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


                                    FORM 10-Q


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

              For the quarterly period ended December 31, 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 March 31, 2005 was 5,441,734 shares.

<PAGE>

                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                        QUARTER ENDED DECEMBER 31, 2004

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

        Balance Sheets as of December 31, 2004 (unaudited)
           and June 30, 2004 (audited) ...............................    1

        Unaudited Statements of Operations for the Three Months Ended
                December 31, 2004 and 2003 ..........................     2

        Unaudited Statements of Operations for the Six Months Ended
                December 31, 2004 and 2003 ...........................    3

        Unaudited Statements of Cash Flows for the Six Months Ended
                December 31, 2004 and 2003 ...........................    4

        Notes to Financial Statements.................................   5-6


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

Item 3.- Quantitative and Qualitative Disclosures about Market Risk...    9

Item 4.- Controls and Procedures .....................................    10

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

Exhibits and reports on Form 8-K .....................................    10

Signatures............................................................    11


<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                                    December 31,   June 30,
                                                         2004         2004
                                                     -----------  -----------
                                                     (Unaudited)    Audited
                                     ASSETS
Current assets:
   Cash and cash equivalents ........................$     7,552  $   186,716
   Receivables ......................................    105,585      275,004
   Inventories ......................................    263,242      605,843
   Prepaid expenses .................................     21,612       27,005
                                                     -----------  -----------
      Total current assets ..........................    397,991    1,094,568
                                                     -----------  -----------
Property and equipment, at cost:
   Equipment.........................................  1,611,332    1,997,600
      Less accumulated depreciation and amortization  (1,189,385)  (1,167,688)
                                                     -----------  -----------
       Net property and equipment ...................    421,947      829,912
                                                     -----------  -----------
Other assets:
   Investment .......................................  3,519,468    3,797,288
   Deferred tax assets ..............................  2,044,000    1,330,000
   Other ............................................     77,371       77,371
                                                     -----------  -----------
                                                       5,640,839    5,204,659
                                                     -----------  -----------

                                                     $ 6,460,777  $ 7,129,139
                                                     ===========  ===========

                LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Current portion of long-term debt ................$    18,484  $    18,071
   Note payable- short term .........................     16,000         --
   Accounts payable .................................    233,484      241,540
   Accrued payroll and related expenses .............    285,857      278,286
   Accrued income taxes .............................    979,000      979,000
   Other liabilities ................................     78,051         --
                                                     -----------  -----------
      Total current liabilities .....................  1,610,876    1,516,897
                                                     -----------  -----------

Long-term debt, excluding current portion ...........     57,892       67,232
                                                     -----------  -----------

Deferred taxes liabilities ..........................  5,158,000    5,158,000
                                                     -----------  -----------

Minority interest in consolidated subsidiary ........     15,000       15,000
                                                     -----------  -----------
Commitments and contingencies (Note 4)

Shareholders' equity (deficit):
   Common stock, $.01 par value, 50,000,000 shares
     authorized, 10,883,467 issued and outstanding ..    340,521      340,521
   Additional paid-in capital .......................  2,038,776    2,038,776
   Treasury stock ...................................   (915,176)    (915,176)
   Retained deficit ................................. (1,845,112)  (1,092,111)
                                                     -----------  -----------
     Total shareholders' equity (deficit) ...........   (380,991)     372,010
                                                     -----------  -----------


                                                     $ 6,460,777  $ 7,129,139
                                                     ===========  ===========

     See accompanying notes to consolidated condensed financial statements.

                                       1
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
                                   (Unaudited)

                                                         2004         2003
                                                     -----------  -----------
Revenues:
   Other ............................................      7,336       12,698
   Other-related party ..............................     14,624       14,931
                                                     -----------  -----------
                                                          21,960       27,629
                                                     -----------  -----------
Costs and expenses:
   Selling, general, and administrative .............    157,095      120,291
   Depreciation and amortization ....................      8,319        7,407
                                                     -----------  -----------
                                                         165,414      127,698
                                                     -----------  -----------

Loss from operations ................................   (143,454)    (100,069)
                                                     -----------  -----------

