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 March 31, 2004

                                 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.)


             7415 Carroll Road, Suite C, San Diego, California 92121
             -------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (858) 408-0364




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
                                               ---    ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes      No X
                                      ---      ---

The number of shares  outstanding  of the  issuer's  only class of common  stock
($.01 par value) as of April 30, 2004 was 27,250,000 shares.

<PAGE>

                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                         QUARTER ENDED MARCH 31, 2004

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Unaudited Balance Sheets as of March 31, 2004
           and June 30, 2003 ..........................................   1-2

      Unaudited Statements of Operations for the Three Months Ended
                March 31, 2004 and 2003 ...............................    3

      Unaudited Statements of Operations for the Nine Months Ended
                March 31, 2004 and 2003 ...............................    4

      Unaudited Statements of Cash Flows for the Nine Months Ended
                March 31, 2004 and 2003 ...............................    5

      Notes to Financial Statements...................................   6-9


Item 2.- Management's Discussion and Analysis of Financial Condition
                and Results of Operations.............................  10-15

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

Item 4.- Controls and Procedures .....................................    15

Part II - Other Information...........................................    16

Exhibits and reports on Form 8-K .....................................    16

Signatures............................................................    17


<PAGE>


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS
                                  (Unaudited)

                                                       March 31,   June 30,
                                                         2004         2003
                                                     -----------  -----------


Current assets:
   Cash and cash equivalents ........................$   132,200  $   365,674
   Other receivable-affiliate .......................       --        350,000
   Receivables ......................................    388,457      402,875
   Inventories ......................................    672,824      641,127
   Prepaid expenses .................................     33,436       34,958
                                                     -----------  -----------
      Total current assets ..........................  1,226,917    1,794,634
                                                     -----------  -----------


Property and equipment, at cost:
   Equipment.........................................  1,997,600    1,889,395
      Less accumulated depreciation and amortization  (1,118,509)  (1,052,740)
                                                     -----------  -----------
       Net property and equipment ...................    879,091      836,655
                                                     -----------  -----------

Other assets:
   Investments ......................................  4,068,668    5,344,007
   Deferred tax assets ..............................  5,177,000    4,661,000
   Other ............................................     77,371       95,671
                                                     -----------  -----------
                                                       9,323,039   10,100,678
                                                     -----------  -----------

                                                     $11,429,047  $12,731,967
                                                     ===========  ===========







                                       1
<PAGE>


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

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                                  (Unaudited)


                                                       March 31,   June 30,
                                                         2004         2003
                                                     -----------  -----------

Current liabilities:
   Current portion of long-term debt ................$    17,691  $     5,771
   Accounts payable .................................    437,336      441,434
   Accrued payroll and related expenses .............    329,117      282,080
   Deferred income taxes ............................    926,000         --
   Other liabilities ................................      6,576        3,796
                                                     -----------  -----------
      Total current liabilities .....................  1,716,720      733,081
                                                     -----------  -----------

Long-term debt, excluding current portion ...........     72,030         --
                                                     -----------  -----------

Deferred income taxes ...............................  9,390,000   10,514,000
                                                     -----------  -----------

Minority interest in consolidated subsidiary ........    373,839      431,839
                                                     -----------  -----------


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
   Retained earnings ................................    165,401    1,341,990
                                                     -----------  -----------
                                                       2,167,950    3,344,539
   Less note receivable from shareholder ............ (2,291,492)  (2,291,492)
                                                     -----------  -----------

     Total shareholders' equity (deficiency) ........   (123,542)    1,053,047
                                                     -----------  -----------

Commitments and contingencies (Note 6)

                                                     $11,429,047  $12,731,967
                                                     ===========  ===========









     See accompanying notes to consolidated condensed financial statements.


                                       2
<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (Unaudited)

                                                         2004         2003
                                                     -----------  -----------
Revenues:
   Golf .............................................$   822,499  $   841,552
   Rental ...........................................     20,022       19,335
   Other ............................................     24,468        8,103
   Other-related party ..............................     14,482       49,360
                                                     -----------  -----------
                                                         881,471      918,350
                                                     -----------  -----------
Costs and expenses:
   Golf .............................................    847,306      654,047
   Rental ...........................................     19,500       18,800
   Selling, general, and administrative .............    687,571      564,274
   Depreciation and amortization ....................     52,938       59,720
                                                     -----------  -----------
                                                       1,607,315    1,296,841
                                                     -----------  -----------

Loss from operations ................................   (725,844)    (378,491)
                                                     -----------  -----------

Other income (charges):
   Investment income- related party .................      9,072        7,946
   Investment income- other .........................          2         --
   Interest expense and amortization of finance costs     (1,105)     (10,659)
   Equity in income (loss) of investees .............     62,335      (75,987)
                                                     -----------  -----------
                                                          70,304      (78,700)
                                                     -----------  -----------

Loss from continuing operations before income taxes..   (655,540)    (457,191)

Income tax benefit ..................................    198,000         --
                                                     -----------  -----------

Loss from continuing operations .....................   (457,540)    (457,191)

Gain from discontinued operations ...................     88,009      258,092
                                                     -----------  -----------

Net loss ............................................$  (369,531) $  (199,099)
                                                     ===========  ===========

Per common share (based on weighted average shares
 outstanding) basic and diluted:
  Loss from continuing operations ...................   ($0.01)       ($0.02)
  Discontinued operations ...........................      --           0.01
                                                        ------        ------
   Net loss .........................................   ($0.01)       ($0.01)
                                                        ======        ======

     See accompanying notes to consolidated condensed financial statements.



