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, 1995

                                       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 (619) 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 December 31, 1995 was 27,250,000 shares.


<PAGE>


                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                         QUARTER ENDED DECEMBER 31, 1995

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of December 31, 1995 and June 30, 1995             1-2

      Statements of Operations for the Three Months Ended                   3
            December 31, 1995 and 1994

      Statements of Operations for the Six Months Ended                     4
            December 31, 1995 and 1994

      Statements of Cash Flows for the Six Months Ended                    5-6
            December 31, 1995 and 1994

      Notes to Financial Statements                                        7-9


Item 2.- Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                     10-12



Part II - Other Information                                                13


Signature                                                                  14



<PAGE>


15

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                         December 31,     June 30,
                                                                            1995           1995 
                                                                         ----------      ---------
<S>                                                                    <C>             <C>
                                                                         (Unaudited)
Current assets:
   Cash and equivalents ............................................    $   447,221     $   120,027
   Current portion of notes receivable .............................         25,000          25,000
   Current portion of notes receivable-affiliate ...................        100,000         100,000
   Construction contract receivables ...............................        354,120         273,912
   Other receivables ...............................................         53,792          41,346
   Costs in excess of billings on uncompleted contracts.............         86,800          14,471
   Prepaid expenses ................................................        279,302         148,225
                                                                       ------------    ------------
     Total current assets ..........................................      1,346,235         722,981
                                                                       ------------    ------------

Receivables due after one year:
   Note receivable .................................................        731,702         743,144
      Less deferred gain ...........................................       (726,005)       (737,447)
   Affiliate .......................................................        610,119         595,224
   Other ...........................................................         99,761         115,100
                                                                       ------------    ------------
                                                                            715,577         716,021
     Less current portion ..........................................       (125,000)       (125,000)
                                                                       ------------    ------------
                                                                            590,577         591,021
                                                                       ------------    ------------
Property and equipment, at cost:
   Land ............................................................      1,879,000       1,529,000
   Buildings .......................................................      5,665,528       4,477,544
   Equipment and leasehold and tenant improvements .................      5,711,012       5,702,034
                                                                       ------------    ------------
                                                                         13,255,540      11,708,578
   Less accumulated depreciation and amortization ..................     (5,772,791)     (5,088,774)
                                                                       ------------    ------------

     Net property and equipment ....................................      7,482,749       6,619,804
                                                                       ------------    ------------

Other assets:
   Undeveloped land, at cost .......................................      4,804,496       4,804,496
   Capitalized carrying costs on leased land .......................         86,517          87,465
   Goodwill, net ...................................................        672,678         807,216
   Deferred loan costs, net ........................................        108,953         127,002
   Investments .....................................................      1,270,865       1,416,147
   Other ...........................................................        129,898         132,309
                                                                       ------------    ------------
                                                                          7,073,407       7,374,635
                                                                       ------------    ------------
                                                                       $ 16,492,968    $ 15,308,441
                                                                       ============    ============ 
</TABLE>

                                     1

<PAGE>


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

                  LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
                                                                        December 31,      June 30,
                                                                            1995            1995 
                                                                       ------------    ------------
                                                                        (Unaudited)
<S>                                                                    <C>             <C>

Current liabilities:
   Assessment district obligation - in default .....................   $  2,040,721    $  1,928,403
   Long-term debt due within one year ..............................      1,501,000         705,000
   Note payable, line of credit ....................................        268,742          88,742
   Accounts payable ................................................      1,096,593         663,814
   Accrued payroll and related expenses ............................        188,501         130,890
   Accrued property taxes ..........................................        231,090         249,146
   Accrued interest ................................................        123,663          93,350
   Accrued frequent bowler program expense .........................        211,637         200,292
   League bowler prize funds .......................................        323,579            --
   Other accrued liabilities .......................................        142,833         264,488
                                                                       ------------    ------------

     Total current liabilities .....................................      6,128,359       4,324,125
                                                                       ------------    ------------

Long-term debt, excluding current portion ..........................      6,484,249       6,803,635
                                                                       ------------    ------------

Long-term debt, related party ......................................        346,000            --
                                                                       ------------    ------------

Distributions received in excess of basis
   in investment ...................................................      9,734,634       9,559,390
                                                                       ------------    ------------

Tenant security deposits                                                     24,719          24,616
                                                                       ------------    ------------

Minority interests in consolidated subsidiaries ....................      2,119,402       2,212,677
                                                                       ------------    ------------

