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 September 30, 1997

                                       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 October 31, 1997 was 27,250,000 shares.


<PAGE>


                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 1997

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

        Balance Sheets as of September 30, 1997 and June 30, 1997 ..........1-2

        Statements of Operations for the Three Months 
           Ended September 30, 1997 and 1996 ................................3
         
        Statements of Cash Flows for the Three Months
           Ended September 30, 1997 and 1996 ............................... 4
          
        Notes to Financial Statements .......................................5-6


Item 2.- Management's Discussion and Analysis of Financial
           Condition and Results of Operations ..............................7-9



Part II - Other Information .................................................10


Signature ...................................................................11



<PAGE>



                               SPORTS ARENAS, INC. AND SUBSIDIARIES
                               CONSOLIDATED CONDENSED BALANCE SHEETS

                                              ASSETS
<TABLE>
<CAPTION>
 
                                                               September 30,    June 30,
                                                                   1997           1997
                                                               -----------    -----------
                                                               (Unaudited)
                                                                                         
Current assets:
<S>                                                            <C>            <C>        
Cash and cash equivalents ..................................   $   279,623    $   821,513
Current portion of notes receivable ........................        25,000         25,000
Current portion of notes receivable-affiliate ..............        50,000         50,000
Construction contract receivables ..........................       266,524        384,732
Other receivables ..........................................        49,778         82,972
Costs in excess of billings on uncompleted
contracts ..................................................        33,158         17,462
Inventories ................................................        82,148         89,118
Prepaid expenses ...........................................       199,733        138,583
                                                               -----------    -----------
Total current assets .......................................       985,964      1,609,380
                                                               -----------    -----------

Receivables due after one year:
Note receivable ............................................       710,702        728,838
Less deferred gain .........................................      (716,025)      (716,025)
Note receivable- Affiliate .................................       569,311        539,306
Note receivable- Other .....................................        30,067         35,477
                                                               -----------    -----------
                                                                   594,055        587,596
Less current portion .......................................       (75,000)       (75,000)
                                                               -----------    -----------
                                                                   519,055        512,596
                                                               -----------    -----------
Property and equipment, at cost:
Land .......................................................       678,000        678,000
Buildings ..................................................     2,461,327      2,461,327
Equipment and leasehold and tenant improvements ............     1,895,861      1,752,244
                                                               -----------    -----------
                                                                 5,035,188      4,891,571
Less accumulated depreciation and amortization .............    (1,391,876)    (1,291,861)
                                                               -----------    -----------
Net property and equipment .................................     3,643,312      3,599,710
                                                               -----------    -----------

Other assets:
Undeveloped land, at cost ..................................     1,665,643      1,665,643
Intangible assets, net .....................................       364,679        447,608
Investments ................................................     2,012,119      2,012,119
Other ......................................................        89,587         86,699
                                                               -----------    -----------
                                                                 4,132,028      4,212,069
                                                               -----------    -----------

                                                               $ 9,280,359    $ 9,933,755
                                                               ===========    ===========
</TABLE>




                                       1
<PAGE>




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

                         LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>

                                                               September 30,      June 30,
                                                                    1997            1997
                                                               ------------    ------------
                                                                (Unaudited)

Current liabilities:
<S>                                                            <C>             <C>         
Assessment district obligation-in default ..................   $  2,149,880    $  2,097,982
Current portion of long-term debt ..........................        481,000         481,000
Notes payable, short-term ..................................        250,000         250,000
Accounts payable ...........................................        911,899         738,185
Accrued payroll and related expenses .......................         74,323         116,249
Accrued property taxes .....................................        432,778         408,784
Accrued interest ...........................................         27,531          29,353
Accrued frequent bowler program expense ....................         60,059          60,239
Other liabilities ..........................................        114,223         147,324
                                                               ------------    ------------
Total current liabilities ..................................      4,501,693       4,329,116
                                                               ------------    ------------

Long-term debt, excluding current portion ..................      3,990,291       4,061,987
                                                               ------------    ------------

Distributions received in excess of basis in investment ....     10,189,686      10,083,802
                                                               ------------    ------------

Tenant security deposits ...................................         25,549          27,847
                                                               ------------    ------------

Minority interest in consolidated subsidiary ...............      2,212,677       2,212,677
                                                               ------------    ------------

Commitments and contingencies (Note 4)

Shareholders' equity (deficiency):
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 ........................................    (11,620,681)    (10,813,818)
                                                               ------------    ------------
                                                                 (9,618,132)     (8,811,269)
Less note receivable from shareholder ......................     (2,021,405)     (1,970,405)
                                                               ------------    ------------
Total shareholders' equity (deficiency) ....................    (11,639,537)    (10,781,674)
                                                               ------------    ------------

                                                               $  9,280,359    $  9,933,755
                                                               ============    ============
</TABLE>








   See  accompanying  notes  to  consolidated  condensed  financial statements.


