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, 1999

                                       OR

                [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                    SECURITIES EXCHANGE ACT OF 1934

         For the transition period from __________________ to ______________

                          Commission File Number 0-2380

                               SPORTS ARENAS, INC.
             (Exact name of registrant as specified in its charter)

                               DELAWARE 13-1944249
               (State of Incorporation) (I.R.S. Employer I.D. No.)

        5230 CARROLL CANYON ROAD, SUITE 310, SAN DIEGO, CALIFORNIA 92121
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (619) 587-1060

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

The number of shares  outstanding  of the  issuer's  only class of common  stock
($.01 par value) as of January 31, 2000 was 27,250,000 shares.
<PAGE>

                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                         QUARTER ENDED DECEMBER 31, 1999

                                      INDEX

Part I - Financial Information:

Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of December 31, 1999 (unaudited)
        and June 30, 1999                                                  1-2

      Unaudited Statements of Operations for the Three Months Ended
            December 31, 1999 and 1998                                      3

        Unaudited Statements of Operations for the Six Months Ended
          December 31, 1999 and 1998                                        4

      Unaudited Statements of Cash Flows for the Six Months Ended
            December 31, 1999 and 1998                                      5

      Notes to Financial Statements                                        6-10

Item 2.- Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                     11-14

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

                                                    December 30,    June 30,
                                                        1999          1999
                                                    ------------  -----------
                                                    (Unaudited)

Current assets:
   Cash and cash equivalents                           $614,364     $357,906
   Current portion of note receivable- affiliate         50,000       50,000
   Other receivables                                    110,930      116,404
   Inventories                                          217,354      310,160
   Prepaid expenses                                     264,041      199,668
                                                    ------------  -----------
      Total current assets                            1,256,689    1,034,138
                                                    ------------  -----------

Receivables due after one year:
   Note receivable- affiliate, net                       68,350      104,829
   Less current portion                                 (50,000)     (50,000)
                                                    ------------  -----------
                                                         18,350       54,829
                                                    ------------  -----------
Property and equipment, at cost:
   Land                                                 678,000      678,000
   Buildings                                          2,461,327    2,461,327
   Equipment and leasehold and tenant improvements    2,204,214    2,137,993
                                                    ------------  -----------
                                                      5,343,541    5,277,320
      Less accumulated depreciation and
         amortization                                (2,108,260)  (1,968,191)
                                                    ------------  -----------
       Net property and equipment                     3,235,281    3,309,129
                                                    ------------  -----------

Other assets:
   Undeveloped land, at cost                          1,408,746    1,582,468
   Intangible assets, net                               270,273      294,423
   Investments                                          613,313      618,853
   Other                                                120,757      104,980
                                                    ------------  -----------
                                                      2,413,089    2,600,724
                                                    ------------  -----------

                                                     $6,923,409   $6,998,820
                                                    ============  ===========


                                       1
<PAGE>



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

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                   December, 31,   June 30,
                                                       1999          1999
                                                    ------------  -----------
                                                    (Unaudited)

Current liabilities:
   Assessment district obligation- in default        $2,675,725   $2,565,179
   Current portion of long-term debt                  1,928,000      289,000
   Accounts payable                                     530,742      453,203
   Accrued payroll and related expenses                 173,037      164,877
   Accrued property taxes- in default                   625,579      582,859
   Accrued interest                                      25,692       14,395
   Other liabilities                                    193,607      246,211
                                                    ------------  -----------
      Total current liabilities                       6,152,382    4,315,724
                                                    ------------  -----------

Long-term debt, excluding current portion             2,057,735    3,911,694
                                                    ------------  -----------

Distributions received in excess of basis in
   investment                                        14,471,719   12,688,808
                                                    ------------  -----------

Other liabilities                                       100,783       74,602
                                                    ------------  -----------

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

Commitments and contingencies (Note 5)

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                              (17,282,944) (15,415,742)
                                                    ------------  -----------
                                                    (15,280,395) (13,413,193)

   Less note receivable from shareholder             (2,291,492)  (2,291,492)
                                                    ------------  -----------
     Total shareholders' deficit                    (17,571,887) (15,704,685)
                                                    ------------  -----------

                                                     $6,923,409   $6,998,820
                                                    ============  ===========








        See accompanying notes to consolidated condensed financial statements.


