769,213     7,629,099
                                                     ------------   ----------

Long-term debt, excluding current portion                 10,734     1,967,169
                                                     ------------   ----------

Distributions received in excess of basis
   in investment                                      14,403,473    14,498,208
                                                     ------------   ----------

Other liabilities                                        120,000       123,831
                                                     ------------   ----------

Minority interest in consolidated subsidiary           1,712,677     1,712,677
                                                     ------------   ----------


Shareholders' deficit:
   Common stock, $.01 par value, 50,000,000
     shares authorized, 27,250,000
     shares issued and outstanding                       272,500       272,500
   Additional paid-in capital                          1,730,049     1,730,049
   Accumulated deficit                               (17,989,591)  (19,040,805)
                                                     ------------   ----------
                                                     (15,987,042)  (17,038,256)
   Less note receivable from shareholder              (2,291,492)   (2,291,492)
                                                     ------------   ----------

     Total shareholders' deficit                     (18,278,534)  (19,329,748)
                                                     ------------   ----------

Commitments and contingencies (Note 6)

                                                      $4,737,563    $6,601,236
                                                     ============   ==========







     See accompanying notes to consolidated condensed financial statements.

                                       2
<PAGE>


                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
                                  (Unaudited)

                                                          2000        1999
                                                      ----------   ----------
Revenues:
   Bowling                                            $  668,135   $  625,382
   Rental                                                142,314      160,113
   Golf                                                  243,620      157,601
   Other                                                  44,152       32,290
   Other-related party                                    44,441       42,635
                                                      ----------   ----------
                                                       1,142,662    1,018,021
                                                      ----------   ----------
Costs and expenses:
   Bowling                                               509,679      501,494
   Rental                                                 63,168       61,638
   Golf                                                  492,546      331,941
   Development                                            43,712       28,980
   Selling, general, and administrative                  954,868      924,282
   Depreciation and amortization                          65,695       96,383
                                                      -----------  ----------
                                                       2,129,668    1,944,718
                                                      -----------  ----------

Loss from operations                                    (987,006)    (926,697)
                                                      -----------  ----------

Other income (charges):
   Investment income:
     Related party                                         7,263       10,053
     Other                                                     -        8,773
   Interest expense:
     Development activities                              (46,885)     (69,625)
     Other and amortization of finance costs            (160,684)     (90,717)
   Gain on sale of office building                     2,764,483            -
   Gain on sale of bowling center building               482,487            -
   Equity in income of investees                          50,283      102,210
                                                      -----------  ----------
                                                       3,096,947      (39,306)
                                                      -----------  ----------

Net income (loss)                                     $2,109,941   $ (966,003)
                                                      ===========  ==========


Basic and diluted net income (loss) per
  common share (based on 27,250,000
  weighted average common shares outstanding)           $0.08       ($0.04)
                                                       ======       =======



     See accompanying notes to consolidated condensed financial statements.



                                       3
<PAGE>

                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                  SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
                                  (Unaudited)

                                                         2000         1999
                                                      ----------   ----------
Revenues:
   Bowling                                            $1,329,732   $1,249,954
   Rental                                                311,147      316,390
   Golf                                                  530,629      281,531
   Other                                                  78,434       60,747
   Other-related party                                    88,792       85,334
                                                      ----------   ----------
                                                       2,338,734    1,993,956
                                                      ----------   ----------
Costs and expenses:
   Bowling                                             1,043,056    1,036,264
   Rental                                                132,451      124,380
   Golf                                                1,018,722      604,813
   Development                                            84,992       90,313
   Selling, general, and administrative                1,782,213    1,772,673
   Depreciation and amortization                         164,811      191,952
                                                      ----------   ----------
                                                       4,226,245    3,820,395
                                                      ----------   ----------

Loss from operations                                  (1,887,511)  (1,826,439)
                                                      ----------   ----------

Other income (charges):
   Investment income:
     Related party                                         7,263       19,973
     Other                                                     -        9,089
   Interest expense:
     Development activities                             (130,279)    (133,001)
     Other and amortization of finance costs            (290,674)    (179,485)
   Loss on sale of undeveloped land                            -         (638)
   Gain on sale of office building                     2,764,483            -
   Gain on sale of bowling center building               482,487            -
   Equity in income of investees                         105,445      243,299
                                                      ----------   ----------
                                                       2,938,725      (40,763)
                                                      ----------   ----------


Net income (loss)                                     $1,051,214  $(1,867,202)
                                                      ==========   ==========


Basic and diluted net income (loss) per
  common share (based on 27,250,000
  weighted average common shares outstanding)           $0.04       ($0.07)
                                                        ======      =======



     See accompanying notes to consolidated condensed financial statements.


                                       4
<PAGE>


                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                  SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
                                  (Unaudited)

                                                          2000         1999
                                                       ----------   ----------
Cash flows from operating activities:
  Net income (loss)                                    $1,051,214  ($1,867,202)
  Adjustments to reconcile net loss to the
    net cash used by operating activities:
      Amortization of deferred financing costs             18,846        4,560
      Depreciation and amortization                       164,811      191,952
      Equity in income of investees                      (105,445)    (243,299)
      Deferred income                                      24,000       24,000
      (Gain) loss on sale of property                  (3,246,970)         638
      Interest accrued on assessment
        district obligations                              130,279      133,001
    Changes in assets and liabilities:
      Decrease in receivables                              14,032        5,474
      Decrease in inventories                              21,060       92,806
     (Increase) decrease in prepaid expenses               29,035      (64,373)
      Increase (decrease) in accounts payable            (112,541)      77,539
      Increase in accrued expenses                        198,376        9,573
      Other                                                19,675       (2,286)
                                                       -----------  ----------
        Net cash used by operating activities          (1,793,628)  (1,637,617)
                                                       -----------  ----------