                                       3
<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 NINE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (Unaudited)

                                                         2004         2003
                                                     -----------  -----------
Revenues:
   Golf .............................................$ 1,804,024  $ 1,973,303
   Rental ...........................................     62,513       59,622
   Other ............................................     45,797      164,155
   Other-related party ..............................     32,817      146,229
                                                     -----------  -----------
                                                       1,945,151    2,343,309
                                                     -----------  -----------
Costs and expenses:
   Golf .............................................  2,103,996    1,799,188
   Rental ...........................................     57,900       56,200
   Selling, general, and administrative .............  1,868,362    1,580,812
   Depreciation and amortization ....................    151,145      179,160
                                                     -----------  -----------
                                                       4,181,403    3,615,360
                                                     -----------  -----------

Loss from operations ................................ (2,236,252)  (1,272,051)
                                                     -----------  -----------

Other income (charges):
   Investment income:
     Related party ..................................     24,072       24,230
     Other ..........................................        299         --
   Interest expense and amortization of finance costs     (1,811)     (56,181)
   Gain on sale .....................................     78,533         --
   Equity in income (loss) of investees .............    156,561       (8,786)
                                                     -----------  -----------
                                                         257,654      (40,737)
                                                     -----------  -----------

Loss from continuing operations before income taxes
  and change in accounting principle ................ (1,978,598)  (1,312,788)

Income tax benefit ..................................    714,000         --
                                                     -----------  -----------

Loss from continuing operations ..................... (1,264,598)  (1,312,788)

Gain from discontinued operations ...................     88,009      149,823
Cumulative effect of change in accounting principle .       --         37,675
                                                     -----------  -----------

Net loss ............................................$(1,176,589) $(1,125,290)
                                                     ===========  ===========

Per common share (based on weighted average shares
 outstanding) basic and diluted:
  Loss from continuing operations ...................   ($0.04)       ($0.05)
  Discontinued operations ...........................      --           0.01
  Cumulative effect of change in accounting principle      --            --
                                                        ------        ------
   Net loss .........................................   ($0.04)       ($0.04)
                                                        ======        ======

     See accompanying notes to consolidated condensed financial statements.



                                       4
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                 NINE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (Unaudited)
                                                         2004         2003
                                                     -----------  -----------
Cash flows from operating activities:
  Net loss ..........................................$(1,176,589) $(1,125,290)
    Less gain from discontinued operations ..........    (88,009)    (149,823)
                                                     -----------  -----------
    Loss from continuing operations ................. (1,264,598)  (1,275,113)
  Adjustments to reconcile net loss to the net
   cash used by operating activities:
      Depreciation and amortization .................    151,145      179,160
      Equity in income of investees .................   (156,561)       8,786
      Gain on sales .................................    (78,533)        --
      Deferred income ...............................       --         36,000
      Provision for deferred income taxes ...........   (714,000)        --
      Change in accounting principle ................       --        (37,675)
    Changes in assets and liabilities:
      (Increase) decrease in receivables ............    364,418       (9,600)
      (Increase) decrease in inventories ............    (31,697)     159,604
      Decrease in prepaid expenses ..................      1,522       32,804
      Decrease in accounts payable ..................     (4,098)    (346,500)
      Increase in accrued expenses ..................     49,817      107,591
      Other .........................................     18,300       27,963
                                                     -----------  -----------
  Net cash used by continuing operations ............ (1,664,285)  (1,116,980)
  Net cash used by discontinued operations ..........       --        (89,197)
                                                     -----------  -----------
  Net cash used by operating activities ............. (1,664,285)  (1,206,177)
                                                     -----------  -----------
Cash flows from investing activities:
   Capital expenditures .............................   (193,581)      (4,310)
   Distribution to holder of minority interest ......    (58,000)    (370,838)
   Proceeds from sale of assets .....................     78,533         --
   Distributions from investees .....................  1,519,909    2,118,276
                                                     -----------  -----------
 Net cash provided by investing activities ..........  1,346,861    1,743,128
                                                     -----------  -----------
Cash flows from financing activities:
   Scheduled principal payments on long-term debt ...    (12,528)      (5,903)
   Proceeds from short-term debt ....................       --         75,000
   Payments on short-term debt ......................       --       (460,044)
   Proceeds from long-term debt .....................     96,478         --
                                                     -----------  -----------
 Net cash provided (used) by financing activities ...     83,950     (390,947)
                                                     -----------  -----------
Net increase (decrease) in cash and cash equivalents.   (233,474)     146,004
Cash and cash equivalents, beginning of period ......    365,674       39,345
                                                     -----------  -----------
Cash and cash equivalents, end of period ............$   132,200  $   185,349
                                                     ===========  ===========

Supplemental Disclosure of Non-Cash Financing Activities:
  Interest paid .....................................$     1,811  $    41,153
                                                     ===========  ===========
  Reclassification of principal payments on
    short-term debt to accrued interest .............$      --    $   280,631
                                                     ===========  ===========
  Reclassification of non-current deferred tax
    liability to current portion ....................$   926,000  $      --
                                                     ===========  ===========
  In December  2003,  the  Company  sold an auto  for  $18,000  with a cost  and
     accumulated depreciation of $85,376.
  In November  2003, the Company  received a $60,533  payment on the sale of All
     Season Inns and wrote off the cost of $37,926 and  valuation  allowance  of
     $37,926.
  In February  2004,  the Company sold an asset  classified as other for $31,085
     which had a cost of $15,000.

