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, 2001

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

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

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports);  and (2) has been subject to such
filing requirements for the past 90 days.   Yes  X      No
                                                ---       ---

The number of shares outstanding of the issuer's only class of common stock
($.01 par value) as of April 30, 2001 was 27,250,000 shares.



<PAGE>

                               SPORTS ARENAS, INC.
                                    FORM 10-Q
                          QUARTER ENDED MARCH 31, 2001

                                      INDEX

Part I - Financial Information:

Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of March 31, 2001 (unaudited) and
             June 30, 2000                                                 1-2

      Unaudited Statements of Operations for the Three Months Ended
             March 31, 2001 and 2000                                        3

      Unaudited Statements of Operations for the Nine Months Ended
             March 31, 2001 and 2000                                        4

      Unaudited Statements of Cash Flows for the Nine Months Ended
             March 31, 2001 and 2000                                        5

      Notes to Financial Statements                                        6-10

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

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

Part II - Other Information                                                 16


Signatures                                                                  17


<PAGE>


                       SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS

                                                       March 31,    June 30,
                                                         2001         2000
                                                      ------------  ----------
                                                      (Unaudited)

Current assets:
   Cash and cash equivalents                            $ 263,078     $ 13,961
   Current portion of notes receivable- affiliate            --         50,000
   Other receivables                                      220,503      193,510
   Inventories                                            354,961      304,906
   Prepaid expenses                                        91,784      238,719
                                                      ------------  ----------
      Total current assets                                930,326      801,096
                                                      ------------  ----------

Receivables due after one year:
   Note receivable- affiliate, net                            --        73,866
   Less current portion                                       --       (50,000)
                                                      ------------  ----------
                                                              --        23,866
                                                      ------------  ----------
Property and equipment, at cost:
   Land                                                       --       678,000
   Buildings                                                  --     2,461,327
   Equipment and leasehold and tenant improvements      2,255,895    2,347,767
                                                      ------------  ----------
                                                        2,255,895    5,487,094
    Less accumulated depreciation and amortization     (1,028,570)  (2,160,132)
                                                      ------------  ----------
       Net property and equipment                       1,227,325    3,326,962
                                                      ------------  ----------

Other assets:
   Undeveloped land, at cost                            1,532,073    1,501,318
   Intangible assets, net                                 160,452      246,123
   Investments                                            519,446      564,446
   Other                                                  120,999      137,425
                                                      ------------  ----------
                                                        2,332,970    2,449,312
                                                      ------------  ----------

                                                       $4,490,621   $6,601,236
                                                      ============  ==========



                                        1
<PAGE>


                       SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS (CONTINUED)
                      LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                       March 31,     June 30,
                                                         2001          2000
                                                      ------------  ----------
                                                      (Unaudited)
Current liabilities:
   Assessment district obligation- in default          $3,038,618   $2,831,180
   Notes payable-short term                             1,600,000    1,350,000
   Current portion of long-term debt                       54,000    1,874,000
   Accounts payable                                       756,805      796,483
   Accrued payroll and related expenses                   253,577      164,170
   Accrued property taxes- in default                     410,445      356,178
   Accrued interest                                       173,779       41,079
   Other liabilities                                      489,585      216,009
                                                      ------------  ----------
      Total current liabilities                         6,776,809    7,629,099
                                                      ------------  ----------

Long-term debt, excluding current portion                   6,685    1,967,169
                                                      ------------  ----------

Distributions received in excess of basis
   in investment                                       15,171,899   14,498,208
                                                      ------------  ----------

Other liabilities                                         132,000      123,831
                                                      ------------  ----------

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


Shareholders' deficit:
   Common stock, $.01 par value, 50,000,000
     shares authorized, 27,250,000 shares
     issued and outstanding                               272,500      272,500
   Additional paid-in capital                           1,730,049    1,730,049
   Accumulated deficit                                (19,020,506) (19,040,805)
                                                      ------------  ----------
                                                      (17,017,957) (17,038,256)

   Less note receivable from shareholder               (2,291,492)  (2,291,492)
                                                      ------------  ----------
     Total shareholders' deficit                      (19,309,449) (19,329,748)
                                                      ------------  ----------

Commitments and contingencies (Note 6)

                                                       $4,490,621   $6,601,236
                                                      ============  ==========








     See accompanying notes to consolidated condensed financial statements.


                                        2
<PAGE>


                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                  THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (Unaudited)

                                                          2001         2000
                                                       ----------   ----------
Revenues:
   Bowling                                             $  552,596   $  793,718
   Rental                                                  42,131      163,203
   Golf                                                   419,576      318,987
   Other                                                   34,618      119,256
   Other-related party                                     44,763       43,085
                                                       -----------  -----------
                                                        1,093,684    1,438,249
                                                       -----------  -----------
Costs and expenses:
   Bowling                                                429,419      521,409
   Rental                                                  41,783       62,299
   Golf                                                   628,263      422,101
   Development                                             42,021       92,503
   Selling, general, and administrative                   877,284      989,651
   Depreciation and amortization                           63,254       96,952
                                                       -----------  ----------
                                                        2,082,024    2,184,915
                                                       -----------  ----------

Loss from operations                                     (988,340)    (746,666)
                                                       -----------  ----------

Other income (charges):
   Investment income:
     Related party                                          8,529        9,157
     Other                                                  1,609        1,954
   Interest expense:
     Development activities                               (77,159)     (62,950)
     Other and amortization of finance costs              (50,483)     (84,083)
   Equity in income of investees                           74,929       45,569
                                                       -----------  ----------
                                                          (42,575)     (90,353)
                                                       -----------  ----------