Other income (charges):
   Investment income:
     Related party ..................................      7,502       11,529
     Other ..........................................        386         --
   Interest expense and amortization of finance costs       (912)        (372)
   Equity in income (loss) of investees .............    (24,185)      67,438
   Gain on sale .....................................       --         78,533
                                                     -----------  -----------
                                                         (17,209)     157,128
                                                     -----------  -----------

Loss from continuing operations before income taxes..   (160,663)      57,059

Income tax benefit ..................................    (37,000)     (23,000)
                                                     -----------  -----------

Income (loss) from continuing operations ............   (197,663)      34,059
                                                     -----------  -----------

Discontinued operations (Note 7):
  Loss from operations of discontinued segments......   (748,369)    (702,904)
  Income tax benefit ................................    298,000      280,000
                                                     -----------  -----------
  Loss on discontinued operations                       (450,369)    (422,904)
                                                     -----------  -----------

Net loss ............................................$  (648,032) $  (388,845)
                                                     ===========  ===========

Per common share (based on weighted average shares
 outstanding) basic and diluted:
  Income (loss) from continuing operations ..........  $( 0.02)       ($0.00)
  Discontinued operations ...........................   ( 0.04)       ( 0.01)
                                                        ------        ------
   Net loss .........................................   ($0.06)       ($0.02)
                                                        ======        ======

Weighted average number of shares outstanding ...... 10,883,467   27,250,000
                                                     ==========   ==========
     See accompanying notes to consolidated condensed financial statements.


                                       2
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                   SIX MONTHS ENDED DECEMBER 31, 2004 AND 2003
                                   (Unaudited)

                                                         2004         2003
                                                     -----------  -----------
Revenues:
   Other ............................................     15,055       21,329
   Other-related party ..............................     29,379       18,335
                                                     -----------  -----------
                                                          44,434       39,664
                                                     -----------  -----------
Costs and expenses:
   Selling, general, and administrative .............    308,581      303,864
   Depreciation and amortization ....................     18,528       13,308
                                                     -----------  -----------
                                                         327,109      317,172
                                                     -----------  -----------

Loss from operations ................................   (282,675)    (277,508)
                                                     -----------  -----------

Other income (charges):
   Investment income:
     Related party ..................................     16,101       15,000
     Other ..........................................        386          297
   Interest expense and amortization of finance costs     (1,970)        (706)
   Equity in income (loss) of investees .............    (50,820)      94,226
   Gain on sale .....................................       --         78,533
                                                     -----------  -----------
                                                         (36,303)     187,350
                                                     -----------  -----------

Loss from continuing operations before income taxes..   (318,978)     (90,158)

Income tax benefit ..................................    257,000       25,000
                                                     -----------  -----------

Income (loss) from continuing operations ............    (61,978)     (65,158)
                                                     -----------  -----------

Discontinued operations (Note 7):
  Loss from operations of discontinued segments...... (1,148,023)  (1,232,900)
  Income tax benefit ................................    457,000      491,000
                                                     -----------  -----------
  Loss on discontinued operations                       (691,023)    (741,900)
                                                     -----------  -----------

Net loss ............................................$  (753,001) $  (807,058)
                                                     ===========  ===========

Per common share (based on weighted average shares
 outstanding) basic and diluted:
  Income (loss) from continuing operations ..........  $( 0.01)       ($0.00)
  Discontinued operations ...........................   ( 0.06)       ( 0.03)
                                                        ------        ------
   Net loss .........................................   ($0.07)       ($0.03)
                                                        ======        ======

Weighted average number of shares outstanding ...... 10,883,467   27,250,000
                                                     ==========   ==========
     See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   SIX MONTHS ENDED DECEMBER 31, 2004 AND 2003
                                   (Unaudited)

                                                         2004         2003
                                                     -----------  -----------
Cash flows from operating activities:
  Loss from continuing operations ...................$   (61,978)  $  (65,158)
  Adjustments to reconcile net loss to
   net cash provided used by operating activities:
      Depreciation and amortization .................     18,528       13,308
      Equity in (income) loss of investees ..........     50,820      (94,226)
      Provision for deferred income taxes ...........   (257,000)    (305,000)
      Gain on sale ..................................       --        (78,533)
     Changes in assets and liabilities:
      Decrease in receivables .......................      1,104      371,926
      Decrease in prepaid expenses ..................      1,260        3,708
      Increase (decrease) in accounts payable .......     61,709      (20,004)
      Decrease in accrued expenses ..................     27,338        1,006
     Other ..........................................      1,967         --
                                                     -----------  -----------
 Net cash used by operating activities...............   (156,252)    (172,973)
                                                     -----------  -----------