                                       2
<PAGE>




                             SPORTS ARENAS, INC. AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                        THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                          (Unaudited)

<TABLE>
<CAPTION>
                                                                   1997           1996
                                                               -----------    -----------
Revenues:
<S>                                                            <C>            <C>        
Bowling ....................................................   $   621,104    $   990,498
Rental .....................................................        85,844        124,411
Construction ...............................................       760,120        666,705
Golf .......................................................        50,701           --
Other ......................................................        27,821         40,862
Other-related party ........................................        28,599         27,766
                                                               -----------    -----------
                                                                 1,574,189      1,850,242
                                                               -----------    -----------
Costs and expenses:
Bowling ....................................................       498,460        806,746
Rental .....................................................        60,805         54,696
Construction ...............................................       700,940        573,049
Golf .......................................................       130,085           --
Development ................................................        32,928         29,610
Selling, general, and administrative .......................       787,962        521,176
Depreciation and amortization ..............................       184,563        179,324
                                                               -----------    -----------
                                                                 2,395,743      2,164,601
                                                               -----------    -----------

Loss from operations .......................................      (821,554)      (314,359)
                                                               -----------    -----------

Other income (charges):
Investment income:
Related party ..............................................        61,973         56,257
Other ......................................................        33,323         13,623
Interest expense related to development activities .........       (51,898)       (68,620)
Interest expense and amortization of finance costs .........      (121,178)      (117,362)
Equity in income of investees ..............................        92,471         62,831
Gain on sale of bowling centers ............................          --        1,099,514
                                                               -----------    -----------
                                                                    14,691      1,046,243
                                                               -----------    -----------

Net income (loss) ..........................................      (806,863)       731,884
                                                               ===========    ===========

Per common share (based on weighted average shares outstanding):
  Net income (loss) ........................................      ($0.03)         $0.03
                                                                  =======        =======
</TABLE>











     See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>




                             SPORTS ARENAS, INC. AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                        THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                          (Unaudited)
<TABLE>
<CAPTION>

                                                                   1997           1996
                                                               -----------    -----------
Cash flows from operating activities:
<S>                                                            <C>            <C>        
Net income (loss) ..........................................   ($  806,863)   $   731,884
Adjustments to reconcile net income (loss) to the
net cash provided (used) by operating activities:
Amortization of deferred financing costs and discount ......         5,865          8,130
Depreciation and amortization ..............................       184,563        179,324
Undistributed income of investees ..........................       (92,471)       (62,831)
Interest income accrued on note receivable from shareholder        (51,000)       (45,225)
Interest accrued on assessment district obligations ........        51,898         50,308
Gain on sale ...............................................          --       (1,099,514)
Changes in assets and liabilities:
Decrease in receivables ....................................       151,402         86,326
(Increase) decrease in costs in excess of billings .........       (15,696)        12,936
Decrease in inventories ....................................         6,970           --
Increase in prepaid expenses ...............................       (61,150)       (45,806)
Increase in accounts payable ...............................       173,714         14,251
Decrease in accrued expenses ...............................       (53,035)      (198,973)
Other ......................................................           685         20,110
                                                               -----------    -----------
Net cash used by operating activities ......................      (505,118)      (349,080)
                                                               -----------    -----------

Cash flows from investing activities:
Increase in notes receivable ...............................        (6,459)       (17,995)
Other capital expenditures .................................       (98,131)       (15,703)
Proceeds from sale of bowling centers ......................          --          985,246
Distributions from investees ...............................       185,000        111,524
                                                               -----------    -----------
Net cash provided by investing activities ..................        80,410      1,063,072
                                                               -----------    -----------

Cash flows from financing activities:
Scheduled principal payments ...............................      (117,182)      (265,299)
                                                               -----------    -----------
Net cash used by financing activities ......................      (117,182)      (265,299)
                                                               -----------    -----------

Net increase (decrease) in cash and equivalents ............      (541,890)       448,693
Cash and cash equivalents, beginning of year ...............       821,513      1,093,465
                                                               -----------    -----------
Cash and cash equivalents, end of year .....................   $   279,623    $ 1,542,158
                                                               ===========    ===========
</TABLE>



SUPPLEMENTAL CASH FLOW INFORMATION:
   Supplemental Schedule of Non-Cash Investing and Financing Activities:

Long-term  debt of $45,486  was  incurred  to finance  capital  expenditures  of
$79,572 in 1997.