Cash flows from investing activities:
   Decrease in notes receivable                            73,866       36,479
   Capital expenditures                                  (198,173)     (83,114)
   Increase in development costs on
     undeveloped land                                     (12,527)     (17,278)
   Proceeds from sale of undeveloped land                       -      190,362
   Proceeds from sale of office building                1,662,337            -
   Proceeds from bowling center building                2,047,328            -
   Distributions from investees                           114,000    2,024,500
   Contributions to investees                            (100,000)     (19,460)
                                                       -----------  ----------
        Net cash provided by investing activities       3,586,831    2,131,489
                                                       -----------  ----------

Cash flows from financing activities:
   Scheduled principal payments on long-term debt        (130,980)    (139,032)
   Extinguishment of long-term debt                    (1,650,977)     (75,927)
   Proceeds from short-term notes payable               1,200,000      550,000
   Payments on short-term notes payable                  (500,000)    (550,000)
   Other                                                  (22,598)     (22,455)
                                                       -----------  ----------
       Net cash used by financing activities           (1,104,555)    (237,414)
                                                       -----------  ----------

Net increase in cash and cash equivalents                 688,648      256,458
Cash and cash equivalents, beginning of year               13,961      357,906
                                                       -----------  ----------
Cash and cash equivalents, end of year                 $  702,609     $614,364
                                                       ===========  ==========



     See accompanying notes to consolidated condensed financial statements.

                                       5
<PAGE>



                            SPORTS ARENAS, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     DECEMBER 31, 2000 AND 1999 (Unaudited)

1.  The information furnished reflects all adjustments which management believes
    are  necessary to a fair  statement  of the  Company's  financial  position,
    results of operations and cash flows for the interim periods.

2.  Due to the seasonal fluctuations of the bowling and golf shaft manufacturing
    operations, the financial results for the interim periods ended December 31,
    2000 and 1999, are not  necessarily  indicative of operations for the entire
    year.

3.  Investments:
    (a) Investments consist of the following:
                                                   December 31,   June 30,
                                                      2000         2000
                                                   -----------  -----------
         Vail Ranch Limited Partnership
          (equity method)                          $  534,446    $  564,446
                                                   ==========   ===========
        Investment in UCV, L.P. classified as
          liability - Distributions received
          in excess of  basis in investment       $14,403,473   $14,498,208
                                                  ===========   ===========

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:
                                             2000        1999
                                          ---------   ---------
        UCV, L.P.                          $135,445   $ 268,299
        Vail Ranch Limited Partnership      (30,000)    (25,000)
                                          ---------   ---------
                                           $105,445   $ 243,299
                                          =========   =========

     The following is a summary of distributions received from investees:
                                             2000        1999
                                           --------   ---------
        UCV, L.P.                          $114,000   $2,024,500
        Vail Ranch Limited Partnership          --           --
                                           --------   ----------
                                           $114,000   $2,024,500
                                           ========   ==========


   (b) Investment in UCV, L.P.

     The operating  results of this investment are included in the  accompanying
     consolidated   condensed   statements   of   operations   based   upon  the
     partnership's  fiscal  year (March 31).  Summarized  information  from UCV,
     L.P.'s  (UCV)  unaudited  statements  of income for the six and three month
     periods ended September 30, 2000 and 1999 are as follows:
                                       Six Months            Three Months
                                ----------------------  ----------------------
                                   2000        1999        2000        1999
                                ----------  ----------  ----------  ----------
      Revenues                  $2,521,000  $2,365,000  $1,286,000  $1,206,000
      Operating and general
       and administrative
       costs                       849,000     837,000     442,000     444,000
      Depreciation                  11,000      13,000       5,000       7,000
      Interest expense           1,390,000     978,000     708,000     501,000
      Net income                   271,000     537,000     131,000     254,000

     On  January  9,  2001,  UCV  signed a  commitment  letter  with a lender to
     refinance the existing loan  ($28,585,399  balance as of December 31, 2000)
     with a  $33,000,000  loan.  The new loan will be for an initial  term of 18
     months  with two  options  to extend the  maturity  date for one year each.
     Monthly  payments  will be interest only at a rate based on LIBOR (not less
     than  6%)  plus  2.50  points.  The  commitment  requires  UCV to pay a fee
     (currently  estimated  at  $40,000) to cap LIBOR at 7%. UCV  estimates  the
     proceeds from the refinancing will be  approximately  $2,900,000 after loan
     costs and  capital  replacement  reserves.  UCV plans to use  approximately
     $900,000 of the proceeds to fund anticipated  redevelopment  planning costs
     that would be incurred prior to obtaining  financing for the redevelopment.
     UCV plans to  distribute  the remaining  $2,000,000  to the  partners.  The
     Company is  obligated  to use fifty  percent of its share of  distributions
     from UCV, up to $500,000, to make payments on its short-term note payable.

                                       6
<PAGE>

4. Undeveloped land:

   RCSA Holdings,  Inc. (RCSA), a wholly owned subsidiary of the Company, owns a
   50 percent  managing  general  partnership  interest in Old Vail Partners,  a
   general  partnership  (OVPGP),  which  owns 33 acres of  undeveloped  land in
   Temecula,  California.  On September 23, 1999, the other partner assigned his
   partnership interest to Downtown Properties,  Inc., a wholly owned subsidiary
   of the Company. Once the legal matters described below are resolved, OVPGP is
   obligated  to  assign  its  interest  in the 33  acres  of land  to Old  Vail
   Partners,  L.P.  The 33 acres of land  owned by OVPGP  are  located  within a
   special  assessment  district  of the County of  Riverside,  California  (the
   County)  which was created to fund and develop  roadways,  sewers,  and other
   required infrastructure  improvements in the area necessary for the owners to
   develop  their  properties.   Property  within  the  assessment  district  is
   collateral for an allocated portion of the bonded debt that was issued by the
   assessment  district to fund the improvements.  The annual payments (required
   in semiannual  installments) due related to the bonded debt are approximately
   $144,000. The payments continue through the year 2014 and include interest at
   approximately  7-3/4  percent.  OVPGP has been  delinquent  in the payment of
   property taxes and assessments for over the last eight years. The property is
   currently subject to default judgments to the County of Riverside, California
   totaling  approximately  $2,342,270 regarding delinquent  assessment district
   payments  ($1,933,353) and property taxes  ($408,917).  On June 23, 2000, the
   County of  Riverside  agreed to remove the property  from the planned  public
   sale  originally  scheduled  for June 26, 2000 in exchange  for an  immediate
   payment of $330,000  with the balance of property  taxes due on December  29,
   2000.  Separately,  the County of Riverside  stated that a  foreclosure  sale
   related to the default  judgement for assessment  district payments would not
   be scheduled  until some time after January 1, 2001. On January 19, 2001, the
   County of  Riverside  agreed to  extend  the due date to March 30,  2001 with
   options for three  additional  extensions to August 1, 2001.  The options for
   additional  extensions would require payments  totaling $75,000 to be applied
   to the amount due.