Net loss                                              $(1,030,915)  $ (837,019)
                                                       ===========  ==========


Basic and diluted net loss per common share
 (based on 27,250,000 weighted average
 common shares outstanding)                              ($0.04)      ($0.03)
                                                         ======       ======



     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, 2001 AND 2000
                                   (Unaudited)

                                                          2001        2000
                                                       ----------   ----------
Revenues:
   Bowling                                             $1,882,328   $2,043,672
   Rental                                                 353,278      479,593
   Golf                                                   950,205      600,518
   Other                                                  113,052      180,003
   Other-related party                                    133,555      128,419
                                                       ----------  -----------
                                                        3,432,418    3,432,205
                                                       -----------  ----------
Costs and expenses:
   Bowling                                              1,472,475    1,557,673
   Rental                                                 174,234      186,679
   Golf                                                 1,646,985    1,026,914
   Development                                            127,013      182,816
   Selling, general, and administrative                 2,659,497    2,762,324
   Depreciation and amortization                          228,065      288,904
                                                       -----------  ----------
                                                        6,308,269    6,005,310
                                                       -----------  ----------

Loss from operations                                   (2,875,851)  (2,573,105)
                                                       -----------  ----------

Other income (charges):
   Investment income:
     Related party                                         15,792       29,130
     Other                                                  1,609       11,043
   Interest expense:
     Development activities                              (207,438)    (195,951)
     Other and amortization of finance costs             (341,157)    (263,568)
   Loss on sale of undeveloped land                           --          (638)
   Gain on sale of office building                      2,764,483          --
   Gain on sale of bowling center building                482,487          --
   Equity in income of investees                          180,374      288,868
                                                       -----------  ----------
                                                        2,896,150     (131,116)
                                                       -----------  ----------

Net income (loss)                                      $   20,299  $(2,704,221)
                                                       ===========  ==========


Basic and diluted net income (loss) per
   common share (based on 27,250,000 weighted
   average common shares (outstanding)                    $0.00       ($0.10)
                                                          =====       ======





     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, 2001 AND 2000
                                   (Unaudited)

                                                          2001        2000
                                                       ----------   ----------
Cash flows from operating activities:

  Net income (loss)                                    $   20,299  ($2,704,221)
  Adjustments to reconcile net income (loss) to the
    net cash used by operating activities:
      Amortization of deferred financing costs             18,846        6,840
      Depreciation and amortization                       228,065      288,904
      Equity in income of investees                      (180,374)    (288,868)
      Deferred income                                      36,000       36,000
      (Gain) loss on sale of property                  (3,246,970)         638
      Interest accrued on assessment district
        obligations                                       207,438      195,951
    Changes in assets and liabilities:
      Increase in receivables                             (20,792)     (80,887)
     (Increase) decrease in inventories                   (50,055)      85,350
     (Increase) decrease in prepaid expenses               63,259      (95,733)
      Increase (decrease) in accounts payable             (39,678)     221,344
      Increase in accrued expenses                        549,950      170,793
      Other                                                28,996      (15,840)
                                                       -----------  ----------
        Net cash used by operating activities          (2,385,016)  (2,179,729)
                                                       -----------  ----------

Cash flows from investing activities:
   Decrease in notes receivable                            73,866       31,457
   Capital expenditures                                  (375,039)    (130,769)
   Increase in development costs on undeveloped land      (30,755)     (66,717)
   Proceeds from sale of undeveloped land                     --       190,362
   Proceeds from sale of office building                1,662,337          --
   Proceeds from bowling center building                2,047,328          --
   Distributions from investees                         1,059,000    2,122,500
   Contributions to investees                            (200,000)     (43,319)
                                                       -----------  ----------
        Net cash provided by investing activities       4,236,737    2,103,514
                                                       -----------  ----------

Cash flows from financing activities:
   Scheduled principal payments on long-term debt        (179,029)    (210,712)
   Extinguishment of long-term debt                    (1,650,977)     (75,927)
   Proceeds from short-term notes payable               1,200,000      750,000
   Payments on short-term notes payable                  (950,000)    (550,000)
   Other                                                  (22,598)         --
                                                       -----------  ----------
       Net cash used by financing activities           (1,602,604)     (86,639)
                                                       -----------  ----------

Net increase (decrease) in cash and cash equivalents      249,117     (162,854)
Cash and cash equivalents, beginning of period             13,961      357,906
                                                       ----------    ---------
Cash and cash equivalents, end of period               $  263,078      195,052
                                                       ===========  ==========




     See accompanying notes to consolidated condensed financial statements.

                                        5
<PAGE>


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                             MARCH 31, 2001 AND 2000
                                   (Unaudited)

1.    The information furnished reflects all adjustments (consisting of normal
      recurring adjustments) which management believes are necessary for a fair
      presentation of the Company's financial position, results of operations
      and cash flows for the interim periods.

2.    Due to the seasonal fluctuations of the bowling and golf shaft
      manufacturing operations, the financial results for the interim periods
      ended March 31, 2001 and 2000, are not necessarily indicative of
      operations for the entire year.