Commitments and contingencies

Shareholders' equity (deficiency):
   Common stock, $.01 par value, 50,000,000 shares
     authorized, 27,250,000 shares issued and ......................        272,500         272,500
outstanding
   Additional paid-in capital ......................................      1,730,049       1,730,049
   Accumulated deficit .............................................     (8,659,720)     (8,017,273)
                                                                       ------------    ------------
                                                                         (6,657,171)     (6,014,724)
   Less note receivable from shareholder ...........................     (1,687,224)     (1,601,278)
                                                                       ------------    ------------
     Total shareholders' equity (deficiency) .......................     (8,344,395)     (7,616,002)
                                                                       ------------    ------------
                                                                       $ 16,492,968    $ 15,308,441
                                                                       ============    ============
</TABLE>








        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, 1995 AND 1994
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                      1995           1994
                                                  -----------    -----------
<S>                                               <C>            <C>

Revenues:
   Bowling ....................................   $ 1,930,647    $ 2,038,366
   Rental .....................................       134,939        124,035
   Construction ...............................       821,130        278,274
   Other ......................................        31,544         41,496
   Other-related party ........................        26,845         26,547
                                                  -----------    -----------
                                                    2,945,105      2,508,718
                                                  -----------    -----------
Costs and expenses:
   Bowling ....................................     1,220,607      1,219,064
   Rental .....................................        61,851         56,218
   Construction ...............................       684,748        233,694
   Development ................................        48,028         51,501
   Selling, general and administrative ........       680,215        682,810
   Depreciation and amortization ..............       260,709        247,543
                                                  -----------    -----------
                                                    2,956,158      2,490,830
                                                  -----------    -----------
Income (loss) from operations .................       (11,053)        17,888
                                                  -----------    -----------

Other income (charges):
   Investment income:
     Related party ............................        54,093         35,514
     Other ....................................        17,424         34,032
   Interest expense and amortization of finance     
     costs ....................................      (219,889)      (176,658)
   Interest expense related to development ....      
     activities ...............................       (54,660)       (40,493)
   Recognize deferred gain ....................         5,792          8,667
   Equity in income of investees ..............        55,690         17,781
                                                  -----------    -----------
                                                     (141,550)      (121,157)
                                                  -----------    -----------

Loss before extraordinary gain ................      (152,603)      (103,269)

Extraordinary gain from extinguishment of debt           --        1,261,826
                                                  -----------    -----------

Net income (loss) .............................   $ ( 152,603)   $ 1,158,557
                                                  ===========    ===========
</TABLE>



Per common share (based on weighted average shares outstanding):
<TABLE>
<S>                                               <C>              <C>
     Loss before extraordinary gain               $ (.01)          $ (.01)
                                                  ======           ======
     Net income (loss)                            $ (.01)          $  .04
                                                  ======           ======
</TABLE>







        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, 1995 AND 1994
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                      1995           1994
                                                  -----------    -----------
<S>                                               <C>            <C>
Revenues:
   Bowling ....................................   $ 3,674,447    $ 3,844,838
   Rental .....................................       258,958        275,972
   Construction ...............................     1,349,834        701,823
   Other ......................................        61,777         89,566
   Other-related party ........................        53,885         53,286
                                                  -----------    -----------
                                                    5,398,901      4,965,485
                                                  -----------    -----------
Costs and expenses:
   Bowling ....................................     2,439,206      2,499,205
   Rental .....................................       116,778        141,802
   Construction ...............................     1,146,139        578,593
   Development ................................        94,404         51,501
   Selling, general and administrative ........     1,425,601      1,463,374
   Depreciation and amortization ..............       522,062        552,862
                                                  -----------    -----------
                                                    5,744,190      5,287,337
                                                  -----------    -----------
Loss from operations ..........................      (345,289)      (321,852)
                                                  -----------    -----------

Other income (charges):
   Investment income:
     Related party ............................       109,987         77,578
     Other ....................................        34,992         40,060
   Interest expense and amortization of finance      
     costs  ...................................      (440,689)      (425,653)
   Interest expense related to development ....      
     activities  ..............................      (109,355)       (40,493)
   Recognize deferred gain ....................        11,442          8,667
   Equity in income of investees ..............        96,465         94,421
                                                  -----------    -----------
                                                     (297,158)      (245,420)
                                                  -----------    -----------

Loss before extraordinary gain ................      (642,447)      (567,272)

Extraordinary gain from extinguishment of debt           --        1,261,826
                                                  -----------    -----------


Net income (loss) .............................   $ ( 642,447)   $   694,554
                                                  ===========    ===========
</TABLE>