     See accompanying notes to consolidated condensed financial statements.
                                       5
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     MARCH 31, 2004 AND 2003 (Unaudited)

1.   The information  furnished  reflects all adjustments of a recurring  nature
     which  management  believes  are  necessary  to a  fair  statement  of  the
     Company's financial position,  results of operations and cash flows for the
     interim periods. Certain information and note disclosures normally included
     in consolidated financial statements prepared in accordance with accounting
     principles  generally  accepted in the United  States of America  have been
     condensed  or  omitted  pursuant  to  the  rules  and  regulations  of  the
     Securities and Exchange Commission.

     The accompanying  unaudited  condensed  consolidated  financial  statements
     should be read in conjunction  with the consolidated  financial  statements
     and notes thereto  included in the  Company's  Annual Report filed on Form
     10-K on October 14, 2003 for the year ended June 30, 2003.

     Revenue   recognition-  the  Company  recognizes  revenue  when  persuasive
     evidence of an  arrangement  exists,  delivery has occurred,  the amount is
     fixed  or  determinable  and  collectibility  is  probable.  All  of  these
     conditions  are typically met at the time the Company ships products to its
     customers.

2.   Due to the  seasonal fluctuations  of the golf  club  shaft  manufacturing
     operations,  the financial  results for the interim periods ended March 31,
     2004 and 2003, are not necessarily indicative of operations for the entire
     year.

3. Investments:
     Investments consist of the following:
                                                       March 31,   June 30,
                                                         2004        2003
                                                     -----------  -----------
     UCV, L.P. ......................................$ 4,068,668  $ 5,277,007
     Vail Ranch Limited Partnership (VRLP)...........       --         67,000
                                                     -----------  -----------
           Total ....................................$ 4,068,668  $ 5,344,007
                                                     ===========  ===========

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:
                               Nine Months         Three Months
                            ------------------   ------------------
                              2004      2003       2004      2003
                            --------  --------   --------  --------
        UCV, L.P. .......   $156,561  $ (8,786)  $ 62,335  $(75,987)
                            ========  ========   ========  ========

     The  equity  in the  income  of VRLP  has been  presented  as  income  from
     discontinued operations (Note 7).

      The following is a summary of distributions received from investees:
                                             2004          2003
                                         ----------    ----------
        UCV, L.P. ....................   $1,364,900    $1,525,500
        Vail Ranch Limited Partnership      155,009       592,776
                                         ----------    ----------
                                         $1,519,909    $2,118,276
                                         ==========    ==========

     As discussed in footnote 5(c) to the Company's  June 30, 2003 annual report
     on Form 10-K,  effective  April 1, 2003,  the Company  began  recording its
     equity in the income of UCV, L.P. (UCV) on a current basis rather than on a
     91 day  delayed  basis.  The  Company  has  treated  this  as a  change  in
     accounting  principle and  accordingly has classified its $37,675 of equity
     in earnings of UCV for the period of April 1, 2002 through June 30, 2002 as
     the  cumulative  effect  of a  change  in  accounting  principle  in  2003.
     Therefore,  the equity in income of UCV for the period July 1, 2003 through
     December 31, 2003 was $94,226 (see  footnote 15 to the  Company's  June 30,
     2003 annual report on Form 10-K).

                                       6
<PAGE>

     In November 2003 the Company received $60,533 related to amounts due on the
     sale of the Company's  investment in All Seasons Inns in a prior year.  The
     Company had recorded a valuation allowance for the entire amount due at the
     time of sale. As a result,  the amount received was classified as gain from
     sale. On April 15, 2004, the Company received an additional $31,708,  which
     represents  the  final  payment  due on the  sale  of  its  investment.  An
     additional gain of $31,708 was recorded at that time.

4. Contingencies:

     A lawsuit was filed on January 10, 2003 in the United States District Court
     in the  Southern  District  of  California  by  Masterson  Marketing,  Inc.
     (Masterson)  against Penley Sports,  LLC.  Masterson's  lawsuit  originally
     asserted claims for copyright infringement,  breach of contract,  breach of
     fiduciary  duty,  and  sought  compensatory   damages,   punitive  damages,
     statutory damages, and attorney fees. The Company filed a motion to dismiss
     all claims. In response to that motion, Masterson dropped all claims except
     for the claims of copyright infringement and breach of contract.  Masterson
     also  dropped all prayers for  punitive  damages,  statutory  damages,  and
     attorney  fees.  It is not  possible at this time to predict the outcome of
     this litigation. We intend to vigorously defend against these claims.