Cash flows from investing activities:
   Capital expenditures .............................      --        (193,581)
   Distributions from investees .....................    227,000      864,173
   Payments to minority interest ....................       --        (29,000)
   Proceeds from sale ...............................       --         78,533
                                                     -----------  -----------
 Net cash provided (used) by investing activities ...    227,000      720,125
 Net cash used by discontinued operations ...........   (256,985)    (968,569)
                                                     -----------  -----------
 Net cash used by investing activities ..............    (29,985)    (248,444)
                                                     -----------  -----------

Cash flows from financing activities:
   Scheduled principal payments on long-term debt ...     (8,927)      (6,204)
   Proceeds from short-term debt ....................     16,000         --
   Proceeds from long-term debt .....................       --         96,478
                                                     -----------  -----------
 Net cash provided (used) by financing activities ...      7,073       90,274
                                                     -----------  -----------

Net decrease in cash and cash equivalents ...........   (179,164)    (331,143)
Cash and cash equivalents, beginning of period ......    186,716      365,674
                                                     -----------  -----------

Cash and cash equivalents, end of period ............$     7,552  $    34,531
                                                     ===========  ===========



     See accompanying notes to consolidated condensed financial statements.


                                       4
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     DECEMBER 31, 2004 AND 2003 (Unaudited)

1.   Basis of Presentation:

     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 January 3, 2005 for the year ended June 30, 2004.

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

2. 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.

3. Investment:

     The Company's  investment  consists of a 35 percent beneficial  interest in
     UCV, L.P.  (UCV) The  following is summarized  results of operations of UCV
     for the periods ended December 31, 2004 and 2003:

                                           2004          2003
                                       -----------   -----------
       Revenues ...................... $1,942,655    $ 1,326,554
       Operating and general and
         administrative costs.........   (578,568)      (293,889)
       Depreciation ..................   (565,842)      (300,771)
       Interest and amortization of
         loan costs ..................   (943,445)      (523,083)
                                       ----------    -----------
       Net income (loss) ............. $ (145,200)    $  208,811
                                       ==========    ===========

     UCV is the sole member of three California limited liability companies that
     each  purchased  property  in  2003  as  part  of  a  "like-kind  exchange"
     transaction.  760,  LLC  purchased a property  with  50,667  square feet of
     retail and office space for approximately  $9,500,000.  939 LLC purchased a
     property   with  23,567   square  feet  of  retail  and  office  space  for
     approximately  $5,000,000.  UCV Media Tech Center, LLC purchased a property
     with 187,534 square feet of office and industrial  space for  approximately
     $28,670,000.  Effective  February 28, 2005,  the Company's  partners in UCV
     accepted the distribution of all of the ownership of UCV Media Tech Center,
     LLC in full  satisfaction  of their  rights title and interest in UCV. As a
     result, the Company became the beneficial owner of 100 percent of UCV.

4. Contingencies:

     A lawsuit was filed on January 10, 2003 in the United States District Court
     for 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 and 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
     those  for  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:

     As a result of the Company  adopting a plan of disposition  for the sale of
     Penley  Sports,   LLC  and  reclassifying  this  activity  to  discontinued
     operations,  the  Company now  principally  only  operates in one  business
     segment,  commercial real estate rental,  through its investee,  UCV. Other
     revenues, which are not part of an identified segment, consist primarily of
     property management fees.