   The  delinquent  principal,  interest  and  penalties  ($1,933,353)  and  the
   remaining  principal  balance  of the  allocated  portion  of the  assessment
   district  bonds   ($1,028,106)   are   classified  as  "Assessment   district
   obligation-  in default" in the  consolidated  balance  sheet at December 31,
   2000.  In  addition,  the  consolidated  balance  sheet at December  31, 2000
   includes  $408,917 of delinquent  property taxes and late fees related to the
   33-acre parcel.

   In November 1993,  the City of Temecula  adopted a general  development  plan
   that  designated  the property  owned by OVPGP as suitable for  "professional
   office" use, which is contrary to its zoning as "commercial"  use. As part of
   the adoption of its general  development plan, the City of Temecula adopted a
   provision  that,  until the zoning is changed on  properties  affected by the
   general  plan,  the general plan shall  prevail when a use  designated by the
   general plan conflicts with the existing  zoning on the property.  The result
   is that the City of Temecula has effectively down-zoned OVPGP's property from
   a  "commercial"  to  "professional  office"  use.  The property is subject to
   assessment district obligations that were allocated in 1989 based on a higher
   "commercial" use. Since the assessment  district  obligations are not subject
   to reapportionment as a result of re-zoning,  a "professional  office" use is
   not economically  feasible due to the  disproportionately  high allocation of
   assessment  district  costs.  OVPGP  filed suit  against the City of Temecula
   claiming  that, if the effective  re-zoning is valid,  the action is a taking
   and damaging of OVPGP's property without payment of just compensation.  OVPGP
   sought to have the effective re-zoning  invalidated and an unspecified amount
   of damages.  OVPGP previously  suffered adverse outcomes in other suits filed
   in relation to this matter.  A stipulation  was entered that  dismissed  this
   suit  without  prejudice  and  agreed  to  toll  all  applicable  statute  of
   limitations  while OVPGP and the City of  Temecula  attempted  to  informally
   resolve this  litigation.  On October 23, 2000,  the City of Temecula's  city
   council  granted  preliminary  approval of OVPGP's  request for re-zoning and
   general  plan  amendment  related  to a  development  plan  which  includes a
   combination of  multi-family  and  commercial  uses. On November 28, 2000 the
   re-zoning and general plan  amendment  requested by OVPGP were adopted by the
   City of Temecula and OVPGP  abandoned  its legal  claims  against the City of
   Temecula.

   On January 11, 2001,  the Company agreed to sell the 33 acres to an unrelated
   developer for $6,550,000 cash plus assumption of the  non-delinquent  balance
   of the assessment district obligation ($1,028,106 as of December 31, 2000) at
   the time of closing, which shall be April 20, 2001. The sale is contingent on
   the buyer's due diligence, which must be completed by February 28, 2001.

                                       7
<PAGE>

   The following is a summary of the results from  operations of the development
   activities  related  to  this  undeveloped  land  included  in the  financial
   statements in the three and six month periods:
                                         Three Months          Six Months
                                      ------------------   ------------------
                                        2000      1999       2000      1999
                                      -------    -------   --------  --------
      Development costs                44,000     29,000     85,000    90,000
      Allocated SG&A                    6,000        -       11,000    12,000
                                      -------    -------   --------  --------
      Loss from operations            (50,000)   (29,000)   (96,000) (102,000)
      Interest expense- development    47,000     70,000    130,000   133,000
                                      -------    -------   --------  --------
      Loss from continuing
       operations                     (97,000)   (99,000)  (226,000) (235,000)
                                      =======    =======   ========  ========

5. Notes payable:

   Pursuant to a short term loan  agreement  with the Company's  partner in UCV,
   the  Company  borrowed  an  additional  $700,000  in the three  months  ended
   September 30, 2000, $350,000 on October 17, 2000 and $150,000 on November 10,
   2000. On December 28, 2000 the Company repaid $500,000 of the short term loan
   from the proceeds of the office building sale (Note 7a).

   The Company has agreed in principle to repay principal on the short term loan
   from  the  proceeds  of  the  following  events:  up  to  $500,000  from  any
   distributions  received  from  proceeds of future  refinancing  of UCV; up to
   $350,000 from  distributions  received from the sale of the 33 acres owned by
   Old Vail  Partners,  a general  partnership;  up to $350,000  from 50% of the
   distributions received from the sale of the shopping center in which Old Vail
   Partners,  Ltd. is a partner.  The remaining  balance will become due on July
   31, 2001,  however,  the Company will have the ability to extend the due date
   for up to one additional year.

6. Contingencies:

   The Company is involved in other  various  routine  litigation  and  disputes
   incident  to its  business.  In  management's  opinion,  based in part on the
   advice of legal counsel,  none of these matters will have a material  adverse
   effect on the Company's financial position.