     See accompanying notes to consolidated condensed financial statements.



                                       4
<PAGE>



                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1997 AND 1996
                                   (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 September 30, 1997 and
        1996, are not necessarily indicative of operations for the entire year.

3. Investments:

   (a) Investments consist of the following:
                                                   September 30,      June 30,
                                                        1997            1997
                                                   ------------    ------------
       Accounted for on the equity method:
         Investment in UCV, L.P. ...............   $(10,189,686)   $(10,083,802)
         Vail Ranch Limited Partnership ........      1,974,193       1,974,193
                                                   ------------    ------------
                                                     (8,215,493)     (8,109,609)
         Less Investment in UCV, L.P. classified
          as liability- Distributions received
          in excess of basis in investment .....     10,189,686      10,083,802
                                                   ------------    ------------
                                                      1,974,193       1,974,193
                                                   ------------    ------------

       Accounted for on the cost basis:
         All Seasons Inns, La Paz ..............         37,926          37,926
                                                   ------------    ------------

            Total investments ..................   $  2,012,119    $  2,012,119
                                                   ============    ============

      The  following  is a  summary  of  the  equity  in  income  (loss)  of the
      investments accounted for by the equity method:
                                          1997      1996 
                                        -------   -------
       UCV, L.P. ....................   $92,471   $62,831
       Vail Ranch Limited Partnership      --        --   
                                        -------   -------
                                        $92,471   $62,831
                                        =======   =======
     The Company received cash  distributions of $185,000 from UCV, L.P. in 1997
     and $83,500 from UCV, L.P. and $28,024 from Vail Ranch Limited  Partners in
     1996.

   (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  three-month  periods ended June 30, 1997 and
      1996 are as follows:

                                      1997         1996 
                                   ----------   ----------
       Revenues ................   $1,117,000   $1,067,000
       Operating and general and
         administrative costs ..      360,000      368,000
       Depreciation ............       48,000       49,000
       Interest expense ........      524,000      524,000
       Net income ..............      185,000      126,000




                                       5
<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 1997 AND 1996
                                   (Unaudited)


4. Contingencies:

   (a)Old Vail Partners  (OVP), a  consolidated  subsidiary and 50 percent owned
      by the Company,  owns  approximately 33 acres of undeveloped land that 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 (made in semiannual  installments)  due related to the
      bonded debt are  approximately  $144,000  for the 33 acres.  The  payments
      continue through the year 2014 and include interest at approximately 7-3/4
      percent.   OVP  is  delinquent  in  the  payment  of  property  taxes  and
      assessments for the last five years. The property is currently  subject to
      default  judgments  to  the  County  of  Riverside,   California  totaling
      approximately $1,361,949 regarding delinquent assessment district payments
      ($941,656) and property taxes ($420,293).

      The principal balance of the allocated portion of the assessment  district
      bonds  ($1,208,224),  and  delinquent  principal,  interest and  penalties
      ($941,656  at  September  30,  1997 and  $889,758  at June 30,  1997)  are
      classified  as  "Assessment   district  obligation-  in  default"  in  the
      consolidated  balance sheet.  In addition,  accrued  property taxes in the
      balance sheet include  $420,293 at September 30, 1997 and $399,140 at June
      30, 1997 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 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
      downzoned OVP's property from a "commercial" to "professional office" use.
      The property is subject to Assessment  District  liens that 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  downzone  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. Significant Events:

   The Company's $300,000 line of credit expired on November 1, 1997 and was not
     renewed.




                                       6
<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 $945,556 at
September 30, 1997, which is a $722,942  increase from the similarly  calculated
working  capital  deficit of  $222,614  at June 30,  1997.  The  increase in the
working capital deficit is attributable to the cash used by operating activities
for the three months ended  September  30, 1997.  The following is a schedule of
the cash provided (used) before changes in assets and liabilities  segregated by
business segments:

                                           1997           1996         Change
                                      -----------    -----------    -----------
Bowling ...........................   $  (153,000)   $  (183,000)   $    30,000
Rental ............................        43,000         46,000         (3,000)
Construction ......................       (26,000)        29,000        (55,000)
Golf ..............................      (480,000)          --         (480,000)
Development .......................       (35,000)       (50,000)        15,000
General corporate expense and other       (57,000)       (80,000)        23,000
                                      -----------    -----------    -----------
Cash provided (used) by operations       (708,000)      (238,000)      (470,000)
Capital expenditures, net of
  financing .......................       (98,000)       (16,000)       (82,000)
Principal payments on long-term
  debt ............................      (117,000)      (755,000)       638,000
                                      -----------    -----------    -----------
Cash used .........................      (923,000)    (1,009,000)        86,000
                                      -----------    -----------    -----------