3. Investments:

   (a) Investments consist of the following:

                                                     March 31,    June 30,
                                                       2001         2000
                                                   ------------ ------------
        Vail Ranch Limited Partnership            $    519,446  $    564,446
                                                   ============ ============
        Investment in UCV, L.P. classified as
         liability- Distributions received
         in excess of basis in investment         $ 15,171,899  $ 14,498,208
                                                   ============ ============

     The following is a summary of the equity in income (loss) of the
     investments accounted for by the equity method for the nine-month periods
     ended March 31,:
                                            2001          2000
                                         ---------     ---------
        UCV, L.P.                        $ 225,374     $ 346,868
        Vail Ranch Limited Partnership     (45,000)      (58,000)
                                         ---------     ---------
                                         $ 180,374     $ 288,868
                                         =========     =========

     The following is a summary of distributions received from investees for the
     nine-month periods ended March 31,:
                                            2001          2000
                                         -----------   -----------
        UCV, L.P.                        $ 1,059,000   $ 2,122,500
        Vail Ranch Limited Partnership           --           --
                                         -----------    ----------
                                         $ 1,059,000   $ 2,122,500
                                         ===========    ==========

   (b) Investment in UCV, L.P.

     The operating results of this investment are included in the accompanying
     consolidated condensed statements of operations based upon the
     partnership's fiscal year (March 31). Summarized information from UCV,
     L.P.'s (UCV) unaudited statements of income for the nine and three month
     periods ended December 31, 2000 and 1999 are as follows:

                                        Nine Months           Three Months
                                  ---------------------- ---------------------
                                     2000        1999      2000        1999
                                  ----------  ---------- ---------- ----------
        Revenues                  $3,796,000  $3,593,000 $1,272,000 $1,226,000
        Operating and general
         and administrative
         costs                     1,229,000   1,266,000    378,000    427,000
        Depreciation                  17,000      20,000      5,000      7,000
        Interest expense           2,099,000   1,613,000    709,000    635,000
        Net income                   451,000     694,000    180,000    157,000

     On March 8, 2001, UCV paid its existing $28,478,687 note payable with the
     proceeds from a $33,000,000 loan. The new loan provides for monthly
     payments of interest only at a variable rate of interest equal to LIBOR
     (not less than 6 percent) plus 2-1/2 percentage points. UCV paid a fee to
     cap LIBOR at 6. The note payable matures August 2002 but may be extended
     for two 12-month periods upon entering into an agreement to cap LIBOR at 7
     percent. The loan may be prepaid at any time, however, there are prepayment
     fees as follows: 3 percent if paid prior to the sixth payment date; 1-1/2
     percent if paid prior to the ninth payment date; 1 percent if paid prior to
     the twelfth payment date; and none thereafter. UCV is required to make a
     monthly payment of approximately $16,290 to a property tax and insurance
     impound account. The note payable is collateralized by the land, buildings,
     leases and security deposits. The proceeds of the new loan, after
     extinguishing the $28,478,687 note payable less a refund of impounds of
     $161,907, were utilized to: pay a prepayment penalty of $295,260, pay loan



                                        6
<PAGE>

     costs of $976,615, pay distributions to the partners of $1,820,000 in March
     2001, fund a capital replacement impound maintained by the lender of
     $754,040 and provide working capital of $837,305. The refinancing resulted
     in charges of $401,444 related to the prepayment penalty of $295,260 and
     $106,184 of the unamortized portion of deferred loan costs related to the
     old note payable. These charges were classified as an extraordinary loss
     from extinguishment of debt in the financial statements of UCV in its
     fourth quarter ending March 31, 2001. The Company's equity in the
     extraordinary loss of UCV will be recorded in the Company's quarter ending
     June 30, 2001.

4. Undeveloped land:

   RCSA Holdings, Inc. (RCSA), a wholly owned subsidiary of the Company, owns a
   50 percent managing general partnership interest in Old Vail Partners, a
   general partnership (OVPGP), which owns 33 acres of undeveloped land in
   Temecula, California. On September 23, 1999, the other partner assigned his
   partnership interest to Downtown Properties, Inc., a wholly owned subsidiary
   of the Company. OVPGP is obligated to assign its interest in the 33 acres of
   land to Old Vail Partners, L.P. The 33 acres of land owned by OVPGP are
   located within a special assessment district of the County of Riverside,
   California (the County) which was created to fund and develop roadways,
   sewers, and other required infrastructure improvements in the area necessary
   for the owners to develop their properties. Property within the assessment
   district is collateral for an allocated portion of the bonded debt that was
   issued by the assessment district to fund the improvements. The annual
   payments (required in semiannual installments) due related to the bonded debt
   are approximately $144,000. The payments continue through the year 2014 and
   include interest at approximately 7-3/4 percent. OVPGP has been delinquent in
   the payment of property taxes and assessments for over the last eight years.
   The property is currently subject to default judgments to the County of
   Riverside, California totaling approximately $2,420,957 regarding delinquent
   assessment district payments ($2,010,512) and property taxes ($410,445). On
   June 23, 2000, the County of Riverside agreed to remove the property from the
   planned public sale originally scheduled for June 26, 2000 in exchange for an
   immediate payment of $330,000 with the balance of property taxes due on
   December 29, 2000. Separately, the County of Riverside stated that a
   foreclosure sale related to the default judgement for assessment district
   payments would not be scheduled until some time after January 1, 2001. On
   January 19, 2001, the County of Riverside agreed to extend the due date to
   March 30, 2001 with options for three additional extensions to August 1,
   2001. The options for additional extensions would require payments totaling
   $75,000 to be applied to the amount due. Payments have been made to extend
   the agreement through May 31, 2001.

   The delinquent principal, interest and penalties ($2,010,512) and the
   remaining principal balance of the allocated portion of the assessment
   district bonds ($1,028,106) are classified as "Assessment district
   obligation- in default" in the consolidated balance sheet at March 31, 2001.
   In addition, the consolidated balance sheet at March 31, 2001 includes
   $410,445 of delinquent property taxes and late fees related to the 33-acre
   parcel.