7. Significant events:

(a) Sale of Office  Building:  On December 28, 2000 the Company sold its office
     building  for   $3,725,000   and  recorded  a  gain  of   $2,764,483.   The
     consideration  consisted  of the  assumption  of the  existing  loan with a
     principal  balance of $1,950,478 and cash of $1,662,337.  The cash proceeds
     were net of selling  expenses of $163,197,  credits for lender  impounds of
     $83,676,  deductions for security  deposits of $26,463 and prepaid rents of
     $6,201.  The Company has been  released from  liability  under the existing
     loan except for those acts,  events or omissions that occurred prior to the
     loan assumption.  The Company has occupied  approximately 5,000 square feet
     of  space in the  building  since  1984.  The  existing  lease  expires  in
     September 2011. In conjunction with a lease modification with the new owner
     of the office  building,  the Company is  expecting  to vacate the premises
     about March 31, 2001. However, because the lease commitment was a condition
     to the original loan  agreement,  the lender will only allow the Company to
     be conditionally released from its remaining lease obligation. In the event
     there  is an  uncured  event of  default  by the new  owner  of the  office
     building under the existing loan agreement, the Company's obligations under
     its lease  will be  reinstated  to the extent  there is not an  enforceable
     lease on the Company's  space.  The future  minimum rent payments under the
     lease  agreement  are as follows  for the period and years  ending June 30:
     $33,000 for the six month  period  ending  June 30,  2001;  $68,000-  2002;
     $70,000- 2003;  $72,000-  2004;  $75,000-  2005;  $77,000-  2006;  $443,000
     thereafter and $839,000 in the aggregate.

                                       8
<PAGE>



     The  following  is a summary of the results from  operations  of the office
     building  included in the  financial  statements in the three and six month
     periods:
                                           Three Months           Six Months
                                      -------------------   ------------------
                                       2000       1999       2000      1999
                                      --------   --------   --------  --------
       Rents                          $117,000   $118,000   $244,000  $231,000
       Costs                            24,000     27,000     52,000    56,000
       Allocated SG&A                    9,000      9,000     15,000    15,000
       Depreciation                        -       21,000     16,000    41,000
                                      --------   --------   --------  --------
       Income from operations           84,000     61,000    161,000   119,000
       Interest expense                 40,000     42,000     81,000    83,000
                                      --------   --------   --------  --------
       Income from continuing
         operations                     44,000     19,000     80,000    36,000
                                      ========   ========   ========  ========

 (b) Sale of Valley Bowl real estate:
     On December 29, 2000 the Company sold the land and building occupied by the
     Valley Bowling Center for $2,215,000  cash and recorded a gain of $482,487.
     The proceeds of the sale were used to pay the existing  loan of  $1,650,977
     and selling  expenses of  $160,670.  The bowling  center  discontinued  its
     operations on December 21, 2000.  The following is a summary of the results
     of operations of the bowling center included in the financial statements:

                                         Three Months           Six Months
                                      -------------------   ------------------
                                        2000       1999       2000      1999
                                      --------   --------   --------  --------
       Revenues                       $222,000   $258,000   $460,000  $536,000
       Costs                           146,000    165,000    317,000   369,000
       Direct SG&A                      41,000     57,000    104,000   131,000
       Allocated SG&A                   14,000     18,000     30,000    39,000
       Depreciation                      2,000     23,000     26,000    46,000
                                      --------   --------   --------  --------
       Income from operations           19,000     (5,000)   (17,000)  (49,000)
       Interest expense                 53,000     36,000     91,000    72,000
                                      --------   --------   --------  --------
       Income from continuing
         operations                    (34,000)   (41,000)  (108,000) (121,000)
                                      ========   ========   ========  ========

7. Supplementary Non-Cash information:

   The following is a summary of the changes to the balance sheet related to the
   non-cash  portion of the sale of the  office  building  and Valley  Bowl real
   estate:
                                         Office      Valley Bowl
                                         Building    Real Estate
                                        ----------   -----------
          Receivables                   $    6,201   $      -
          Prepaid expenses                 (83,676)         -
          Property and equipment        (1,171,699)  (2,434,539)
          Accumulated depreciation        (438,096)    (877,536)
          Deferred loan costs              (52,200)      (7,838)
          Other assets                     (11,516)         -
          Long-term debt                (1,950,478)         -
          Other liabilities                (26,462)         -

8. Liquidity

   The  accompanying  consolidated  condensed  financial  statements  have  been
   prepared  assuming the Company will continue as a going concern.  The Company
   has suffered  recurring  losses,  has a working  capital  deficiency,  and is
   forecasting negative cash flows for the next twelve months. These items raise
   substantial doubt about the Company's ability to continue as a going concern.
   The  Company's  ability to continue as a going concern is dependent on either
   refinancing  or selling  certain real estate assets or increases in the sales
   volume of its subsidiary, Penley Sports. The consolidated condensed financial
   statements do not contain adjustments,  if any, including diminished recovery
   of asset  carrying  amounts,  that could arise from forced  dispositions  and
   other insolvency costs.