Per common share (based on weighted average shares outstanding):
<TABLE>
     <S>                                            <C>              <C>
     Loss before extraordinary gain                 $ (.02)          $ (.02)
                                                    ======           ======
     Net income (loss)                              $ (.02)          $  .02
                                                    ======           ======
</TABLE>







        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, 1995 AND 1994
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                             1995           1994
                                                          ---------      ---------
<S>                                                       <C>          <C>
Cash flows from operating activities:
   Net income (loss) ..................................   $(642,447)   $   694,554
   Adjustments to reconcile net loss to net
     cash provided (used) by operating activities:
     Amortization of deferred financing costs .........      19,685         22,693
     Depreciation and amortization ....................     522,062        552,862
     Undistributed income of investees ................     (96,465)       (94,421)
     Extraordinary gain ...............................        --       (1,261,826)
     Interest accrued on assessment district obligation     112,318         37,493
     Interest accrued on receivable from shareholder ..     (85,946)       (62,580)
     Recognize deferred gain ..........................     (11,442)        (8,667)
                                                          ---------    -----------
                                                           (182,235)      (119,892)
   Changes in assets and liabilities:
     Increase in other receivables, prepaid
        expenses, and costs in excess of billings .....    (296,060)       (77,117)
     Increase in accounts payable and accrued
        expenses ......................................     715,916        168,987
     Other ............................................      (6,473)       (32,372)
                                                          ---------    -----------
      Net cash used by operating activities ...........     231,148        (60,394)
                                                          ---------    -----------

Cash flows from investing activities:
   (Increase) decrease in notes receivable ............      11,886        (21,649)
   Capital expenditures ...............................      (8,978)      (123,973)
   Distributions from investees .......................     244,999        142,500
   Contributions to investees .........................      (1,800)       (79,960)
   Other ..............................................      12,109           --
   Purchase of additional interests in investees ......      (5,246)       (49,845)
                                                          ---------    -----------
     Net cash provided by investing activities ........     252,970       (132,927)
                                                          ---------    -----------

Cash flows from financing activities:
   Scheduled principal payments .......................    (336,924       (471,863)
   Extinguishment of long-term debt ...................        --          (21,658)
   Costs associated with refinancing long-term debt ...        --          (39,417)
   Proceeds from line of credit .......................     210,000        149,360
   Payments on line of credit .........................     (30,000)       (15,000)
   Other ..............................................        --          (11,096)
                                                          ---------    -----------
      Net cash provided (used) by financing activities     (156,924)      (409,674)
                                                          ---------    -----------

Net increase (decrease) in cash and equivalents .......     327,194       (602,995)

Cash and equivalents, beginning of year ...............     120,027        904,744
                                                          ---------    -----------

Cash and equivalents, end of year .....................   $ 447,221    $   301,749
                                                          =========    ===========
</TABLE>







        See accompanying notes to consolidated condensed financial statements.

                                          5
<PAGE>


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
                                   (Unaudited)


SUPPLEMENTAL CASH FLOW INFORMATION:

   Supplemental Schedule of Non-Cash Investing and Financing Activities:

   The Company acquired an additional 29 percent interest in Redbird Properties,
     effective July, 1, 1995, in exchange for a $446,000 note payable.  See Note
     3c regarding  resulting effect of consolidating  accounts and operations in
     the Company's financial statements.

   In addition to the initial  cash payment of $50,000 to acquire an  additional
     interest in Old Vail Partners in September 1994, the  acquisition  resulted
     in the following items being included in the Company's consolidated balance
     sheet  on the  date of  acquisition:  Cash-  $155;  Prepaid  expense-  $85;
     Undeveloped  land-  $4,482,867;  Investment in Vail Ranch Limited Partners-
     $1,122,062;  Accounts payable- $4,095;  Accrued interest- $50,000;  Accrued
     property tax- $182,618; Other liabilities- $62,369; Notes payable- $93,819;
     Assessment  District  obligations,  in default-  $1,760,125;  and  Minority
     interest- $2,262,677. As a result of the consolidation of Old Vail Partners
     in  the  Company's  financial  statements,   the  Company's  investment  of
     $1,189,466 in Old Vail Partners was eliminated.

   In October 1994, the Company  refinanced long term debt of $1,193,800  with a
     $1,200,000  note payable.  The Company also incurred  $45,617 of loan costs
     related to the refinancing, of which $39,417 was a cash expenditure.

   In October 1994, the Company extinguished  debt of $2,461,942 by the transfer
     of title to an office  building to the lender in complete  satisfaction  of
     the liability.  The office building cost and accumulated  depreciation were
     $1,856,187  and  $721,739,  respectively.  The  Company  also wrote off the
     balance of unamortized  loan costs  ($19,995),  deferred lease  commissions
     ($27,765),  and accrued property tax ($3,750) as part of the  transactions.
     The  Company  incurred  transaction  costs of  $21,659  to  consummate  the
     transfer.