                                            5
<PAGE>

6. 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 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 selling the  operations of its
     subsidiary, Penley Sports, and obtaining funds from additional financing of
     the  properties  owned  by  UCV  and  its  subsidiaries.  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:

     On  September  16, 2004 the Company  committed to a plan of disposal of the
     graphite golf club shaft  operation  owned by Penley Sports,  LLC (Penley).
     The Company had been in  negotiations  to sell Penley to the former  owner,
     Carter  Penley.  However,  those  negotiations  ceased on February 1, 2005.
     Carter  Penley had funded cash flow  deficits  from  November 1, 2004 until
     February 1, 2005.  Based on a previous verbal agreement with Carter Penley,
     the Company will not be required to repay the advances.  The Company is now
     in  negotiation  to sell Penley with another  party.  While the Company had
     been in negotiations with Carter Penley, the Company had estimated that the
     sales  proceeds  from that sale,  if  consummated,  would  provide  for the
     Company to recover the carrying value of the Penley assets. The Company has
     reassessed  the  recoverability  of the Penley  assets based on the current
     negotiations and as of December 31, 2004 recorded a valuation allowance for
     the  impairment  of the Penley  property and  equipment  of $345,000.  This
     amount is  classified  as part of  discontinued  operations at December 31,
     2004.

     As a result of  adopting  a plan of  disposal,  the  operations  related to
     Penley for both the current period and the prior period, have been restated
     and recorded as discontinued operations.  The operations of Penley included
     a small sublease of a portion of its leased premises which were included in
     the real estate operation segment. The following is a summary of the income
     (loss) from the discontinued business segments:

                                  Three Months Ended       Six Months Ended
                                 ---------------------  -----------------------
                                    2004        2003        2004        2003
                                 ---------   ---------  ----------- -----------
     GOLF:
     Revenues................... $ 259,505   $ 372,000  $   696,091 $   981,525
     Golf costs ................  (493,062)   (623,429)  (1,067,690) (1,256,690)
     SG&A- direct ..............  (104,154)   (257,923)    (188,318)   (575,927)
     SG&A- corporate allocation    (66,000)   (154,000)    (201,000)   (301,000)
     Depreciation ..............      --       (43,508)     (42,470)    (84,899)
     Impairment loss ...........  (345,000)       --       (345,000)       --
                                 ---------   ---------  ----------- -----------
       Loss ....................  (748,711)   (706,860)  (1,148,387) (1,236,991)
                                 ---------   ---------  ----------- -----------
     REAL ESTATE OPERATION:
     Revenues ..................    20,342      23,156       40,364      42,491
     Rental costs ..............   (20,000)    (19,200)     (40,000)    (38,400)
                                 ---------   ---------  ----------- -----------
       Loss.....................       342       3,956          364       4,091
                                 ---------   ---------  ----------- -----------
      Total loss from
       discontinued operations . $(748,369)  $(702,904) $(1,148,023)$(1,232,900)
                                 =========   =========  =========== ===========

     The following is a summary of the assets and liabilities  related to Penley
     that were included in the balance  sheets as of December 31, 2004 and June
     30, 2004:
                                            December 31     June 30
                                              ---------     ---------
     Assets:
       Trade receivables..................   $   96,682   $  264,997
       Inventories .......................      431,242      605,843
       Prepaid expenses ..................       19,308       23,441
       Equipment & leasehold improvements.    1,570,678    1,611,946
         Impairment allowance ............     (345,000)        --
         Accumulated depreciation ........     (901,804)    (898,635)
       Other assets ......................       18,252       18,252

     Liabilities:
       Accounts payable ..................      114,964      184,729
       Accrued payroll and related........       29,191       47,535
       Other .............................       76,628         --

                                       6
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
            CONDITION AND RESULTS OF OPERATIONS:
            -----------------------------------
                         LIQUIDITY AND CAPITAL RESOURCES
                         -------------------------------
The independent  auditors'  report dated November 15, 2004 included in our June
30,  2004  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 11 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 11.  The
     consolidated financial statements do not include any adjustments that might
     result from the outcome of this uncertainty

As noted  below,  the  recurring  losses and  negative  cash flows relate to the
Company's  golf club shaft  manufacturing  operations.  The Company has not been
successful  in its  efforts to increase  sales,  reduce  manufacturing  costs or
obtain  additional  investors for this operation.  As a result, on September 16,
2004,  the Company  committed  to a plan of disposal of the  graphite  golf club
shaft  operation  owned.  The Company had been in negotiations to sell Penley to
the former owner, Carter Penley.  However, those negotiations ceased on February
1, 2005. Carter Penley had funded cash flow deficits from November 1, 2004 until
February 1, 2005 and based on a previous  verbal  agreement  with Carter Penley,
the Company  will not be required to repay the  advances.  The Company is now in
negotiation to sell Penley with another party.