                                       9
<PAGE>

9. Business segment information:
   The Company operates principally in four business segments:  bowling centers,
   commercial  real  estate  rental,  real  estate  development,  and golf shaft
   manufacturing.  Other revenues,  which are not part of an identified segment,
   consist of property  management  and  development  fees  (earned  from both a
   property 50 percent  owned by the Company and a property in which the Company
   has no  ownership)  and  commercial  brokerage.  The  following is summarized
   information about the Company's operations by business segment.
<TABLE>
<CAPTION>
                                                  Real Estate   Real Estate                   Unallocated
                                      Bowling        Rental     Development        Golf        And Other       Totals
                                   ------------   ------------  ------------   ------------   ------------   ------------
SIX MONTHS ENDED DECEMBER 31, 2000:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $ 1,329,732    $   344,132   $      --      $   530,629    $   167,226    $ 2,371,719
Depreciation and amortization...        30,585         43,441          --           70,631         20,154        164,811
Interest expense ...............        91,117         80,993       130,279          3,377        115,187        420,953
Equity in income (loss)
  of investees .................          --          135,445       (30,000)           --             --         105,445
Gain on sale ...................       482,487      2,764,483           --             --             --       3,246,970
Segment profit (loss) ..........       222,344      2,972,175      (256,271)    (1,528,010)      (366,287)     1,043,951
Investment income ..............                                                                                   7,263
Net income .....................                                                                               1,051,214
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 1999:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $ 1,249,954    $   348,190   $      --      $   281,531    $   146,081    $ 2,025,756
Depreciation and amortization...        52,633         69,100          --           45,570         24,649        191,952
Interest expense ...............        72,136         83,428       134,022          7,906         14,994        312,486
Equity in income (loss)
  of investees .................          --          268,299       (25,000)          --             --          243,299
Loss on sale ...................          --             --            (638)          --             --             (638)
Segment profit (loss) ..........      (350,783)       324,581      (261,973)    (1,338,212)      (269,877)    (1,896,264)
Investment income ..............                                                                                  29,062
Net loss .......................                                                                              (1,867,202)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 2000:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   668,135    $   159,051   $      --      $   243,620    $    88,593    $ 1,159,399
Depreciation and amortization...         4,743         13,829          --           37,046         10,077         65,695
Interest expense ...............        53,700         39,570        46,885          1,358         66,056        207,569
Equity in income (loss)
  of investees .................          --           65,283       (15,000)          --             --           50,283
Gain on sale ...................       482,487      2,764,483          --             --             --        3,246,970
Segment profit (loss) ..........       377,724      2,863,250      (111,597)      (785,599)      (241,100)     2,102,678
Investment income ..............                                                                                   7,263
Net income .....................                                                                               2,109,941
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 1999:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   625,382    $   176,361   $      --      $   157,601    $    74,925    $ 1,034,269
Depreciation and amortization...        25,963         34,696          --           23,368         12,356         96,383
Interest expense ...............        35,851         41,674        69,625          3,675          9,517        160,342
Equity in income of investees ..          --          127,210       (25,000)          --             --          102,210
Segment profit (loss) ..........      (149,158)       156,563      (123,605)      (702,092)      (166,537)      (984,829)
Investment income ..............                                                                                  18,826
Net loss .......................                                                                                (966,003)
</TABLE>
                                     Six Months              Three Months
                              -----------------------   -----------------------
                               2000          1999         2000         1999
                            ----------    ----------   ----------    ----------
Revenues per segment .......$2,371,719    $2,025,756   $1,159,399    $1,034,269
Intercompany rent eliminated   (32,985)      (31,800)     (16,737)      (16,248)
                            ----------    ----------   ----------    ----------
Consolidated revenues ......$2,338,734    $1,993,956   $1,142,662    $1,018,021
                            ==========    ==========   ==========    ==========

                                       10
<PAGE>

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
---------------------------------------------------------------
          CONDITION  AND  RESULTS OF OPERATIONS:
          ---------------------------------------

                         LIQUIDITY AND CAPITAL RESOURCES
Excluding  the  balance  of  the  assessment-district-obligation-in-default  and
property  taxes in default  related to the same  property  which are included in
current liabilities,  the Company has a working capital deficit of $2,100,695 at
December 31, 2000, which is a $1,539,950 decrease from the similarly  calculated
working  capital deficit of $3,640,645 at June 30, 2000. The increase in working
capital is  primarily  attributable  to the cash  proceeds  from the sale of two
properties partially offset by the cash used by operating activities for the six
months ended December 31, 2000. The following is a schedule of the cash provided
(used)  before  changes  in  assets  and  liabilities,  segregated  by  business
segments:
                                        2000         1999        Change
                                      ----------   ----------   ---------
     Bowling                          $(214,000)   $(297,000)   $  83,000
     Rental                             119,000      129,000      (10,000)
     Golf                            (1,457,000)  (1,293,000)    (164,000)
     Development                        (96,000)    (103,000)       7,000
     General corporate expense
       and other                       (315,000)    (192,000)    (123,000)
                                      ----------   ----------   ---------
     Cash used by continuing
       operations                    (1,963,000)  (1,756,000)    (207,000)
     Capital expenditures              (211,000)    (100,000)    (111,000)
     Principal payments on
       long-term debt                  (131,000)    (139,000)       8,000
                                      ----------   ----------   ---------
     Cash used                       (2,305,000)  (1,995,000)    (310,000)
                                      ==========   ==========   =========
     Distributions received from
       investees, net                    14,000    2,005,000   (1,991,000)
                                      ==========   ==========   =========
     Proceeds from sale of
        properties, net of
        extinguishment of debt        2,059,000      114,000   (1,945,000)
                                      ==========   ==========   =========

The  Company has been unable to  generate  sufficient  cash flow from  operating
activities to meet  scheduled  principal  payments on long-term debt and capital
replacement  needs  during  the last  several  years.  It has used its  share of
distributions  from investees and proceeds from refinancings and sales of assets
to fund these deficits.