                                          6
<PAGE>



                       SPORTS ARENAS, INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           DECEMBER 31, 1995 AND 1994
                                   (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 changes in cash flow for the interim
      periods.

2.    Due to the seasonal fluctuations of the bowling operations,  the financial
      results for the interim  periods ended December 31, 1995 and 1994, are not
      necessarily indicative of operations for the entire year.

3. Investments:

   (a) Investments consist of the following:
<TABLE>
<CAPTION>
                                                   December 31,     June 30,
                                                      1995           1995 
                                                   -----------    -----------
<S>                                               <C>            <C>
Accounted for on the equity method:
   Investment in UCV, L.P. .......................$(9,734,634)   $(9,559,390)
   Vail Ranch Limited Partnership ................  1,220,833      1,219,033
   Redbird Properties, Ltd. ......................       --          134,975
                                                  -----------    -----------
                                                   (8,513,801)    (8,205,382)
   Less Investment in UCV, L.P. classified
     as liability- Distributions received
     in excess of basis in investment ............  9,734,634      9,559,390
                                                  -----------    -----------
                                                    1,220,833      1,354,008
                                                  -----------    -----------
Accounted for on the cost basis:
   All Seasons Inns, La Paz .....................      50,032         62,139
                                                  -----------    -----------

                                                  $ 1,270,865    $ 1,416,147
                                                  ===========    ===========
</TABLE>

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:
<TABLE>
<CAPTION>
                                          1995       1994 
                                         -------   -------
<S>                                      <C>       <C>
        UCV, L.P. ....................   $96,465   $134,819
        Vail Ranch Limited Partnership      --         --
        Old Vail Partners ............      --      (39,050)
        Redbird Properties, Ltd. .....      --       (1,348)
                                         -------   --------
                                         $96,465   $ 94,421
                                         =======   ========
</TABLE>

     During the six  months  ended  December  31,  1995,  the  Company  received
     $244,999 of cash  distributions from UCV, L.P. ($102,500 from UCV, L.P. and
     $40,000 from Old Vail Partners in 1994).

   (b) Investment in UCV, L.P.

     The operating  results of this investment are included in the  accompanying
     consolidated  statements of operations based upon the partnership's  fiscal
     year  (March  31).  Summarized   information  from  UCV,  L.P.'s  unaudited
     statements of income for the six-month periods ended September 30, 1995 and
     1994 are as follows:
<TABLE>
<CAPTION>
                                                     1995           1994  
                                                   --------       -------
<S>                                              <C>           <C>
        Revenues                                 $ 2,057,000   $ 1,978,000
        Operating and general and
              administrative costs                   718,000       726,000
        Depreciation                                 152,000       118,000
        Interest expense                             994,000       865,000
        Net income                                   193,000       269,000
</TABLE>
                                       7

<PAGE>

   (c) Investment in Redbird Properties, Ltd.

     At June 30,  1995,  the  Company  owned a 40  percent  limited  partnership
     interest in Redbird  Properties,  Ltd.  which owns the land and building in
     which one of the Company's bowling centers (Red Bird Lanes) is located. The
     other 60  percent  interest  was owned by Harold S.  Elkan as a 30  percent
     limited  partner,  and by his brother,  directly and  indirectly,  as a one
     percent general partner and 29 percent limited  partner.  Effective July 1,
     1995, the Company purchased an additional 29 percent  partnership  interest
     in Redbird Properties, Ltd. from Harold S. Elkan for $446,000. The purchase
     price is payable in monthly installments of interest at 8 percent per annum
     plus annual  principal  payments of  $100,000 on January 1,  1996-1999  and
     $46,000 on January 1, 2000. The agreement provides for an adjustment to the
     purchase price if the partnership  subsequently sells the real estate prior
     to June 30,  1996.  The  Company's  partnership  interest  is entitled to a
     priority return over the other limited partners.  The Company and the other
     partners  are   co-guarantors  of  a  loan  to  the  partnership  which  is
     collateralized  by the  partnership's  land  and  building.  See Note 5 (c)
     regarding subsequent event.