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

                                        7
<PAGE>

    On January 11, 2001, the Company agreed to sell the 33 acres to an unrelated
    developer for $6,550,000 cash plus assumption of the non-delinquent balance
    of the assessment district obligation ($1,028,106 as of December 31, 2000)
    at the time of closing, which was to be April 20, 2001. The buyer had
    deposited $260,000 into escrow which became non-refundable and the funds
    were paid to OVPGP when the buyer waived all contingencies in March 2001. On
    May 4, 2001, the Company signed an agreement to extend the closing date to
    May 31, 2001 and reduce the cash sale price to $6,375,000. The buyer has
    deposited an additional $740,000 as a non-refundable deposit to escrow. If
    the sale closes, the Company estimates that it will recognize a gain in the
    fourth quarter.

   The following is a summary of the results from operations of the development
   activities related to this undeveloped land included in the financial
   statements in the three and nine month periods:

                                         Three Months          Nine Months
                                      -------------------   ------------------
                                        2001       2000       2001      2000
                                      --------   --------   --------  --------
       Development costs                42,000     93,000    127,000   183,000
       Allocated SG&A                    6,000        --      17,000    17,000
                                      --------   --------   --------  --------
       Loss from operations            (48,000)   (93,000)  (144,000) (200,000)
       Interest expense- development    77,000     63,000    207,000   196,000
                                      --------   --------   --------  --------
       Loss from continuing
         operations                   (125,000)  (156,000)  (351,000) (396,000)
                                      ========   ========   ========  ========

5. Notes payable:

   Pursuant to a short term loan agreement with the Company's partner in UCV,
   the Company borrowed an additional $700,000 in the three months ended
   September 30, 2000, $350,000 on October 17, 2000 and $150,000 on November 10,
   2000. On December 28, 2000 the Company paid $500,000 of the short term note
   payable from the proceeds of the office building sale (Note 7a) and on March
   8, 2001 paid $450,000 from the proceeds of distributions received from UCV.

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

6. Contingencies:

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

7. Significant events: (a) Sale of Office Building:

     On December 28, 2000 the Company sold its office building for $3,725,000
     and recorded a gain of $2,764,483. The consideration consisted of the
     assumption of the existing loan with a principal balance of $1,950,478 and
     cash of $1,662,337. The cash proceeds were net of selling expenses of
     $163,197, credits for lender impounds of $83,676, deductions for security
     deposits of $26,463 and prepaid rents of $6,201. The Company has been
     released from liability under the existing loan except for those acts,
     events or omissions that occurred prior to the loan assumption. The Company
     has occupied approximately 5,000 square feet of space in the building since
     1984. The existing lease expires in September 2011. In conjunction with a
     lease modification with the new owner to the office building, the Company
     vacated the premises on April 6, 2001 and moved into the factory space
     occupied by its subsidiary, Penley Sports, LLC. However, because the lease
     commitment was a condition to the original loan agreement, the lender will
     only allow the Company to be conditionally released from its remaining
     lease obligation. In the event there is an uncured event of default by the
     new owner of the office building under the existing loan agreement, the
     Company's obligations under its lease will be reinstated to the extent
     there is not an enforceable lease on the Company's space. The future
     minimum rent payments under the lease agreement are as follows for the
     period and years ending June 30: $16,000 for the three month period ending
     June 30, 2001; $68,000- 2002; $70,000- 2003; $72,000- 2004; $75,000- 2005;
     $77,000- 2006; $443,000 thereafter and $839,000 in the aggregate.

                                        8
<PAGE>

     The following is a summary of the results from operations of the office
     building included in the financial statements in the three and nine month
     periods:

                                       Three Months           Nine Months
                                   --------------------   ------------------
                                      2001       2000       2001      2000
                                   --------    --------   --------  --------
          Rents                        --      $122,000   $244,000  $353,000
          Costs                        --        28,000     52,000    84,000
          Allocated SG&A               --         7,000     15,000    22,000
          Depreciation                 --        21,000     16,000    63,000
                                   --------    --------   --------  --------
          Income from operations       --        66,000    161,000   184,000
          Interest expense             --        42,000     81,000   125,000
                                   --------    --------   --------  --------
          Income from continuing
            operations                 --        24,000     80,000    59,000
                                   ========    ========   ========  ========

   (b) Sale of Valley Bowl real estate:

     On December 29, 2000 the Company sold the land and building occupied by the
     Valley Bowling Center for $2,215,000 cash and recorded a gain of $482,487.
     The proceeds of the sale were used to pay the existing loan of $1,650,977
     and selling expenses of $167,671. The bowling center discontinued its
     operations on December 21, 2000. The following is a summary of the results
     of operations of the bowling center included in the financial statements:

                                       Three Months           Nine Months
                                    --------------------  -------------------
                                       2001       2000       2001      2000
                                    ---------- ---------  ---------  --------
          Revenues                     $1,000   $336,000   $460,000  $872,000
          Costs                         2,000    171,000    319,000   540,000
          Direct SG&A                       -     58,000    103,000   188,000
          Allocated SG&A                    -     24,000     30,000    63,000
          Depreciation                      -     21,000     26,000    69,000
                                    ---------- ---------  ---------  --------
          Income from operations       (1,000)    62,000    (18,000)   12,000
          Interest expense                  -     35,000     91,000   107,000
                                    ---------- ---------  ---------  --------
          Income from continuing
            operations                 (1,000)    27,000   (109,000)  (95,000)
                                    ========== =========  =========  ========