As  described  in  Note 4 of  the  Notes  to  Consolidated  Condensed  Financial
Statements,  OVPGP is delinquent in the payment of special  assessment  district
obligations  and  property  taxes on 33 acres of  undeveloped  land.  The annual
obligation for the assessment district is approximately  $144,000. The County of
Riverside  obtained  judgments  for the  default  in the  delinquent  assessment
district  payments.  The amounts due to cure the judgment for the default  under
the assessment district obligation on the 33 acre parcel as of December 31, 2000
was approximately $1,933,000.  The principal balance of the allocated portion of
the bonds  ($1,384,153  as of December 31, 2000),  and  delinquent  interest and
penalties  ($1,577,306  as of December 31, 2000) are  classified as  "Assessment
district obligation- in default" in the consolidated balance sheet. In addition,
the consolidated  balance sheet includes  $488,917 of delinquent  property taxes
and late fees as of December 31, 2000. On June 23, 2000, the County of Riverside
agreed to remove the property from the planned public sale originally  scheduled
for June 26,  2000 in exchange  for an  immediate  payment of $330,000  with the
balance of property  taxes due on December 29, 2000.  Separately,  the County of
Riverside  stated that a foreclosure  sale related to the default  judgement for
assessment  district  payments  would not be  scheduled  until  some time  after
January 1, 2001. On January 19, 2001,  the County of Riverside  agreed to extend
the due date to March 30, 2001 with three  options to that would  extend the due
date to August 1, 2001.  The options for  additional  extensions  would  require
payments  totaling  $75,000 to be applied to the amount due. In 1993 the City of
Temecula  adopted  a  general  development  plan as a means of  down-zoning  the
property to a lower use and, if uncontested,  might have significantly  impaired
the value of the property.  As described in Note 4 of the Notes to  Consolidated
Financial  Statements,  the Company  contested this action. On October 23, 2000,
the City of  Temecula's  city council  granted  preliminary  approval of OVPGP's
request for re-zoning and general plan amendment  related to a development  plan
which includes a combination of  multi-family  and commercial  uses. On November
28,  2000 the  re-zoning  and general  plan  amendment  requested  by OVPGP were
adopted by the City of Temecula and OVPGP abandoned its legal claims against the
City of Temecula.
                                       11
<PAGE>

On January 11,  2001,  the Company  agreed to sell the 33 acres to an  unrelated
developer for $6,550,000 cash plus assumption of the  non-delinquent  balance of
the assessment district  obligation  ($1,028,106 as of December 31, 2000) at the
time of closing,  which shall be April 20, 2001.  The sale is  contingent on the
buyer's due diligence, which must be completed by February 28, 2001. The Company
estimates  the  proceeds  from the  sale to the  Company  will be  approximately
$1,300,000 after paying delinquent  assessment district obligations and property
taxes ($2,342,000), selling expenses and other costs ($558,000), distribution to
minority  interest holder of Old Vail Partners  ($1,150,000),  and a development
fee to Landgrant Corporation ($1,200,000).

On December 28, 2000 the Company sold its office  building  for  $3,725,000  and
recorded a gain of $2,764,483.  The proceeds  consisted of the assumption of the
existing  loan with a  principal  balance of  $1,950,478  and cash  proceeds  of
$1,662,337.  The cash proceeds were net of selling expenses of $163,197, credits
for lender impounds of $83,676,  deductions for security deposits of $26,463 and
prepaid rents of $6,201.  The Company has been released from liability under the
existing loan except for those acts,  events or omissions that occurred prior to
the loan  assumption.  The Company occupies  approximately  5,000 square feet of
space in the building under a lease that expires in September  2011. The Company
is expecting to vacate the premises about March 31, 2001.  However,  because the
lease commitment was a condition to the original loan agreement, the lender will
only allow the Company to be  conditionally  released from its  remaining  lease
obligation.  In the event there is an uncured event of default by the new office
building owner under the existing loan agreement,  the Company obligations under
its lease will be reinstated to the extent there is not an enforceable  lease on
the Company's space.

On  December  29, 2000 the Company  sold the land and  building  occupied by the
Valley Bowling Center for $2,215,000  cash and recorded a gain of $482,487.  The
proceeds  of the sale  were  used to pay the  existing  loan of  $1,650,977  and
selling expenses of $160,670.  The bowling center discontinued its operations on
December 21, 2000.

On October 3, 2000,  UCV obtained  approval  for the plans to redevelop  the 542
unit  apartment  project  into  1,109  units  plus  an 80 unit  assisted  living
facility.   UCV  is  currently   evaluating   alternatives   for  financing  the
redevelopment.

On January 9, 2001,  UCV signed a  commitment  letter with a lender to refinance
the  existing  loan  ($28,585,399  balance  as of  December  31,  2000)  with  a
$33,000,000 loan. The new loan will be for an initial term of 18 months with two
options to extend the maturity date for one year each.  Monthly payments will be
interest only at a rate based on LIBOR (not less than 6%) plus 2.50 points.  The
commitment  requires  UCV to pay a fee  (currently  estimated at $40,000) to cap
LIBOR  at  7%.  UCV  estimates  the  proceeds  from  the  refinancing   will  be
approximately  $2,900,000 after loan costs and capital replacement reserves. UCV
plans  to  use  approximately  $900,000  of the  proceeds  to  fund  anticipated
redevelopment planning costs that would be incurred prior to obtaining financing
for the redevelopment.  UCV plans to distribute the remaining  $2,000,000 to the
partners.  The  Company  is  obligated  to use  fifty  percent  of its  share of
distributions from UCV, up to $500,000,  to make payments on its short-term note
payable.

Management  estimates  negative cash flow of  $1,000,000  to $1,300,000  for the
remaining  quarters of the year ending June 30, 2001 from  operating  activities
before  adding  an  estimated   $1,000,000   distribution   from  UCV  from  the
refinancing,  the estimated sales proceeds of $1,300,000 from the sale of the 33
acres of undeveloped land, and deducting  $850,000 of principal  payments due on
the short  term note  payable  triggered  by these  events.  Management  expects
continuing  cash flow deficits  until Penley Sports  develops  sufficient  sales
volume to become  profitable.  However,  there can be no assurances  that Penley
Sports  will  ever  achieve  profitable  operations.   Management  is  currently
evaluating obtaining additional investors in Penley Sports to provide sufficient
funds  for the  expected  future  cash  flow  deficits.  If the  Company  is not
successful  in  obtaining  other  sources of working  capital  this could have a
material adverse effect on the Company's ability to continue as a going concern.