     The Company had accounted for its  investment in Redbird  Properties  using
     the equity  method of  accounting  through  June 30,  1995.  As a result of
     acquiring the additional 29 percent interest,  Redbird  Properties became a
     consolidated subsidiary,  effective July 1, 1995. This transaction resulted
     in an  increase  in the  following  assets and  liabilities:  Property  and
     equipment- $1,537,984,  Accumulated  depreciation-  $331,500; Note payable-
     $713,538;  Note  payable,  related  party-  $446,000.  The  effect  of this
     transaction  was also to eliminate  the  Company's  $134,975  investment in
     Redbird  Properties  and to reduce  Minority  interests  by $93,275,  which
     relates to advances to the other  partners  in excess of their  basis.  The
     following is summarized financial  information of Redbird Properties,  Ltd.
     as of and for the six months  ended  December  31,  1995  (included  in the
     consolidated  condensed financial statements) and 1994 (accounted for using
     the equity method).
<TABLE>
<CAPTION>
                                                1995         1994 
                                               ------       ------
<S>                                          <C>          <C>
          Assets                             $ 679,000    $ 722,000
          Liabilities                          705,000      741,000
          Rent from Red Bird Lanes              55,000       55,000
          Interest expense                    ( 36,000)    ( 37,000)
          Depreciation                        ( 21,000)    ( 21,000)
          Net loss                             ( 2,000)     ( 3,000)
</TABLE>

     The note payable was originally scheduled to mature in January 1996 but the
     due date was  extended to February 7, 1997.  The loan is  otherwise  due in
     $9,060 monthly payments including principal and a variable rate of interest
     at the  banks  prime  rate  (8-3/4%  at  December  31,  1995).  The loan is
     collateralized  by the land,  building and bowling equipment of the Redbird
     Lanes bowling center.

4. Contingencies:

   (a)  Old Vail Partners (OVP), a consolidated  subsidiary and 50 percent owned
        by the Company, owns approximately 40 acres of undeveloped land and a 50
        percent limited  partnership  interest in Vail Ranch Limited Partnership
        (VRLP). VRLP is a partnership formed in September 1994 between OVP and a
        third  party  (Developer)  to  develop  32 acres  of the  land  that was
        contributed by OVP to VRLP. The 40 acres of land owned by OVP and the 32
        acres of land  owned by VRLP 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 were issued
        by the assessment district to fund the improvements. The annual payments
        (made in  semiannual  installments)  due  related to the bonded debt are
        approximately  $156,000  for the 40 acres and $340,000 for the 32 acres.
        The  payments  continue  through the year 2014 and  include  interest at
        approximately 7-3/4 percent.  OVP and VRLP are delinquent in the payment
        of property taxes and  assessments  for the last two to four years.  The
        County has  judgments  for the defaults  under the  assessment  district
        obligations  on both  properties.  Other  than a notice  of levy for the
        judgment affecting 33 acres of the 40 acre property,  the County has not
        yet commenced foreclosure proceedings on these judgments.

                                          8
<PAGE>

        The  amount  due  to  cure  the  judgments  at  December  31,  1995  was
        approximately  $980,000  for the 32 acres owned by VRLP and $590,000 for
        the 40 acres  owned  by OVP.  The  principal  balance  of the  allocated
        portion  of  the  bonds  ($1,513,730)  related  to  the  40  acres,  and
        delinquent   interest  and  penalties   ($526,991)   are  classified  as
        "Assessment district obligation- in default" in the consolidated balance
        sheet. In addition, accrued property taxes in the balance sheet includes
        $221,799 of  delinquent  property  taxes and late fees related to the 40
        acre parcel.  The judgment related to VRLP's 32 acres will be cured once
        construction financing is obtained by VRLP.

        In November  1993,  the City of Temecula  adopted a general  development
        plan that  designates  the 40 acres of property owned by OVP 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  the  40  acre  parcel  from  a
        "commercial"  to  "professional  office"  use.  The parcel is subject to
        Assessment District liens which were allocated in 1989 based on a higher
        "commercial" use. Since the Assessment District liens 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.  OVP has filed suit against the City of
        Temecula  claiming that the City's adoption of a general plan as a means
        of effectively re-zoning the property is invalid.  Additionally,  OVP is
        claiming  that,  if the  effective  re-zoning is valid,  the action is a
        taking  and  damaging  of  OVP's  property   without   payment  of  just
        compensation. OVP is seeking to have the effective re-zoning invalidated
        and an unspecified amount of damages.  The outcome of this litigation is
        uncertain.  If the City of  Temecula  is  successful  in its  attempt to
        down-zone the property,  the value of the property may be  significantly
        impaired.


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

5. Subsequent Events:

   (a)The Company's  revolving  line of credit limit was increased from $300,000
      to  $450,000 in January  1996 for the period of January  1996 until May 1,
      1996. The line of credit expires in September 1996.