5. Business segment information:
     The Company operates principally in two business segments:  commercial real
     estate rental and golf club shaft manufacturing.  Other revenues, which are
     not part of an  identified  segment,  consist of  property  management  and
     development  fees  (earned  from both a property  50  percent  owned by the
     Company  and a  property  in  which  the  Company  has  no  ownership)  and
     commercial brokerage.

                                       7
<PAGE>

     The following is summarized  information about the Company's  operations by
     business segment.
<TABLE>
<CAPTION>
                                         Real Estate                   Unallocated
                                          Operation         Golf        And Other         Totals
                                        ------------    -----------    -----------    ------------
NINE MONTHS ENDED MARCH 31, 2004:
--------------------------------
<S>                                     <C>             <C>            <C>            <C>
Revenues .............................  $     62,513    $ 1,804,024    $    78,614    $  1,945,151
Depreciation and amortization ........          --          127,628         23,517         151,145
Interest expense .....................          --             --            1,811           1,811
Equity in income of investee .........       156,561           --             --           156,561
Gain on sale .........................          --             --           78,533          78,533
Segment profit (loss) ................       161,174     (1,914,633)      (249,510)     (2,002,969)
Investment income ....................                                                      24,371
Loss from continuing
  operations before taxes.............                                                  (1,978,598)
Significant non-cash items ...........      (156,561)          --             --          (156,561)

NINE MONTHS ENDED MARCH 31, 2003:
---------------------------------
Revenues .............................  $     59,622    $ 1,973,303    $   310,384    $  2,343,309
Depreciation and amortization ........        40,065        125,271         13,824         179,160
Interest expense .....................          --             --           56,181          56,181
Equity in loss of investee ...........        (8,786)           --             --           (8,786)
Segment profit (loss) ................       (45,429)    (1,085,857)      (205,732)     (1,337,018)
Investment income ....................                                                      24,230
Loss from continuing
  operations before taxes.............                                                  (1,312,788)
Significant non-cash items ...........        (8,786)          --             --            (8,786)
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2004:
---------------------------------
<S>                                     <C>             <C>            <C>            <C>
Revenues .............................  $     20,022    $   822,499    $    38,950    $    881,471
Depreciation and amortization ........          --           42,729         10,209          52,938
Interest expense .....................          --             --            1,105           1,105
Equity in income of investee .........        62,335           --             --            62,335
Segment profit (loss) ................        62,857       (677,642)       (49,829)       (664,614)
Investment income ....................                                                       9,074
Loss from continuing
  operations before taxes.............                                                    (655,540)
Significant non-cash items ...........       (62,335)           --             --          (62,335)

THREE MONTHS ENDED MARCH 31, 2003:
---------------------------------
Revenues .............................  $     19,335    $   841,552    $    57,463    $    918,350
Depreciation and amortization ........        13,355         41,757          4,608          59,720
Interest expense .....................          --             --           10,659          10,659
Equity in loss of investee ...........       (75,987)          --             --           (75,987)
Segment profit (loss) ................       (88,807)      (287,944)       (88,386)       (465,137)
Investment income ....................                                                       7,946
Loss from continuing
  operations before taxes.............                                                    (457,191)
Significant non-cash items ...........       (75,987)          --             --           (75,987)
</TABLE>

                                       8
<PAGE>
6. Liquidity

     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming  the Company  will  continue as a going  concern.  The Company has
     suffered  recurring losses,  has negative working capital,  a shareholders'
     deficit, and is forecasting negative cash flows for the next twelve months.
     Additionally,  the Company  estimates  that it will have a tax liability of
     approximately  $926,000 due in September  2004 as a result of reporting the
     taxable portion of the sale of the apartment  project owned by UCV, LP. The
     Company is  currently  uncertain of where the Company will obtain the funds
     to pay these tax liabilities. These items raise substantial doubt about the
     Company's ability to continue as a going concern.  The Company's ability to
     continue as a going concern is dependent on obtaining  additional investors
     in its subsidiary,  Penley Sports, or increasing the sales volume of Penley
     Sports. The consolidated  financial  statements do not contain adjustments,
     if any, including diminished recovery of asset carrying amounts, that could
     arise from forced dispositions and other insolvency costs.

7. Discontinued Operations:

     During the year ended June 30, 2003, the Company  ceased  operations in two
     business segments. The following is a summary of the income (loss) from the
     discontinued business segments for the periods ended March 31:
                                   Three Months            Nine Months
                              ----------------------   ----------------------
                                 2004        2003         2004        2003
                              ---------  -----------   ---------  -----------
     Bowling .................$    --    $   (86,296)  $    --    $    21,973
     Real estate development .   88,009      236,119      88,009      236,119
                              ---------  -----------   ---------  -----------
                              $  88,009  $   149,823  $   88,009  $   258,092
                              =========  ===========   =========  ===========

8. Note receivable from shareholder:

     In December 1990 the Company  loaned  $1,061,009 to the Company's  majority
     shareholder,  Andrew Bradley,  Inc. (ABI),  which is 88% owned by Harold S.
     Elkan, the Company's  President.  The loan provided funds to ABI to pay its
     obligation related to its purchase of the Company's stock in November 1983.
     The loan to ABI  provides for interest to accrue at an annual rate of prime
     plus 1-1/2 percentage  points (5.50 percent at March 31, 2004) and to be
     added to the principal balance annually. The loan was due November 7, 2003.
     The loan is  collateralized  by 21,808,267  shares of the  Company's  stock
     owned by ABI. The original loan amount plus accrued  interest of $1,230,483
     is presented  as a reduction of  shareholders'  equity  because  ABI's only
     asset is the stock of the Company.