Distributions received from
  investees .......................       185,000        250,000        (65,000)
Proceeds from sale of assets ......          --          985,000       (985,000)

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 33 acres of  undeveloped  land. The
County of  Riverside  has  obtained  judgments  for the  defaults in  assessment
district payments and property taxes. The amount due to cure the judgments as of
September 30, 1997 is $1,362,000.  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 Temecula to  effectively  downzone the property.  As a result of the
judgments and the attempts to downzone the property,  the  recoverability of the
carrying value of this property is uncertain.

UCV, L.P. (UCV) is currently  evaluating the  feasibility  of  redeveloping  the
apartment project from 542 units to approximately 1,100 units. UCV has commenced
seeking  new  short-term   financing  for  the  property  in  an  amount  up  to
$25,000,000,  which if  obtained  would  provide  sufficient  funds for  funding
redevelopment   planning   costs  over  the  next  18  months  and  for  funding
distributions  to the partners of  approximately  $2,000,000 each. UCV estimates
the annual debt service on the new  financing  will not exceed its current level
of debt service as a result of a reduction in the annual  interest  rate from 10
percent to current rates of approximately 7-3/4 percent

The Company is in the process of entering into a short-term  loan agreement with
Loma  Palisades,  Ltd.  (Loma),  an affiliate of the  Company's  partner in UCV,
whereby Loma will lend the Company up to $800,000.  The loan will bear  interest
at "Wall  Street"  prime rate plus 1 percent on the amounts  drawn.  Interest is
payable  monthly  and the  principal  is due  within 30 days of  demand  and the
agreement will expire upon consummation of new financing for UCV.

Management  estimates  a cash flow  deficit  of  $550,000  to  $600,000  for the
remaining  three  quarters  in the year  ending  June 30,  1998  from  operating
activities  after adding  estimated  distributions  from UCV ($300,000) and Vail
Ranch  Limited  Partners  ($100,000)  and  deducting  capital  expenditures  and
scheduled principal payments on long-term debt. The Company believes the cash at
September  30,  1997  plus  the  proceeds  from  the  short-term  loan  and  the
refinancing  of UCV will be  sufficient  to fund the cash flow  deficit  for the
remaining  year. This analysis does not include  consideration  of the following
due to their  uncertainty:  any  distributions the Company may receive from Vail
Ranch Limited Partners related to proceeds from a potential sale or refinancing;
or, any payments made on delinquent or current property taxes and assessments on
undeveloped land.


                                       7
<PAGE>

                              RESULTS OF OPERATIONS
                              ---------------------

The following is a summary of the comparison of the results of operations of the
three months ended September 30, 1997 to the same period in 1996:
<TABLE>
<CAPTION>

                                                   Real Estate   Real Estate     Con-                     Unallocated
                                       Bowling      Operation    Development   struction       Golf         And Other      Totals
                                       -------      ---------    -----------   ---------       ----         ---------      ------
<S>                                 <C>           <C>                         <C>           <C>           <C>           <C>         
Revenues .........................  $  (369,394)  $     2,351          --     $    93,415   $    50,701   $   (12,208)  $  (235,135)
Costs ............................     (308,286)        6,109         3,318       127,891       130,085          --         (40,883)
SG&A-direct ......................      (63,372)         --            --          12,943       360,752        (2,619)      307,704
SG&A-allocated ...................      (26,555)       (1,000)         --           7,000        32,000       (11,445)         --
Depreciation and amortization ....      (18,098)        3,460          --              24        16,949         2,904         5,239
Impairment losses ................         --            --            --            --            --            --            --
Interest expense .................       (2,948)         (322)      (16,648)          (97)        8,175        (1,066)      (12,906)
Equity in investees ..............         --          29,640          --            --            --            --          29,640
Reversal of accrued liability ....         --            --            --            --            --            --            --
Gain (loss) on disposition .......   (1,099,514)         --            --            --            --            --      (1,099,514)
Segment profit (loss) ............   (1,049,649)       23,744        13,330       (54,346)     (497,260)           18    (1,564,163)
Investment income ................                                                                                           25,416
Net loss .........................                                                                                       (1,538,747)
</TABLE>

BOWLING OPERATIONS:

On August 7, 1996, the Company sold its three bowling centers located in Georgia
and then on December 15, 1996, the Company sold the video game  operations  that
were located in the two San Diego bowling  centers.  The Company has no plans to
sell the two remaining bowling centers.