   (b)On January 18, 1996, the Company  received  payment of $160,401 as payment
      due in full on the contract for sale of 55 acres of land in Sierra County,
      New Mexico. The Company had previously adjusted the carrying value of this
      land to $40,000  and  deferred  recognition  of gain on the sale until the
      contract was paid. As a result of this payment,  the Company will record a
      gain on this transaction of $120,401 in the quarter ended March 31, 1996.

   (c)Redbird Properties,  Ltd. (Redbird Properties) has agreed to sell the real
      estate  in which  Redbird  Lanes  is  located  for  $2,800,000  cash.  The
      agreement  is  subject  to  several  contingencies   including  government
      approvals and soils and engineering studies. The scheduled closing date is
      tentatively  set for no latter than May 25, 1996.  The  Company is looking
      alternate locations for the Redbird Lanes bowling center.


                                       9   
<PAGE>



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

                         Liquidity and Capital Resources

The Company's working capital deficit of $4,051,124 as of December 31, 1995 is a
$449,980  increase from the $3,601,144  working  capital  deficit as of June 30,
1995. The increase in the deficit is primarily attributable to the negative cash
flow from  operations  after debt service for the six months ended  December 31,
1995.  This  increase is comparable to the same period in 1994 and is reflective
of the seasonality of the bowling industry.

As  described  in  Note 4 of  the  Notes  to  Consolidated  Condensed  Financial
Statements, Old Vail Partners is delinquent in the payment of special assessment
district  obligations  and property taxes on 40 acres of  undeveloped  land. The
County of  Riverside  has  obtained  judgments  for the  default  in  assessment
district  payments.  The amount due to cure the judgment as of December 31, 1995
is $590,000.  This amount will increase by approximately  $80,000 related to the
billings  due in April  1996.  Other than a notice of levy  received in November
1995 on a 33 acre  portion  of the 40  acres  of land,  the  County  has not yet
commenced foreclosure  proceedings on the judgments.  If the County of Riverside
takes the property to public sale and the judgments  are not satisfied  prior to
the sale,  Old Vail  Partners  could lose title to the property and the property
would not be subject to redemption.  Also as described in Note 4 of the Notes to
Consolidated Condensed Financial Statements,  Old Vail Partners is contesting an
attempt by the City of Temeculah to  effectively  down-zone the  property.  As a
results of the  judgments  and the  attempts  to  down-zone  the  property,  the
recoverability of the carrying value of this property is uncertain.

Redbird Properties, Ltd. (Redbird Properties) has agreed to sell the real estate
in which Red Bird Lanes is located for $2,800,000 cash. The agreement is subject
to  several   contingencies   including   government  approvals  and  soils  and
engineering studies. The scheduled closing date is tentatively set for no latter
than May 25, 1996. The net proceeds to the Company from this  transaction  after
payment of expenses of sale,  payment of partnership loans, and distributions to
partners  is  estimated  at  $1,700,000.  The Company is  currently  looking for
alternative locations for the Redbird Lanes Bowling Center.

Excluding  the proceeds  from the  potential  sale of Redbird  Properties'  real
estate,  management estimates a $150,000 cash flow deficit for the remaining two
quarters in the year ending June 30, 1996 from operating activities after adding
estimated  distributions from UCV ($300,000) and deducting capital  expenditures
and scheduled  principal  payments on long-term  debt. The Company  believes its
cash at December 31, 1995 and the Company's line of credit will be sufficient to
fund  the  expected   cash  flow   deficit.   This  analysis  does  not  include
consideration of the following due to their  uncertainty:  any distributions the
Company may receive from its investment in Vail Ranch Limited Partners;  or, any
payments  due for  delinquent  or  current  property  taxes and  assessments  on
undeveloped  land  because  these  amounts may not be paid unless the Company is
able to obtain an alternative source of funds.


                              Results of Operations

The  following  is a  recap  of the  circumstances  related  to the  significant
differences  between  the loss before  extraordinary  gain for the six and three
month periods ended December 31, 1995 and the same periods in 1994 (increases in
loss are in brackets):
<TABLE>
<CAPTION>
                                                      Six Months   Three Months
                                                      ---------     ---------
<S>                                                  <C>          <C>
        Sale of office building in October 1994          10,000            -
        Acquisition  of  controlling  interest  in
          Old Vail Partners in September 1994         ( 101,000)    ( 11,000)
        Acquisition  of  controlling  interest  in
          Redbird Properties on July 1, 1995           ( 35,000)    ( 20,000)
        Changes in construction segment                  27,000       23,000
        Reduction in corporate expenses                  31,000            -
        Other changes in the rental segment              41,000        6,000
        Other changes in bowling segment               ( 61,000)    ( 57,000)
        Increase in equity in income of investees             -       38,000
        Other changes                                    13,000     ( 28,000)
                                                     ----------   ----------
           Net change for period                       ( 75,000)    ( 49,000
                                                     ==========   ==========
</TABLE>