     On November 7, 2003,  the  Company  presented  demand to ABI for payment of
     $3,351,724,  which represents the original  principal  balance plus accrued
     interest, of which $1,060,232 had not been accrued by the Company. The note
     provides for a 5 day grace period and negotiations are underway between the
     Company and ABI with respect to disposition of the note.


                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
            CONDITION AND RESULTS OF OPERATIONS:
            -----------------------------------
                         LIQUIDITY AND CAPITAL RESOURCES
                         -------------------------------
The independent  auditors'  report dated September 5, 2003 included in our June
30,  2003  Annual  Report  on Form  10-K  contained  the  following  explanatory
paragraph:

     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming that the Company will continue as a going concern. As discussed in
     Note 13 to the consolidated financial statements,  the Company has suffered
     recurring  losses,  and is  forecasting  negative cash flows from operating
     activities for the next twelve months.  These items raise substantial doubt
     about the Company's  ability to continue as a going  concern.  Management's
     plans  in  regard  to these  matters  are also  described  in Note 13.  The
     consolidated financial statements do not include any adjustments that might
     result from the outcome of this uncertainty.

Management  estimates positive cash flow of $50,000 to $100,000 in total for the
remaining  quarter for the year ending June 30, 2004 from  operating  activities
after deducting capital expenditures and principal payments on notes payable and
adding estimated distributions from UCV and VRLP. However,  Management estimates
that it will have a tax  liability  of  approximately  $926,000 due in September
2004 as a result of reporting  the taxable  portion of the sale of the apartment
project owned by UCV, LP. Management is currently uncertain of where the Company
will obtain the funds to pay these tax liabilities.

The Company  estimates it will receive  approximately  $240,000 of distributions
from UCV in the fourth  quarter of which  $100,000 was received on May 10, 2004.
$200,000 of these estimated  distributions  from UCV represents the remainder of
funds to be  distributed  by UCV to the Company from the sales proceeds of UCV's
apartment project.

In February 2003 Vail Ranch Limited Partners (VRLP) sold its membership interest
in  Temecula  Creek LLC to its other  partner in  Temecula  Creek LLC.  VRLP was
entitled to receive  one-half of the sales proceeds from the sale of a remaining
parcel of undeveloped land as well as the release of $100,000 that was held back
from the sales  proceeds  in  February  2003.  In  December  2003 VRLP  received
$121,955 as its share of the proceeds from the sale of the undeveloped  land. In
January  2004,  VRLP  received  $99,959 as the  balance of the hold back plus an
additional  $66,157 as final settlement for allocation of revenues and expenses.
The Company received  distributions  from VRLP related to these  transactions of
$58,173 in December 2003, $59,975 in January 2004, and $36,861 in March 2004. As
part of the Company's obligation to pay approximately one-half of these proceeds
to its  minority  partner,  payments of $29,000  each were made to the  minority
partner  in  December  2003 and  January  2004 and  $15,000 in April  2004.  The
liability to the minority  interest  stated in the balance sheet is $373,839 but
is likely to be settled for a lesser amount based on the distributions  received
from VRLP.

In  December  1990 the  Company  loaned  $1,061,009  to the  Company's  majority
shareholder,  Andrew Bradley, Inc. (ABI), which is 88% owned by Harold S. Elkan,
the Company's  President.  The loan provided  funds to ABI to pay its obligation
related to its purchase of the Company's stock in November 1983. The loan to ABI
provides for interest to accrue at an annual rate of prime plus 1-1/2 percentage
points  (5.50  percent at March  31,  2004) and to be added to the  principal
balance annually.  The loan was due November 7, 2003. The loan is collateralized
by  21,808,267  shares of the  Company's  stock owned by ABI. The original  loan
amount plus  accrued  interest of  $1,230,483  is  presented  as a reduction  of
shareholders' equity because ABI's only asset is the stock of the Company.

On  November  7,  2003,  the  Company  presented  demand to ABI for  payment  of
$3,351,724,  which  represents  the  original  principal  balance  plus  accrued
interest,  of which  $1,060,232  has not been accrued by the  Company.  The note
provides for a 5 day grace  period and  negotiations  are  underway  between the
Company and ABI with respect to disposition of the note.

                                       10
<PAGE>

Management  expects  continuing  cash flow deficits until Penley Sports develops
sufficient  sales volume to become  profitable.  There can be no assurances that
Penley  Sports  will  ever  achieve  profitable  operations.  In  April of 2004,
management  implemented a number of cost cutting measures to  manufacturing  and
marketing and promotion (primarily the tour department).  However, unless Penley
can  increase  its  revenues,  it is not  likely to reach a break  even level of
operations without identifying other opportunities to cut costs in manufacturing
expenses.