The  following  is a summary of the changes to the  components  of the loss from
operations of the bowling  segment  during the three months ended  September 30,
1997 compared to 1996:
<TABLE>
<CAPTION>

                                             Georgia     Video
                                              Bowls       Games       Other     Combined
                                              -----       -----       -----     --------
<S>                                         <C>          <C>         <C>        <C>      
Revenues ................................   (331,961)    (15,194)    (22,239)   (369,394)
Bowl costs ..............................   (260,183)     (8,604)    (39,499)   (308,286)
Selling, general & administrative:
  Direct ................................    (89,174)       --        25,802     (63,372)
  Allocated .............................    (28,953)       --         2,398     (26,555)
Depreciation ............................    (18,487)       --           389     (18,098)
Interest expense ........................     (7,511)     (1,162)      5,725      (2,948)
Segment profit before gain on sale ......     72,347      (5,428)    (17,054)     49,865
</TABLE>

         
The  following  is a  comparison  of  operations  of the two  remaining  bowling
centers:

Bowling  revenues  decreased by 3-1/% in 1997 due to a 5% decline in the average
price per game  bowled.  The number of games bowled  remained the same,  however
shoe rental  income  decreased by  approximately  $8,000 or 18% of shoe rentals.
These  declines  are likely due to the an increase in the use of lane rental for
open bowling  whereby bowlers pay an hourly rate for use of a lane regardless of
the number of games bowled. This results in more games bowled at a lower average
rate.

Bowl costs decreased by $39,000 or 7% primarily due to the timing of bowling pin
purchases and lane resurfacing that either occurred in a different period in the
prior year or had been deferred.

Selling,  general and  administrative  expense  directly  related to the bowling
segment  increased  by $26,000 or 19%  primarily  due to an $18,000  increase in
promotion  expense.  This change primarily  relates to a credit recorded in 1996
when the Company discontinued its frequent bowler program. These costs otherwise
increased by $8,000  primarily  attributable  to the Company  hiring a full time
outside marketer to serve both bowling centers.

                                       8
<PAGE>

Interest  expense  increased by $5,725 in 1997  primarily due to a $9,800 credit
recorded in 1996 related to the discounted payoff of a note payable.

RENTAL OPERATIONS:

There were no significant changes to the components of the rental segment in the
period ended September 30, 1997 except for the $29,640 increase in the equity in
income of UCV. The income of UCV increased  primarily due to a $50,000  increase
in revenues which was attributable to a 3% increase in rent rates and a decrease
in the vacancy rate from 2.7% to 1.4%.

CONSTRUCTION OPERATIONS:

Construction  revenues  increased  by $93,416  (14%)  because  of the  Company's
continued success in bidding for large tenant  improvement  contracts of $75,000
and higher.  However,  costs as a percentage of construction  revenues increased
from 86% in 1996 to 92% in 1997.  This increase is  attributable  to the Company
bidding  larger jobs at lower profit  margins and that one job over  $200,000 in
1997 had costs equal to 99 percent of the  contract  amount.  This job  incurred
unexpected costs that could not be passed on to the customer.  Selling,  general
and  administrative  costs  related to the  construction  segment did not change
significantly.

REAL ESTATE DEVELOPMENT OPERATIONS:

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.  This interest expense  decreased by
$16,722 due to the payment of a $340,000 note payable in April 1997.

GOLF OPERATIONS:

Sales  during  the  three  months  ended  September  30,  1997  continued  to be
insignificant  because the Company  has not yet  developed  sales with golf club
manufacturers or distributors.  The sales were principally to custom golf shops.
Golf costs consisted of costs of sales and manufacturing overhead of $95,000 and
research  and  development  costs of $35,000.  SG&A  related to the golf segment
consisted  of   marketing   and   promotion   expenses  of  $245,000  and  other
administrative  costs of $106,000.  Corporate SG&A allocated to the Golf segment
totaled  $32,000.  The  Company  expects  that it will be another  three to nine
months  before  the  Company  is able to  develop  sales  with  these  types  of
customers.




                                       9
<PAGE>




                                     PART II
                                OTHER INFORMATION



ITEM 1. Legal Proceedings

         As of September  30, 1997,  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, 1997.


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

            NONE

ITEM 5. Other Information

            NONE


ITEM 6. Exhibits & Reports on Form 8-K

      (a) Exhibits: NONE

      (b) Reports on Form 8-K:  NONE





                                       10
<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:   November 14, 1997
      -----   -----------------




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



      Date: November 14, 1997
      ----  -----------------



                                       11
<PAGE>