                                       10
<PAGE>


BOWLING OPERATIONS:

The  following is a recap of the changes to the  components  related to the loss
from  operations of the bowling  segment  during the six and three month periods
ended December 31, 1995 compared to the same periods in 1994:
<TABLE>
<CAPTION>
                                                       Six Months   Three Months
                                                        ---------     ---------
<S>                                                    <C>            <C>
      Bowling revenues:
        Bowling shoe rental revenues                     ( 97,000)      ( 72,000)
        Food and beverage revenues                       ( 71,000)      ( 39,000)
        Other revenues                                    ( 3,000)         3,000
                                                       ----------     ----------
          Net changes                                   ( 171,000)     ( 108,000)
                                                       ----------     ----------
     Bowling costs:
        Increase(decrease)in payroll & related expense   ( 17,000)        13,000
        Decrease in rent- Redbird Properties             ( 55,000)      ( 28,000)
        Increase in-rent other                             29,000         14,000
        Other changes to bowling costs                    (17,000)         3,000
                                                       ----------     ----------
          Net changes                                    ( 60,000)         2,000
                                                       ----------     ----------
     Selling, general and administrative expenses:
        Reduction in payroll and related expenses        ( 39,000)      ( 29,000)
        Reduction in frequent bowler program expense     ( 42,000)      ( 36,000)
        Increase in other promotional expenses             44,000          6,000
        Reduction in insurance expense                   ( 13,000)      ( 11,000)
        Other changes                                       5,000          6,000
                                                       ----------     ----------
          Net changes                                    ( 45,000)      ( 64,000)
                                                       ----------     ----------
     Depreciation and amortization
        Increase related to Redbird Properties             34,000         17,000
        Depreciation of assets acquired in 1988          ( 34,000)             -
        Other changes                                     ( 1,000)       ( 2,000)
                                                       ----------     ----------
          Net changes                                     ( 1,000)        15,000
                                                       -----------    ----------
     Interest expense:
        Increase related to Redbird Properties             56,000         28,000
        Other decreases                                  ( 25,000)      ( 12,000)
                                                       ----------     ----------
                                                           31,000         16,000
                                                       ----------     ----------

        Net change for period                            ( 96,000)      ( 77,000)
                                                       ==========     ==========
</TABLE>

Bowling  revenues  decreased  by 4% and 5% in the six and three  month  periods,
respectively,  primarily  due to the decreases in open and league play at two of
the bowling  centers in Georgia and one of the centers in  California.  Overall,
games played have decreased by 3% in both the six and three month  periods.  The
average  rate paid has also  decreased  due to special  pricing  related to open
play. Food and beverage  revenues have also decreased,  partially because of the
decreased  bowling,  but  also  because  of  a  trend  towards  reduced  alcohol
consumption.  The ratio of alcoholic beverage sales to bowling sales is down 11%
and 6% for the six and three month periods, respectively.

On July 1,  1995,  the  Company  acquired  a  controlling  interest  in  Redbird
Properties,  Ltd.,  which  owns the land and  building  in which  Redbird  Lanes
bowling center is located and had previously been an unconsolidated  subsidiary.
The consolidation of Redbird Properties, Ltd.,  effective July 1, 1995, resulted
in  reductions in rent expense in the six and three month periods as a result of
its elimination in  consolidation  and a corresponding  increase in depreciation
and interest expense related to ownership of the property. This decrease in rent
expense was partially  offset by scheduled  rent increases at one of the other
bowling centers.

Bowling costs and selling,  general and administrative  costs both decreased due
to  decreases  in payroll and related  expenses as a result of staffing  changes
implemented  in  December  1994.  The  payroll  reductions  will not  likely  be
significant in the future now that they have been in place over one year.

                                       11
<PAGE>

The reduction of selling, general and administrative expense attributable to the
frequent  bowler  program was the result of the actual points awarded at the end
of the year being less than the rate used for accrual purposes.  The Company has
adjusted  its accrual rate for future  months so this  decrease is not likely to
recur.  Promotional  expenses otherwise  increased primarily due the use of free
promotional  bowling and other special pricing used in programs during the first
quarter.  The decrease in insurance  expense was attributable to lower insurance
rates at all six bowling centers on the policies that renewed in September 1995.