8. Supplementary Non-Cash information:

   The following is a summary of the changes to the balance sheet related to the
   non-cash portion of the sale of the office building and Valley Bowl real
   estate:

                                         Office      Valley Bowl
                                        Building     Real Estate
                                        --------     -----------
          Receivables                      $6,201    $     --
          Prepaid expenses                (83,676)         --
          Property and equipment        (1,171,699)  (2,434,539)
          Accumulated depreciation       (438,096)     (877,536)
          Deferred loan costs             (52,200)       (7,838)
          Other assets                    (11,516)         --
          Long-term debt                (1,950,478)        --
          Other liabilities               (26,462)         --

9. Liquidity

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

                                        9
<PAGE>

10. Business segment information:

   The Company operates principally in four business segments: bowling centers,
   commercial real estate rental, real estate development, and golf shaft
   manufacturing. Other revenues, which are not part of an identified segment,
   consist of property management and development fees (earned from both a
   property 50 percent owned by the Company and a property in which the Company
   has no ownership) and commercial brokerage. The following is summarized
   information about the Company's operations by business segment.
<TABLE>
<CAPTION>
                                                  Real Estate   Real Estate                   Unallocated
                                      Bowling        Rental     Development        Golf        And Other       Totals
                                   ------------   ------------  ------------   ------------   ------------   ------------
NINE MONTHS ENDED MARCH 31, 2001:
--------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $ 1,882,328    $   386,263   $      --      $   950,205    $   246,607    $ 3,465,403
Depreciation and amortization...        33,075         57,270          --          107,489         30,231        228,065
Interest expense ...............        91,117         80,993       207,438          4,193        164,854        548,595
Equity in income (loss) of
  investees ....................          --          225,374       (45,000)          --             --          180,374
Gain on sale ...................       482,487      2,764,483          --             --             --        3,246,970
Segment profit (loss) ..........       207,504      3,048,623      (396,451)    (2,367,870)      (488,908)         2,898
Investment income ..............                                                                                  17,401
Net income .....................                                                                                  20,299
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31, 2000:
--------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $ 2,043,672    $   527,593   $      --      $   600,518    $   308,422    $ 3,480,205
Depreciation and amortization...        78,561        104,226          --           69,204         36,913        288,904
Interest expense ...............       107,181        125,020       196,972         10,979         19,367        459,519
Equity in income (loss) of
  investees ....................          --          346,868       (58,000)          --             --          288,868
Loss on sale ...................          --             --            (638)          --             --             (638)
Segment profit (loss) ..........      (350,208)       436,536      (455,426)    (2,078,018)      (297,278)    (2,744,394)
Investment income ..............                                                                                  40,173
Net loss .......................                                                                              (2,704,221)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2001:
--------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   552,596    $    42,131   $      --      $   419,576    $    79,381    $ 1,093,684
Depreciation and amortization...         2,490         13,829          --           36,858         10,077         63,254
Interest expense ...............          --             --          77,159            816         49,667        127,642
Equity in income (loss) of
 investees .....................          --           89,929       (15,000)          --             --           74,929
Segment profit (loss) ..........       (26,177)        76,448      (140,180)      (839,860)      (111,284)    (1,041,053)
Investment income ..............                                                                                  10,138
Net loss .......................                                                                              (1,030,915)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000:
--------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   793,718    $   179,403   $      --      $   318,987    $   162,341    $ 1,454,449
Depreciation and amortization...        25,928         35,126          --           23,634         12,264         96,952
Interest expense ...............        35,045         41,592        62,950          3,073          4,373        147,033
Equity in income (loss) of
 investees .....................          --           78,569       (33,000)          --             --           45,569
Segment profit (loss) ..........        (2,892)       111,955      (188,453)      (739,806)       (28,934)      (848,130)
Investment income ..............                                                                                  11,111
Net loss .......................                                                                                (837,019)
</TABLE>
                                    Nine Months              Three Months
                              -----------------------   -----------------------
                               2001          2000         2001         2000
                            ----------    ----------   ----------    ----------
Revenues per segment .......$3,465,403    $3,480,205   $1,093,684    $1,454,449
Intercompany rent eliminated   (32,985)      (48,000)        --         (16,200)
                            ----------    ----------   ----------    ----------
Consolidated revenues ......$3,432,418    $3,432,205   $1,093,684    $1,438,249
                            ==========    ==========   ==========    ==========


                                       10
<PAGE>

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

                         Liquidity and Capital Resources

Excluding the balance of the assessment-district-obligation-in-default and
property taxes in default related to the same property which are included in
current liabilities, the Company has a working capital deficit of $2,397,420 at
March 31, 2001, which is a $1,243,225 decrease from the similarly calculated
working capital deficit of $3,640,645 at June 30, 2000. The increase in working
capital is primarily attributable to the cash proceeds from the sale of two
properties and the distributions received from UCV, which were partially offset
by the cash used by operating activities for the nine months ended March 31,
2001. The following is a schedule of the cash provided (used) before changes in
assets and liabilities, segregated by business segments:

                                        2001         2000        Change
                                     ----------   ----------  -----------
     Bowling                         $ (226,000)   $(270,000)   $  44,000
     Rental                             119,000      199,000      (80,000)
     Golf                            (2,260,000)  (2,009,000)    (251,000)
     Development                       (144,000)    (201,000)      57,000
     General corporate expense and
       other                           (405,000)    (184,000)    (221,000)
                                     ----------   ----------   ----------
     Cash used by continuing
       operations                    (2,916,000)  (2,465,000)    (451,000)
     Capital expenditures              (406,000)    (197,000)    (209,000)
     Principal payments on long-term
       debt                            (179,000)    (211,000)      32,000
                                     ----------   ----------   ----------
     Cash used                       (3,501,000)  (2,873,000)    (628,000)
                                     ==========   ==========   ==========

     Distributions received from
       investees, net                   859,000    2,079,000   (1,220,000)
                                     ==========   ==========   ==========
     Proceeds from sale of
        properties, net of
        extinguishment of debt        2,059,000      114,000    1,945,000
                                     ==========   ==========   ==========

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

As described in Note 4 of the Notes to Consolidated Condensed Financial
Statements, OVPGP is delinquent in the payment of special assessment district
obligations and property taxes on 33 acres of undeveloped land. The annual
obligation for the assessment district is approximately $144,000. The County of
Riverside obtained judgments for the default in the delinquent assessment
district payments. The amounts due to cure the judgment for the default under
the assessment district obligation on the 33 acre parcel as of March 31, 2001
was approximately $2,011,000. The delinquent principal, interest and penalties
($2,010,512) and the remaining principal balance of the allocated portion of the
assessment district bonds ($1,028,106) are classified as "Assessment district
obligation- in default" in the consolidated balance sheet at March 31, 2001. In
addition, the consolidated balance sheet at March 31, 2001 includes $410,445 of
delinquent property taxes and late fees related to the 33-acre parcel. On June
23, 2000, the County of Riverside agreed to remove the property from the planned
public sale originally scheduled for June 26, 2000 in exchange for an immediate
payment of $330,000 with the balance of property taxes due on December 29, 2000.
Separately, the County of Riverside stated that a foreclosure sale related to
the default judgement for assessment district payments would not be scheduled
until some time after January 1, 2001. On January 19, 2001, the County of
Riverside agreed to extend the due date to March 30, 2001 with three options to
that would extend the due date to August 1, 2001. Each extension option requires
a payment of $25,000. Payments have been made to date to extend the agreement to
May 31, 2001. In 1993 the City of Temecula adopted a general development plan as
a means of down-zoning the property to a lower use and, if uncontested, might
have significantly impaired the value of the property. As described in Note 4 of
the Notes to Consolidated Condensed Financial Statements, the Company contested
this action. On October 23, 2000, the City of Temecula's city council granted
preliminary approval of OVPGP's request for re-zoning and general plan amendment
related to a development plan which includes a combination of multi-family and
commercial uses. On November 28, 2000 the re-zoning and general plan amendment
requested by OVPGP were adopted by the City of Temecula and OVPGP abandoned its
legal claims against the City of Temecula.

                                       11
<PAGE>

On January 11, 2001, the Company agreed to sell the 33 acres to an unrelated
developer for $6,550,000 cash plus assumption of the non-delinquent balance of
the assessment district obligation ($1,028,106 as of March 31, 2001) at the time
of closing. Closing was to take place on April 20, 2001. The buyer had waived
all contingencies but was unable to meet its obligations on the closing date. On
May 4, 2001, the Company signed an agreement to extend the closing date to May
31, 2001 and reduce the cash sale price to $6,375,000. The buyer has deposited
an additional $740,000 as a non-refundable deposit to escrow. The Company
estimates the proceeds from the sale to the Company will be approximately
$1,374,000 after paying delinquent assessment district obligations and property
taxes ($2,491,000), selling expenses and other costs ($379,000), distribution to
minority interest holder of Old Vail Partners ($1,156,000), and a development
fee to Landgrant Corporation ($975,000).

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

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

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

On March 8, 2001, UCV paid its existing $28,478,687 note payable with the
proceeds from a $33,000,000 loan. The new loan provides for monthly payments of
interest only at a variable rate of interest equal to LIBOR (not less than 6
percent) plus 2-1/2 percentage points. UCV paid a fee to cap LIBOR at 6 percent.
The note payable matures August 2002 but may be extended for two 12-month
periods upon entering into an agreement to cap LIBOR at 7 percent. The loan may
be prepaid at any time, however, there are prepayment fees as follows: 3 percent
if paid prior to the sixth payment date; 1-1/2 percent if paid prior to the
ninth payment date; 1 percent if paid prior to the twelfth payment date; and
none thereafter. UCV is required to make a monthly payment of approximately
$16,290 to a property tax and insurance impound account. The note payable is
collateralized by the land, buildings, leases and security deposits. The
proceeds of the new loan, after extinguishing the $28,478,687 note payable less
a refund of impounds of $161,907, were utilized to: pay a prepayment penalty of
$295,260, pay loan costs of $976,615, pay distributions to the partners of
$1,820,000, fund a capital replacement impound maintained by the lender of
$754,040 and provide working capital of $837,305. The refinancing resulted in
charges of $401,444 related to the prepayment penalty of $295,260 and $106,184
of the unamortized portion of deferred loan costs related to the old note
payable. These charges were classified in UCV's financial statement as an
extraordinary loss from extinguishment of debt in the year ended March 31, 2001.