Management is currently  evaluating  other sources of working capital  including
the  sale  of  assets  or  obtaining  additional  investors  in  Penley  Sports.
Management  has not assessed the  likelihood of the Company  receiving any other
sources of long-term or short-term  liquidity.  If the Company is not successful
in obtaining other sources of working capital this could have a material adverse
effect  on the  Company's  ability  to  continue  as a going  concern.

The Company has working capital deficit of $489,803 at March 31, 2004,  which is
a $1,551,356  decrease from the working  capital of $1,061,553 at June 30, 2003.
The   decrease   in  working   capital   is   primarily   attributable   to  the
reclassification  of $926,000  from a  non-current  deferred tax  liability to a
current  deferred tax  liability and cash used by operating  activities  for the
nine months ended March 31,  2004.  The cash used by  operating  activities  was
partially offset by  distributions  received from the Company's  investees.  The
following  is a  schedule  of  the  cash  used  before  changes  in  assets  and
liabilities, segregated by business segments:

                                      2004          2003        Change
                                  ----------    ----------    ----------
    Rental ....................   $    5,000         3,000         2,000
    Golf ......................   (1,787,000)     (962,000)     (825,000)
    General corporate expense
      and other ...............     (280,000)     (132,000)     (148,000)
                                  ----------    ----------    ----------
    Cash used by continuing
      operations ..............   (2,062,000)   (1,091,000)     (971,000)
    Discontinued operations:
      Bowling .................         --         (68,000)       68,000
      Real estate development .         --            --            --
    Capital expenditures.......     (194,000)       (4,000)     (190,000)
    Principal payments on
      long-term debt ..........      (13,000)       (6,000)       (7,000)
                                  ----------    ----------    ----------
    Cash used .................   (2,269,000)   (1,169,000)   (1,100,000)
                                  ==========    ==========    ==========
    Distributions received from
      investees ...............    1,520,000     2,118,000      (598,000)
                                  ==========    ==========    ==========


                          CRITICAL ACCOUNTING POLICIES
                          ----------------------------
In  response to the SEC's  release No.  33-8040,  "Cautionary  Advice  Regarding
Disclosure About Critical Accounting  Policies",  the Company has identified its
most  critical  accounting  policy as that related to the carrying  value of its
long-lived  assets.  Any event or circumstance  that indicates to the Company an
impairment  of the fair  value of any asset is  recorded  in the period in which
such event or  circumstance  becomes known to the Company.  During the three and
nine month periods ended March 31, 2004 no such event or  circumstance  occurred
that  would,  in the  opinion  of  management,  signify  the need for a material
reduction in the carrying value of any of the Company's assets.

                                       11
<PAGE>

                          NEW ACCOUNTING PRONOUNCEMENTS
                          -----------------------------
Statement of Financial Accounting Standards,  No. 149 Amendment of Statement 133
on Derivative  Instruments and Hedging  Activities,  or SFAS No. 149, amends and
clarifies  accounting for derivative  instruments,  including certain derivative
instruments  embedded in other contracts,  and for hedging activities under SFAS
No.  133. In  particular,  SFAS No. 149  clarifies  under what  circumstances  a
contract  within  an  initial  net  investment  meets  the  characteristic  of a
derivative  and when a derivative  contains a financing  component that warrants
special  reporting  in the  statement  of cash flows.  SFAS No. 149 is generally
effective for contracts entered into or modified after June 30, 2003, and is not
expected  to have a  material  impact on the  Company's  consolidated  financial
statements.

Statement of Financial  Accounting  Standards,  No. 150  Accounting  for Certain
Financial  Instruments with  Characteristics  of Both Liabilities and Equity, or
SFAS No. 150,  establishes  standards for how an issuer  classifies and measures
certain  financial  instruments  with  characteristics  of both  liabilities and
equity.  SFAS No. 150 requires  that an issuer  classify a financial  instrument
that is within  its scope as a  liability  (or an asset in some  circumstances).
Many of those instruments were previously  classified as equity. SFAS No. 150 is
effective for financial instruments entered into or modified after May 31, 2003,
and  otherwise  is  effective  at the  beginning  of the  first  interim  period
beginning  after June 15, 2003. At the October 29, 2003 FASB Board meeting,  the
Board decided to  indefinitely  defer the effective date of SFAS No. 150 related
to the classification and measurement  requirements for mandatorily  redeemable
financial  instruments that become subject to SFAS No. 150 solely as a result of
consolidation,  such as the  minority  interest  in the  accompanying  financial
statements.