Other than the change  related to  acquiring a  controlling  interest in Redbird
Properties,  depreciation  expense decreased  primarily due to the expiration of
the useful life used to  depreciate  assets for a bowling  center  acquired in
1988.

Other than the change  related to  acquiring a  controlling  interest in Redbird
Properties,  interest  expense  decreased  generally  due to a reduction  of the
outstanding  balances of notes  payable and  decreases in the interest  rates of
some loans.


RENTAL OPERATIONS:

In October  1994,  the Company  transferred  title in an office  building to the
lender in complete  satisfaction  of a related note payable.  As a result of the
disposition of this office building, the following items increased (decreased):
<TABLE>
<CAPTION>
                                                   Six               Three
                                                  Months             Months
                                                 -------             ------
<S>                                              <C>                 <C>
      Bowling revenues:
         Rental revenues ...................     (50,000)              --
         Rental costs ......................     (22,000)             3,000
         Depreciation ......................     (27,000)              --
         Interest expense ..................     (12,000)            17,000
         Loss from rental operations .......     (11,000)            20,000
</TABLE>

Rental revenues otherwise  increased by $33,000 and $11,000 in the six and three
month periods due to improved  occupancy at the remaining office building during
each of those  periods and due to the  inclusion in last year's first quarter of
$11,000 of rental  revenues from Old Vail Partners,  which became a consolidated
subsidiary on October 1, 1994.

Interest  expense related to the rental segment  otherwise  decreased by $18,000
during the six month period as a result of refinancing  the loan  collateralized
by the remaining office building in October 1994 with a loan at a lower interest
rate.

OTHER ACTIVITIES:

Construction revenues and costs increased in the six and three month periods due
to several large tenant improvement contracts that were completed during the
second quarter.  Construction  costs as a percentage of  construction  revenues
stayed relatively  consistent  in the range of 82%-84%  during the six and three
month periods.  Selling,  general and administrative costs related to the 
construction segment increased by $53,000 and $68,000 during the six and three 
month periods, respectively,  primarily due to increased incentive  compensation
as a result of the increased profitability in the second quarter.

Development  costs and expenses  primarily  consists of legal costs  incurred to
contest the City of Temecula's  attempts to down-zone the undeveloped land owned
by Old  Vail  Partners.  Interest  expense  related  to  development  activities
primarily  relates to interest  accrued on the past due and  current  assessment
district  obligations  of  Old  Vail  Partners.   Old  Vail  Partners  became  a
consolidated subsidiary on October 1, 1994.

Other than  changes  associated  with the  bowling  and  construction  segments,
selling,  general and administrative expense decreased by $38,000 (14%) in 1995.
This  reduction is primarily  due to  reductions  in  corporate  office  payroll
($26,000) and travel expenses. The reduction in payroll expense is the result of
some restructuring that was implemented in January 1995.

The equity in income of investees increased by $38,000 in the three month period
due to improved occupancy of University City Village (UCV). This increase in the
second quarter  offset a $76,000  decrease in the equity of income of UCV in the
first quarter due to the increased  interest expense  resulting from refinancing
the long term debt in June 1994. The first quarter  decrease in equity in income
of investees was partially offset by a $40,000 decrease in the equity in loss of
Old Vail  Partners  in the first  quarter  because  Old Vail  Partners  became a
consolidated subsidiary in October 1995.

                                       12
<PAGE>



                                     PART II
                                OTHER INFORMATION



ITEM 1. Legal Proceedings

        As of December 31, 1995, 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, 1995.



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 27, 1995 the Company held its annual shareholder  meeting in
        which the following items were voted upon:
<TABLE>
<CAPTION>
                                                      Tabulation of Votes 
                                                  For       Against     Abstain
                                                -------     -------     --------
<S>                                            <C>           <C>         <C>

      Bowling revenues:
       Election of Directors:
          Harold S. Elkan                      21,904,457       -        47,174
          Steven R. Whitman                    21,905,357       -        46,274
          Patrick D. Reiley                    21,904,882       -        46,749
          James E. Crowley                     21,905,382       -        46,249
          Robert A. MacNamara                  21,905,382       -        46,249

       Selection of KPMG Peat Marwick LLP as
          certified public accountants for
          the year ending June 30, 1996        21,916,420    10,057      25,154
</TABLE>

ITEM 5. Other Information

                    NONE


ITEM 6. Exhibits & Reports on Form 8-K

     (a) Exhibits: NONE

     (b) Reports on Form 8-K:  NONE



                                       13
<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 12, 1996
             ------------------



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



     Date: February 12, 1996
           -------------------



                                       14