The  Company  is  expecting  a $200,000  to  $250,000  cash flow  deficit in the
remaining  two  quarters  of the  year  ending  June  30,  2005  from  operating
activities  after  estimated   distributions   from  UCV  ($300,000,   primarily
distributions  from real  estate  operations),  estimated  capital  expenditures
($3,000) and  scheduled  principal  payments on long-term  debt,  excluding  any
estimated  payments to be received  from the sale of Penley.  This analysis does
not  include the  obligation  to pay federal  and state  income  taxes  totaling
$979,000 that was due in September 2004 related to the taxable  income  reported
from  the  sale of the apartment project owned by UCV.  Management is  currently
uncertain about how it will obtain the funds to pay these tax liabilities.

Management is currently  evaluating  other sources of working capital  including
the proceeds that would become  available for  distribution  to the Company from
refinancing  the debt related to one of the  properties  owned by UCV or selling
one of the properties  owned by UCV.  Management has not assessed the likelihood
of 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.
However, other than the tax liabilities noted above, management believes it will
be able to meet its financial obligations for the next twelve months.

The Company has a working capital deficit of  $1,212,885  at December  31, 2004,
which is a $790,556  increase in the working capital deficit of $422,329 at June
30, 2004. The increase in working capital  deficit is primarily  attributable to
the cash used by  operating  activities  and the cash  invested in  discontinued
operations for the six months ended December 31, 2004.

                                        7
<PAGE>

One of the properties  owned by UCV is subject to a loan agreement that requires
Sports Arenas,  Inc. to maintain a minimum net worth of $1,000,000 and a minimum
cash balance of $100,000. As of June 30, 2004 and December 31, 2004, the Company
did not meet the net worth  requirement  and the Company has not met the minimum
cash requirement since September 30, 2004. UCV is in the process of requesting a
waiver from the lender regarding this covenant. However, it is uncertain whether
the  lender  will grant a waiver.  If UCV is unable to obtain a waiver  from the
lender, the lender could call the loan due.

UCV is the sole member of three California limited liability companies that each
purchased property in 2003 as part of a "like-kind exchange"  transaction.  760,
LLC  purchased a property with 50,667 square feet of retail and office space for
approximately  $9,500,000.  939 LLC purchased a property with 23,567 square feet
of retail and office space for approximately $5,000,000.  UCV Media Tech Center,
LLC purchased a property with 187,534 square feet of office and industrial space
for  approximately  $28,670,000.  Effective  February  28, 2005,  the  Company's
partners in UCV accepted the  distribution  of all of the ownership of UCV Media
Tech Center, LLC in full satisfaction of their rights title and interest in UCV.
As a result, the Company became the beneficial owner of 100 percent of UCV.

                         CRITICAL ACCOUNTING POLICIES
                          ----------------------------

We prepared the consolidated  condensed  financial  statements of the Company in
conformity with accounting principles generally accepted in the United States of
America.  As such,  we are required to make  certain  estimates,  judgments  and
assumptions that we believe are reasonable based upon the information available.
These  estimates  and  assumptions  affect  the  reported  amounts of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the periods presented.

We have several significant  accounting  estimates,  such as; income taxes, long
lived assets and accounts  receivable and  inventories,  which were discussed in
the Form 10-K for the year ended June 30, 2004,  that are both  important to the
portrayal of our  financial  condition  and results of  operations,  and require
management's most difficult,  subjective and complex judgments.  Typically,  the
circumstances  that make these  judgments  complex and difficult have to do with
making  estimates  about the effect of matters  that are  inherently  uncertain.
During  the  six  months  ended  December  31,  2004,  we did not  make  any new
accounting estimates that are considered  significant accounting estimates other
than related to income taxes and impairment of inventory, property and equipment
related  to  Penley,  nor were  there any  significant  changes  related  to our
significant  accounting  estimates  that  would  have a  material  impact on our
consolidated  financial  position,  results  of  operations,  cash  flows or our
ability to conduct business.

              "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
                              ---------------------

As a result of the Company adopting a plan of disposition for the sale of Penley
Sports,  LLC and  reclassifying  this activity to discontinued  operations,  the
Company now principally only operates in one business  segment,  commercial real
estate rental, through its investee, UCV. Other revenues,  which are not part of
an identified segment, consist primarily of property management fees.