In December 2003, the FASB issued FASB  Interpretation  No. 46 (revised December
2003),  Consolidation  of Variable  Interest  Entities,  which  addresses  how a
business  enterprise  should  evaluate  whether it has a  controlling  financial
interest in an entity  through  means other than voting  rights and  accordingly
should  consolidate  the entity.  FIN 46R replaces FASB  Interpretation  No. 46,
Consolidation of Variable Interest  Entities,  which was issued in January 2003.
The Company  will be required  to apply FIN 46R to  variable  interests  in VIEs
created after December 31, 2003.  For variable  interests in VIEs created before
January 1, 2004,  the  Interpretation  will be applied  beginning  on January 1,
2005.  For any VIEs that must be  consolidated  under FIN 46R that were  created
before January 1, 2004, the assets,  liabilities and noncontrolling interests of
the VIE  initially  would  be  measured  at  their  carrying  amounts  with  any
difference  between the net amount added to the balance sheet and any previously
recognized  interest being recognized as the cumulative  effect of an accounting
change.  If determining the carrying amounts is not  practicable,  fair value at
the date FIN 46R first  applies may be used to measure  the assets,  liabilities
and noncontrolling  interest of the VIE. The Company currently does not have any
VIEs in which it has variable interests.

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

                                       12
<PAGE>
                              RESULTS OF OPERATIONS
                              ---------------------
The  following is a summary of the changes in the results of  operations  of the
nine and three-month periods ended March 31, 2004 to the same period in 2003 and
a discussion of the significant changes:
<TABLE>
<CAPTION>
                                 NINE MONTHS ENDED MARCH 31, 2004 VERSUS 2003
                                 ----------------------------------------------
                               Real Estate               Unallocated
                                Operations      Golf      And Other     Total
                               -----------  -----------   ---------  ------------
<S>                           <C>           <C>           <C>        <C>
Revenues ..................... $     2,891  $  (169,279)  $(231,770) $   (398,158)
Costs ........................       1,700      304,808        --         306,508
SG&A-direct ..................        --         97,332      98,022       195,354
SG&A-allocated ...............        --        255,000    (162,804)       92,196
Depreciation and amortization      (40,065)       2,357       9,693       (28,015)
Interest expense .............        --           --       (54,370)      (54,370)
Gain from sale ...............        --           --        78,533        78,533
Equity in investees ..........     165,347         --          --         165,347
Segment profit (loss) ........     206,603     (828,776)    (43,778)     (665,951)
Investment income ............                                                141
Income tax benefit ...........                                            714,000
Loss from continuing
  operations .................                                             48,190
Discontinued operations ......                                            (61,814)
Change in accounting principle                                            (37,675)
Net income (loss) ............                                            (51,299)
</TABLE>

<TABLE>
<CAPTION>
                                THREE MONTHS ENDED MARCH 31, 2004 VERSUS 2003
                                ---------------------------------------------
                               Real Estate               Unallocated
                                Operations      Golf      And Other     Total
                               -----------  -----------   ---------  ------------
<S>                           <C>           <C>           <C>        <C>
Revenues ..................... $       687  $   (19,053)  $ (18,513) $    (36,879)
Costs ........................         700      193,259        --         193,959
SG&A-direct ..................        --         98,414     (11,244)       87,170
SG&A-allocated ...............        --         78,000     (41,873)       36,127
Depreciation and amortization      (13,355)         972       5,601        (6,782)
Interest expense .............        --           --        (9,554)       (9,554)
Equity in investees ..........     138,322         --          --         138,322
Segment profit (loss) ........     151,664     (389,698)     38,557      (199,477)
Investment income ............                                              1,128
Income tax benefit ...........                                            198,000
Loss from continuing
  operations .................                                               (349)
Discontinued operations ......                                           (170,083)
Change in accounting principle                                               --
Net loss .....................                                           (170,432)
</TABLE>

REAL ESTATE OPERATIONS:
------------------
This segment includes the equity in income UCV, L.P. (UCV) and the sublease of a
portion of the Penley factory.  The operations of UCV consisted of the operation
of a 542 unit  apartment  project  until UCV sold the property on April 1, 2003.
UCV acquired  replacement  properties on August 28, 2003, September 25, 2003 and
September  26, 2003.  The  operations of UCV for the three and nine months ended
March  31,  2004  included  the  operations  of  these  properties  since  their
acquisition.

                                       13
<PAGE>
GOLF OPERATIONS:
----------------
Golf  revenues  declined in the nine month period  primarily due to a decline in
sales to golf club manufacturers. In one circumstance there was an order shipped
in July 2002 for which there was no  comparable  sales  activity in fiscal 2004.
There were also two manufacturers  that are  no longer in business in 2004. Golf
revenues declined in the third quarter primarily due to slight declines in sales
to distributors and golf shops.

The following is a breakdown of the percentage of sales by customer category:
                                    Nine Months Three Months
                                    ----------  ------------
                                    2004  2003   2004  2003
                                    ----  ----   ----  ----
     Golf equipment distributors .   50%   42%    46%   48%
     Small golf club manufacturers   24%   30%    32%   28%
     Golf shops ..................   23%   23%    19%   20%
     Other .......................    3%    5%     3%    4%