              "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995
With the  exception  of  historical  information  (information  relating  to the
Company's  financial  condition and results of operations at historical dates or
for historical periods),  the matters discussed in this Management's  Discussion
and   Analysis  of   Financial   Condition   and  Results  of   Operations   are
forward-looking statements that necessarily are based on certain assumptions and
are subject to certain risks and uncertainties. These forward-looking statements
are based on management's  expectations  as of the date hereof,  and the Company
does not undertake any  responsibility  to update any of these statements in the
future.  Actual future  performance and results could differ from that contained


                                       12
<PAGE>

in or suggested by these  forward-looking  statements as a result of the factors
set forth in this  Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  and  elsewhere  in the  Company's  filings  with the
Securities and Exchange Commission.

                              RESULTS OF OPERATIONS

The  following is a summary of the changes in the results of  operations  of the
six-month and three-month periods ended December 31, 2000 to the same periods in
1999 and a discussion of the significant changes:
<TABLE>
<CAPTION>
                                  SIX MONTHS ENDED DECEMBER 31, 2000 VERSUS 1999
                                  ----------------------------------------------
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $  79,778  $    (4,058)        --      $  249,098   $  21,145    $  345,963
 Costs ..........................       6,792        8,071       (5,321)      413,909        --         423,451
 SG&A-direct ....................        (336)        --           --           6,455       4,606        10,725
 SG&A-allocated .................     (14,251)        --         (1,000)       (2,000)     17,251          --
 Depreciation and amortization ..     (22,048)     (25,659)        --          25,061      (4,495)      (27,141)
 Interest expense ...............      18,981       (2,435)      (3,743)       (4,529)    100,193       108,467
 Equity in investees ............        --       (132,854)      (5,000)         --           --       (137,854)
 Gain on sale ...................     482,487    2,764,483          638          --           --      3,247,608
 Segment profit (loss) ..........     573,127    2,647,594        5,702      (189,798)    (96,410)    2,940,215
 Investment income ..............                                                                       (21,799)
 Income from operations ..........                                                                    2,918,416
</TABLE>
<TABLE>
<CAPTION>
                                THREE MONTHS ENDED DECEMBER 31, 2000 VERSUS 1999
                                ------------------------------------------------
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $  42,753  $   (17,310)        --      $   86,019   $  13,668    $  125,130
 Costs ..........................       8,185        1,530       14,732       160,605        --         185,052
 SG&A-direct ....................       2,986         --           --           3,560      24,529        31,075
 SG&A-allocated .................      (9,442)        --          6,000        (6,000)      9,442          --
 Depreciation and amortization ..     (21,220)     (20,867)        --          13,678      (2,279)      (30,688)
 Interest expense ...............      17,849       (2,104)     (22,740)       (2,317)     56,539        47,227
 Equity in investees ............        --        (61,927)      10,000          --           --        (51,927)
 Gain on sale ...................     482,487    2,764,483         --            --           --      3,246,970
 Segment profit (loss) ..........     526,882    2,706,687       12,008       (83,507)    (74,563)    3,087,507
 Investment income ..............                                                                       (11,563)
 Income from operations .........                                                                     3,075,944
</TABLE>
    Note: The change in rental  revenues  and SG&A  expenses  do not include the
        effect of the net change in elimination of  intercompany  rent of $1,185
        and $489 in the six and three month periods, respectively.

BOWLING OPERATIONS:
-------------------
The segment  includes the  operations  of two bowling  centers,  Valley Bowl and
Grove Bowl. On December 21, 2000,  the Company  closed the  operations of Valley
Bowl in  conjunction  with the sale of the real estate on December 29, 2000. The
following  is a summary  by  bowling  center of the  changes  in the  results of
operations of the six-month and  three-month  periods ended December 31, 2000 to
the same periods in 1999:

                             Six-Month Period           Three-Month Period
                        --------------------------   --------------------------
                        Grove    Valley   Combined   Grove    Valley   Combined
                        ------- --------  --------   ------- --------  --------
Revenues               $155,753 $(75,975) $ 79,778   $78,497 $(35,744) $ 42,753
Costs                    58,941  (52,149)    6,792    26,910  (18,725)    8,185
SG&A-direct              25,971  (26,307)     (336)   19,279  (16,293)    2,986
SG&A-allocated           (5,151)  (9,100)  (14,251)   (5,542)  (3,900)   (9,442)
Depreciation and
  amortization           (1,895) (20,153)  (22,048)     (465) (20,755)  (21,220)
Interest expense            --    18,981    18,981       --    17,849    17,849
Gain on sale                --   482,487   482,487       --   482,487   482,487
Segment profit (loss)    77,887  495,240   573,127    38,315  488,567   526,882

                                       13
<PAGE>

The  declines in revenues and  expenses at Valley Bowl are  consistent  with the
changes in prior periods and  indicative  of the changes to operations  once the
Company decided to sell the real estate and close the bowling center.

Bowl revenues of Grove Bowl (Grove)  increased by 21% in the three and six month
periods  primarily due to 12% and 14% increases in the number of games bowled in
the three and six month periods,  respectively.  The Grove Bowl's  revenues have
consistently increased since the surrounding shopping center was redeveloped and
reopened in March 2000.  Grove also had 7% and 6% increases in the average price
of games bowled in the three and six month periods respectively.

Bowl costs of Grove  increased  primarily  due to increases in utility  costs of
$20,223  (94%)  and  $56,159   (116%)  in  the  three  and  six  month  periods,
respectively.  These increases were due to the increase in electric rates in San
Diego.  The  Company is  currently  evaluating  alternatives  for a supplier  of
electricity that will significantly reduce the volatility in utility rates.

SG&A direct expenses  increased at Grove primarily due to increases in promotion
and advertising  expenses of $11,687 (34%) and 24,448 (29%) in the three and six
month periods, respectively.