Selling,  general and administrative  costs decreased in 2004 primarily due to a
decrease in professional  fees.  This was partially  offset by a decrease in the
amount of corporate  expenses  allocated to the  discontinued  operations of the
golf segment.

Equity in income of investees  decreased  in the three and six month  periods in
2004 due to the  losses  incurred  from the  operation  of the one of the  three
properties owned by UCV which was  acquired on September 26, 2003.

                                        8
<PAGE>

Discontinued Operations:
------------------------
As  discussed  in  Footnote  7 of  Notes  to  Consolidated  Condensed  Financial
Statements,  the  Company has  classified  its  operations  in the golf and real
estate rental 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. The Company and its unconsolidated  subsidiary,  UCV, utilizes both fixed
rate and variable rate debt.

The following table presents  scheduled  principal payments and related weighted
average interest rates of the Company's long-term fixed rate debt for the fiscal
years ended June 30:
                   2005    2006     2007     2008     2009    Total   Fair Value
                  ------- ------- -------  -------  -------  -------  ---------
                                                                         (1)
Fixed rate debt   $ 8,000 $19,000 $20,000  $21,000   $8,000  $76,000   $76,000
Weighted average
   interest rate    4.6%    4.6%    4.6%     4.9%      4.9%    4.6%      4.6%

The following table presents  scheduled  principal payments and related weighted
average  interest rates of the UCV's long-term fixed rate and variable rate debt
for the fiscal years ending June 30:
<TABLE>
<CAPTION>
                     2005      2006      2007     2008       2009     Thereafter     Total      Fair Value
                   --------  --------  -------- --------  ---------- -----------  -----------  -----------
                                                                                                    (1)
<S>                <C>       <C>       <C>      <C>       <C>        <C>          <C>          <C>
Fixed rate debt    $146,000  $300,000  $596,000 $336,000  $2,723,000 $18,493,000  $22,594,000  $22,594,000
Weighted average
   interest rate     4.6%      4.6%      4.6%      6.1%      6.0%        6.0%         6.1%          4.6%

Variable Rate Debt $131,000  $199,000  $211,000 $223,000  $238,000    $5,487,000   $6,489,000   $6,489,000
Weighted average
   interest rate     6.8%      6.8%      6.8%      6.8%      6.8%        6.8%         6.8%          6.8%
</TABLE>

(1)  The fair value of fixed-rate and variable rate debt was estimated  based on
     the  current  rates  offered for  fixed-rate  debt with  similar  risks and
     maturities.

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

                                       9
<PAGE>

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 September 30, 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.


                                     PART II
                                OTHER INFORMATION

ITEM 1. Legal Proceedings

As of December 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, 2004.

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:

           10.1   UCV Partnership Asset Distribution Agreement effective
                    February 28, 2005
           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:
          On   July 6,  2004,  the  Company  filed a Current  Report on Form 8-K
               reporting  under  Item 4 -  Changes  in  Registrant's  Certifying
               Accountant that on June 29, 2004, the Company  dismissed KPMG LLP
               as its Independent  Registered Public Accounting Firm and on June
               30,  2004,  the  Company  engaged  Peterson  &  Co.,  LLP  as its
               successor Independent Registered Public Accounting Firm.
          On   July 9,  2004,  the  Company  filed a Current  Report on Form 8-K
               reporting under Item 9. Regulation FD Disclosure that on June 30,
               2004 the  Company,  Harold S.  Elkan  and  Andrew  Bradley,  Inc.
               entered into a Debt Payment & Extra Compensation Agreement.
          On   September 7, 2004, the Company filed a Current Report on Form 8-K
               reporting  under Item  1.01.-  Entry  into a Material  Definitive
               Agreement  that on September  2, 2004,  the Company and Harold S.
               Elkan  entered  into the Stock  Restriction  Agreement  , with an
               effective date of June 30, 2004 pursuant to, and as  contemplated
               by, the Debt Payment and Compensation Agreement.

                                       10
<PAGE>


                                   SIGNATURES


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




      SPORTS ARENAS, INC.



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


      Date:   February 21, 2005
            --------------------



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



      Date:  February 21, 2005
           -------------------




                                       11