Management estimates negative cash flow of $700,000 to $900,000 for the
remaining quarter of the year ending June 30, 2001 from operating activities
before adding an estimated $300,000 distribution from UCV from its operating
activities, the estimated sales proceeds of $1,300,000 from the sale of the 33
acres of undeveloped land, and deducting $350,000 of principal payments due on
the short term note payable triggered by this events. Management expects
continuing cash flow deficits until Penley Sports develops sufficient sales
volume to become profitable. However, there can be no assurances that Penley
Sports will ever achieve profitable operations. Management is currently
evaluating obtaining additional investors in Penley Sports to provide sufficient
funds for the expected future cash flow deficits. If the Company is not
successful in obtaining other sources of working capital this could have a
material adverse effect on the Company's ability to continue as a going concern.

                                       12
<PAGE>

              "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.

                              Results of Operations

The following is a summary of the changes in the results of operations of the
nine-month and three-month periods ended March 31, 2001 to the same periods in
2000 and a discussion of the significant changes:

 <TABLE>
<CAPTION>
                                  NINE MONTHS ENDED MARCH 31, 2001 VERSUS 2000
                                  ----------------------------------------------
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $(161,344) $  (141,330)        --      $  349,687   $ (61,815)   $  (14,802)
 Costs ..........................     (85,198)     (12,445)     (55,803)      620,071        --         466,625
 SG&A-direct ....................     (53,143)        --           --          (6,031)    (58,668)     (117,842)
 SG&A-allocated .................     (36,678)      (7,000)        --          (6,000)     49,678          --
 Depreciation and amortization ..     (45,486)     (46,956)        --          38,285      (6,682)      (60,839)
 Interest expense ...............     (16,064)     (44,027)      10,466        (6,786)    145,487        89,076
 Equity in investees ............        --       (121,494)      13,000          --           --       (108,494)
 Gain on sale ...................     482,487    2,764,483          638          --           --      3,247,608
 Segment profit (loss) ..........     557,712    2,612,087       58,975      (289,852)   (191,630)    2,747,292
 Investment income ..............                                                                       (22,772)
 Income from operations ..........                                                                    2,724,520
</TABLE>
<TABLE>
<CAPTION>
                                THREE MONTHS ENDED MARCH 31, 2001 VERSUS 2000
                                ------------------------------------------------
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $(241,122) $  (137,272)        --      $  100,589   $ (82,960)   $ (360,765)
 Costs ..........................     (91,990)     (20,516)     (50,482)      206,162        --          43,174
 SG&A-direct ....................     (52,807)        --           --         (12,486)    (63,274)     (128,567)
 SG&A-allocated .................     (14,557)      (7,000)       6,000        (4,000)     19,557          --
 Depreciation and amortization ..     (23,438)     (21,297)        --          13,224      (2,187)      (33,698)
 Interest expense ...............     (35,045)     (41,592)      14,209        (2,257)     45,294       (19,391)
 Equity in investees ............        --         11,360       18,000          --           --         29,360
 Segment profit (loss) ..........     (23,285)     (35,507)      48,273      (100,054)    (82,350)     (192,923)
 Investment income ..............                                                                          (973)
 Income from operations .........                                                                      (193,896)
</TABLE>
   Note: The change in rental revenues and SG&A expenses do not include the
   effect of the net change in elimination of intercompany rent of $15,015 and
   $16,200 in the nine and three month periods, respectively.


                                       13
<PAGE>

BOWLING OPERATIONS:

The segment includes the operations of two bowling centers, Valley Bowl and
Grove Bowl. On December 21, 2000, the Company closed the operations of Valley
Bowl in conjunction with the sale of the real estate on December 29, 2000. The
following is a summary by bowling center of the changes in the results of
operations of the nine-month and three-month periods ended March 31, 2001 to the
same periods in 2000:
                             Six-Month Period           Three-Month Period
                        --------------------------   --------------------------
                        Grove    Valley   Combined   Grove    Valley   Combined
                        ------- --------  --------   ------- --------  --------
Revenues                249,661 (411,005) (161,344)   93,908 (335,030) (241,122)
Costs                   134,692 (219,890)  (85,198)   75,672 (167,662)  (91,990)
SG&A-direct              31,120  (84,263)  (53,143)    5,228  (58,035)  (52,807)
SG&A-allocated           (2,978) (33,700)  (36,678)   10,043  (24,600)  (14,557)
Depreciation and         (1,855) (43,631)  (45,486)   (2,339) (21,099)  (23,438)
amortization
Interest expense           --    (16,064)  (16,064)      --   (35,045)  (35,045)
Gain on sale               --    482,487   482,487       --     --        --
Segment profit (loss)    88,682  469,030   557,712     5,304  (28,589)  (23,285)

Bowl revenues of Grove Bowl (Grove) increased by 21% in the three and nine month
periods primarily due to 8% and 12% increases in the number of games bowled in
the three and nine month periods, respectively. The Grove Bowl's revenues have
consistently increased since the surrounding shopping center was redeveloped and
reopened in March 2000. Grove also had 12% and 8% increases in the average price
of games bowled in the three and nine month periods respectively.

Bowl costs of Grove increased primarily due to increases in utility costs of
$38,152 (224%) and $94,311 (144%) in the three and nine month periods,
respectively. These increases were due to the increase in electric rates in San
Diego. Payroll and related costs also increased by $32,842 (30%) and $40,440
(12%) in the three and nine month periods respectively.

Grove's SG&A direct expenses increased during the nine month period primarily
due to increases in promotion and advertising expenses of $19,851 (16%), which
primarily occurred in the first six months.