Operating expenses of the golf segment consisted of the following in 2004 and
2003:
                                     Nine Months            Three Months
                                 ---------------------  --------------------
                                    2004        2003       2004       2003
                                 ----------  ----------  ---------  ---------
     Costs of goods sold and
        manufacturing overhead   $1,887,000  $1,654,000 $  787,000  $ 606,000
     Research & development         217,000     145,000     60,000     48,000
                                 ----------  ----------  ---------  ---------
         Total golf costs         2,104,000   1,799,000    847,000    654,000
                                 ==========  ==========  =========  =========
     Marketing & promotion          824,000     741,000    378,000    299,000
     Administrative-direct          217,000     203,000     87,000     68,000
                                 ----------  ----------  ---------  ---------
          Total SG&A-direct       1,041,000     944,000    465,000    367,000
                                 ==========  ==========  =========  =========
     Allocated corporate costs      446,000     191,000    145,000     67,000
                                 ==========  ==========  =========  =========

Total golf costs  increased in the three and nine-month periods due to increases
in  costs  to  correct   manufacturing   problems   caused  by  changes  in  the
specifications of materials  purchased from one of its "prepreg" vendors as well
as an increase in the valuation reserve.

Marketing and promotion  expenses  increased in the three and nine-month periods
due to an in advertising costs.

OTHER
-----
Other  revenues-related  party  decreased  due to  UCV's  sale of its  apartment
project  on  April  1,  2003.  The  Company  had  received  management  fees and
development  fees from UCV totaling  $49,000 and $146,000 during the three month
and nine month periods ended March 31, 2003,  respectively.  In the same periods
in 2004,  the  Company  only  received  management  fees  from  the  replacement
properties totalling $15,000 and $33,000 respectively.

Other revenues, which primarily consisted of management fees earned from a third
party,  decreased  $118,000  in the nine  month  period  due to  the sale of the
property  being  managed  in  October  2002.  This  was  partially  offset  by a
non-recurring  increase in miscellaneous  income in the three months ended March
31, 2004 of $17,000.

Unallocated selling, general and administrative expenses increased by $98,000 in
the  nine-month  period  primarily  due to  increases  in audit  fees and  legal
expenses.  There was not a  meaningful  change to this  expense  category in the
third quarter.

The  amount  of  corporate  expenses  allocated  to the Golf  segment  primarily
increased due to an increase in the  percentage  of expenses  allocable to golf.
This is the result of the  discontinuance of the bowling segment in May 2003 and
the  reduction  in property  management  services  performed  for UCV and others
during the three months ended September 30, 2003.

                                       14
<PAGE>

Interest expense decreased  primarily due to repayment of the short term debt in
April 2003.

The  increase  in gain on sale  primarily  relates to the  $60,532  received  in
November 2003 related to amounts due on the sale of the Company's  investment in
All Seasons Inns in a prior year. The Company had recorded a valuation allowance
for the amount due at the time of sale.

Discontinued Operations:
------------------------

As  discussed  in  Footnote  7 of  Notes  to  Consolidated  Condensed  Financial
Statements,  the Company has  classified  its operations in the bowling and real
estate development segments as discontinued operations.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

The Company is exposed to market risk primarily due to  fluctuations in interest
rates.  However,  the Company does not consider  this  interest rate market risk
exposure to be material to its financial condition or results of operations.

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


ITEM 4. CONTROLS AND PROCEDURES
-------------------------------
An evaluation was carried out under the supervision  and with the  participation
of the Company's management, including its Chief Executive Officer and its Chief
Financial  Officer,   of  the  effectiveness  of  the  disclosure  controls  and
procedures (as defined in Rule  13a-14(c)  under the Securities and Exchange Act
of 1934 (the "Exchange Act") as of March 31, 2004. Based on this evaluation, the
Chief Executive  Officer and the Chief Financial Officer have concluded that the
Company's  disclosure  controls  and  procedures  are  effective  to ensure that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms.

There have been no changes in the  Company's  internal  control  over  financial
reporting (as defined in Rule  13a-15(e)  under the  Securities  Exchange Act of
1934) during the  Company's  most recent  fiscal  quarter  that have  materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

                                       15
<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1. Legal Proceedings

          As of March 31, 2004, 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, 2003, except the following:

          A lawsuit was filed on January 10, 2003 in the United States  District
          Court in the Southern  District of California by Masterson  Marketing,
          Inc.  (Masterson)  against Penley  Sports,  LLC.  Masterson's  lawsuit
          originally  asserted  claims  for  copyright  infringement,  breach of
          contract,  breach of fiduciary duty, and sought compensatory  damages,
          punitive damages,  statutory  damages,  and attorney fees. The Company
          filed a motion to dismiss  all claims.  In  response  to that  motion,
          Masterson  dropped  all  claims  except  for the  claims of  copyright
          infringement  and  breach of  contract.  Masterson  also  dropped  all
          prayers for punitive damages, statutory damages, and attorney fees. It
          is  not  possible  at  this  time  to  predict  the  outcome  of  this
          litigation. We intend to vigorously defend against these claims.



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:
           31.1   Certification of Chief Executive Officer
           31.2   Certification of Chief Financial Officer
           32.1   Certification of Chief Executive Officer pursuant to Sec. 906
           32.2   Certification of Chief Financial Officer pursuant to Sec. 906

      (b) Reports on Form 8-K:  NONE


                                       16
<PAGE>
                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




      SPORTS ARENAS, INC.



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

      Date:   May 17, 2004
            --------------------



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

      Date: May 17, 2004
           ------------------



                                       17