RENTAL OPERATIONS:
------------------
A  temporary  easement  granted by the  Company  for the use of a portion of its
undeveloped land in Temecula,  California expired in September 2000. The Company
had been  amortizing  approximately  $17,000  of  deferred  rent to income  each
quarter. This decrease was partially offset in the six month period by a $12,389
(5%) increase in the rental income from the office  building  attributable  to a
12%  increase in rental  rates.  The increase in rental rates in the three month
period was offset by a 8% increase in office vacancies.  Depreciation  decreased
in  the  six  and  three  month  periods  due  to  the  cessation  of  recording
depreciation on the office building  effective October 1, 2000, when the Company
became committed to a plan to sell the office  building.  Rental costs increased
due to an increase in the rent expense for the subleasehold interest.

The equity in income of UCV  decreased  primarily due to a decrease in UCV's net
income  of  $266,000  and   $124,000  in  the  six  and  three  month   periods,
respectively. Rental income increased 7% in both the six and three month periods
primarily  due to an increase in the average  rental  rates.  This  increase was
offset by increases in interest  expense of $412,000 and $207,000 in the six and
three month  periods  respectively.  This  increase  related to the  increase in
financing in October 1999.

REAL ESTATE DEVELOPMENT OPERATIONS:
-----------------------------------
Development  costs and expenses  primarily  consists of property taxes and legal
costs  incurred to contest the City of  Temecula's  attempts  to  down-zone  the
undeveloped land owned by Old Vail Partners.  Development costs increased in the
three month period due to an increase in legal costs related to the  development
plan approval received in November 2000. Interest expense related to development
activities  primarily  relates to  interest  accrued on the past due and current
assessment district obligations of Old Vail Partners.

GOLF OPERATIONS:
----------------
Prior to January 2000,  golf shaft sales were  principally to custom golf shops.
In January 2000,  Penley  commenced  sales to two of the largest golf  equipment
distributors.  In addition to increases in sales related to these two customers,
direct  sales  to  the  after-market  and  small  golf-club  manufacturers  also
increased,  likely due to the credibility and increased exposure from the Penley
products being included in the catalogs of these two distributors.

Operating  expenses of the golf segment  consisted of the following in 2000, and
1999:
                                      Three Months           Six Months
                                   --------------------  --------------------
                                     2000        1999       2000      1999
                                   ---------  ---------  ---------  ---------
     Costs of goods sold and
       manufacturing overhead      $ 431,000  $ 268,000  $ 889,000  $ 473,000
     Research & development           62,000     64,000    130,000    132,000
                                   ---------  ---------  ---------  ---------
          Total golf costs           493,000    332,000  1,019,000    605,000
                                   =========  =========  =========  =========
     Marketing & promotion           362,000    383,000    707,000    753,000
     Administrative-direct            53,000     29,000    114,000     62,000
                                   --------- ----------  ---------  ---------
          Total SG&A-direct          415,000    412,000    821,000    815,000
                                   =========  =========  =========  =========
     Allocated corporate costs        83,000     89,000    145,000    147,000
                                   ========= ==========  =========  =========

                                       14
<PAGE>

Total golf costs increased in 2000 primarily due to an increase in the amount of
cost of goods sold related to increased  sales, and an increase in manufacturing
overhead  related to the plant  facilities  into which Penley  relocated in June
2000.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------
The Company is exposed to market risk primarily due to  fluctuations in interest
rates.  The  Company  utilizes  both fixed  rate and  variable  rate  debt.  The
following  table  presents  principal  maturities and related  weighted  average
interest rates of the Company's  long-term fixed rate and variable rate debt for
the fiscal years ended June 30.
                                        2001        2002      Total
                                     ----------  --------  ----------
    Fixed rate debt                     $43,000   $20,000     $63,000
    Weighted average interest rate        9.5%      8.7%       9.2%
       rate

    Variable rate debt               $2,089,000    $6,000  $2,095,000
    Weighted average interest rate       10.5%     10.5%       10.5%

The amounts for 2001 relate to the six months  ending June 30, 2001.  This table
does not include the principal  maturities  related to the  Assessment  District
Obligation-In Default.

The  Company's  unconsolidated  subsidiary,  UCV,  has  variable  rate  debt  of
$28,685,000  as of  September  30,  2000 for  which  the  interest  rate was 9.0
percent. The principal cash flows for each of UCV's fiscal years ending March 31
is: 2001- $339,000; 2002- $28,346,000; and $28,685,000 in total.

The Company does not enter into  derivative  or interest rate  transactions  for
speculative or trading purposes.



                                       15
<PAGE>

                                     PART II
                                OTHER INFORMATION



ITEM 1. Legal Proceedings

    As of December 31,  2000,  other than as described in Note 4 of Notes to the
    Consolidated Condensed Financial Statements,  there were no changes in legal
    proceedings  from  those set forth in Item 3 of the Form 10-K  filed for the
    year ended June 30, 2000.


ITEM 2. Changes in Securities

          NONE


ITEM 3. Defaults upon Senior Securities

          N/A


ITEM 4. Submission of Matters to a Vote of Security Holder
        --------------------------------------------------

        On December 22, 2000 the Company held its annual shareholder  meeting in
        which the following item was voted upon:
                                          Tabulation of Votes
                                     ---------------------------
                                         For    Against  Abstain
                                     ---------- -------  -------
         Election of Directors:
            Harold S. Elkan          23,529,984     0     54,166
            Steven R. Whitman        23,529,888     0     54,262
            Patrick D. Reiley        23,530,388     0     53,762
            James E. Crowley         23,530,550     0     53,600
            Robert A. MacNamara      23,530,450     0     53,700

ITEM 5. Other Information

          NONE


ITEM 6. Exhibits & Reports on Form 8-K

     (a) Exhibits: Financial Data Schedule

     (b) Reports on Form 8-K:  NONE





                                       16
<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.




     SPORTS ARENAS, INC.



     By:  /s/ Harold S. Elkan
        ----------------------
                 Harold S. Elkan, President and Director


     Date:   February 14, 2001




     By:/s/ Steven R. Whitman
        ---------------------
           Steven R. Whitman, Treasurer,
           Principal Accounting Officer and Director



     Date: February 14, 2001




                                       17
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