RENTAL OPERATIONS:

This segment includes the operations of the office building sold December 28,
2000, the equity in income of the operation of a 542 unit apartment project , a
subleasehold interest in land underlying a condominium project and other
miscellaneous rents received on undeveloped land. The following is a summary of
the changes in operations in the nine and three month periods ending March 31,
2001:
                            Nine-Month Period           Three-Month Period
                       ---------------------------  ---------------------------
                        Office   Others   Combined   Office   Others   Combined
                       --------  -------- --------  --------  -------  --------
Revenues               (109,471) (31,859) (141,330) (121,860) (15,412) (137,272)
Costs                   (30,907)  18,462   (12,445)  (26,949)   6,433   (20,516)
SG&A-allocated           (7,000)     --     (7,000)   (7,000)     --     (7,000)
Depreciation and        (46,956)     --    (46,956)  (21,297)     --    (21,297)
amortization
Interest expense        (44,027)     --    (44,027)  (41,592)     --    (41,592)
Equity in income of
  UCV                       --  (121,494) (121,494)      --    11,360    11,360
Gain on sale          2,764,483      --   2,764,483      --       --        --
Segment profit (loss) 2,783,902 (171,815) 2,612,087  (25,022) (10,485)  (35,507)

A temporary easement granted by the Company for the use of a portion of its
undeveloped land in Temecula, California expired in September 2000. The Company
had been amortizing approximately $17,000 of deferred rent to income each
quarter. Other rental costs increased due to an increase in the rent expense for
the subleasehold interest.

                                       14
<PAGE>

The equity in income of UCV decreased in the nine month period primarily due to
a decrease in UCV's net income of $243,000. The primary reason for the decrease
was a $486,000 increase in interest expense in the period related to additional
financing UCV obtained in October 1999. This increase in expense was partially
offset by an increase of $203,000 in rental income. Rental income of UCV
increased 6% in the nine and 4% in the three month periods primarily due to an
increase in the average rental rates.

REAL ESTATE DEVELOPMENT OPERATIONS:

Development costs and expenses primarily consists of property taxes and legal
costs incurred to contest the City of Temecula's attempts to down-zone the
undeveloped land owned by Old Vail Partners. Development costs decreased in the
nine and three month periods due to a decrease in legal costs related to the
development plan approval received in November 2000. Interest expense related to
development activities primarily relates to interest accrued on the past due and
current assessment district obligations of Old Vail Partners.

GOLF OPERATIONS:

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

Operating expenses of the golf segment consisted of the following in 2001, and
2000:

                                      Three Months           Nine Months
                                   --------------------  --------------------
                                     2001        2000       2001      2000
                                   ---------  ---------  ---------  ---------
     Costs of goods sold and
       manufacturing overhead      $ 550,000  $ 367,000  $1,439,000  $  841,000
     Research & development           78,000     55,000     208,000     186,000
                                   ---------  ---------  ----------  ----------
          Total golf costs           628,000    422,000   1,647,000   1,027,000
                                   =========  =========  ==========  ==========
     Marketing & promotion           479,000    493,000   1,186,000   1,246,000
     Administrative-direct            55,000     53,000     168,000     114,000
                                   --------- ----------  ----------  ----------
          Total SG&A-direct          534,000    546,000   1,354,000   1,360,000
                                   =========  =========  ==========  ==========
     Allocated corporate costs        60,000     64,000     205,000     211,000
                                   ========= ==========  ==========  ==========

Total golf costs increased in 2001 primarily due to an increase in the amount of
cost of goods sold related to increased sales, and an increase in manufacturing
overhead related to the plant facilities into which Penley relocated in June
2000.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk primarily due to fluctuations in interest
rates. The Company utilizes both fixed rate and variable rate debt. The
following table presents principal maturities and related weighted average
interest rates of the Company's long-term fixed rate and variable rate debt for
the fiscal years ended June 30.

                                        2001        2002      Total
                                     -------  ----------  ----------
    Fixed rate debt                  $14,000     $21,000     $35,000
    Weighted average interest rate     9.0%        8.7%       8.8%
       rate

    Variable rate debt               $19,000  $1,607,000  $1,626,000
    Weighted average interest rate     10.0%      10.0%       10.0%

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

The Company's unconsolidated subsidiary, UCV, has variable rate debt of
$33,000,000 as of March 31, 2001 for which the interest rate was 8.5 percent.
However, the combination of a floor established by the lender and a cap
purchased by UCV has resulted in the rate being fixed at 8.5 percent for the
initial term of the loan. The principal cash flows for each of UCV's fiscal
years ending March 31 is: 2002- none; 2002 and in total- $33,000,000.

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

                                       15
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                                     PART II

                                OTHER INFORMATION

ITEM 1. Legal Proceedings

        As of March 31, 2001, other than as described in Note 4 of Notes to the
        Consolidated Condensed Financial Statements there were no changes in
        legal proceedings from those set forth in Item 3 of the Form 10-K filed
        for the year ended June 30, 2000.

ITEM 2. Changes in Securities

          NONE

ITEM 3. Defaults upon Senior Securities

          N/A

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

        On December 22, 2000 the Company held its annual shareholder meeting in
        which the following item was voted upon:

                                            Tabulation of Votes
                                     --------------------------------
                                         For     Against     Abstain
                                     ----------  --------   ---------
         Election of Directors:

            Harold S. Elkan          23,529,984       0        54,166
            Steven R. Whitman        23,529,888       0        54,262
            Patrick D. Reiley        23,530,388       0        53,762
            James E. Crowley         23,530,550       0        53,600
            Robert A. MacNamara      23,530,450       0        53,700

ITEM 5. Other Information

          NONE

ITEM 6. Exhibits & Reports on Form 8-K

     (a) 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 14, 2001
             ------------


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

     Date:   May 14, 2001
             ------------


                                       17
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