                                       2
<PAGE>


                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998

                                  (Unaudited)

                                                         1999           1998
                                                      ----------   ------------
Revenues:
   Bowling                                          $   625,382    $   686,264
   Rental                                               160,113        139,040
   Golf                                                 157,601         71,941
   Other                                                 32,290         26,626
   Other-related party                                   42,635         77,047
                                                     -----------    -----------
                                                      1,018,021      1,000,918
                                                     -----------    -----------
Costs and expenses:

   Bowling                                              501,494        478,297
   Rental                                                61,638         58,993
   Golf                                                 331,941        219,612
   Development                                           28,980         43,171
   Selling, general, and administrative                 924,282        819,102
   Depreciation and amortization                         96,383         93,746
                                                     -----------    -----------
                                                      1,944,718      1,712,921
                                                     -----------    -----------
Loss from operations                                   (926,697)      (712,003)
                                                     -----------    -----------

Other income (charges):
   Investment income:
     Related party                                       10,053         60,234
     Other                                                8,773          7,735
   Interest expense:
     Development activities                             (69,625)       (64,926)
     Other and amortization of finance costs            (90,717)       (76,549)
   Equity in income of investees                        102,210        112,161
                                                     -----------    -----------
                                                        (39,306)        38,655
                                                     -----------    -----------

Net loss                                             $ (966,003)    $ (673,348)
                                                     ===========    ===========


Basic and diluted net loss per common share
   (based on 27,250,000 weighted average
   common shares outstanding)                           ($0.04)        ($0.02)
                                                        =======        =======


        See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>

                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                  SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998

                                  (Unaudited)

                                                         1999          1998
                                                    ------------   ------------
Revenues:

   Bowling                                          $ 1,249,954    $ 1,327,334
   Rental                                               316,390        276,269
   Golf                                                 281,531        145,774
   Other                                                 60,747         79,872
   Other-related party                                   85,334        106,124
                                                     -----------    -----------
                                                      1,993,956      1,935,373
                                                     -----------    -----------
Costs and expenses:

   Bowling                                            1,036,264      1,004,522
   Rental                                               124,380        123,464
   Golf                                                 604,813        494,632
   Development                                           90,313         84,432
   Selling, general, and administrative               1,772,673      1,772,276
   Depreciation and amortization                        191,952        187,180
                                                     -----------    -----------
                                                      3,820,395      3,666,506
                                                     -----------    -----------

Loss from operations                                 (1,826,439)    (1,731,133)
                                                     -----------    -----------

Other income (charges):
   Investment income:
     Related party                                       19,973        125,950
     Other                                                9,089         19,620
   Interest expense:
     Development activities                            (133,001)      (122,676)
     Other and amortization of finance costs           (179,485)      (167,224)
   Loss on sale of undeveloped land                        (638)           --
   Equity in income of investees                        243,299        224,849
                                                     -----------    -----------
                                                        (40,763)        80,519
                                                     -----------    -----------

Loss from operations before extraordinary loss       (1,867,202)    (1,650,614)

Extraordinary loss from early
  extinguishment of investee debt                           --         (98,500)
                                                     -----------    -----------

Net loss                                            $(1,867,202)   $(1,749,114)
                                                     ===========    ===========


Basic and  diluted  net loss per  common
   share  (based on  27,250,000  weighted
   average common shares outstanding) from:
        Operations before extraordinary loss           ($0.07)        ($0.06)
        Extraordinary loss                                --             --
                                                       -------        -------
        Net loss                                       ($0.07)        ($0.06)
                                                       =======        =======


        See accompanying notes to consolidated condensed financial statements.


                                       4
<PAGE>

                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                  SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
                                  (Unaudited)

                                                          1999           1998
                                                      ------------  ------------
Cash flows from operating activities:

  Net loss                                           ($1,867,202)   ($1,749,114)
  Adjustments to reconcile net loss to the
    net cash used by operating activities:
      Amortization of deferred financing costs             4,560          9,099
      Depreciation and amortization                      191,952        187,180
      Equity in income of investees                     (243,299)      (126,349)
      Deferred income                                     24,000            --
      Loss on sale of undeveloped land                       638            --
      Interest income accrued on note
        receivable from shareholder                          --        (104,286)
      Interest accrued on assessment
        district obligations                             133,001        122,676
    Changes in assets and liabilities:
      Decrease in receivables                              5,474         18,136
      (Increase) decrease in inventories                  92,806        (83,886)
      (Increase) decrease in prepaid expenses            (64,373)        44,469
      Increase (decrease) in accounts payable             77,539       (127,899)
      Increase in accrued expenses                         9,573         17,696
      Other                                               (2,286)        10,488
                                                      -----------    -----------
        Net cash used by operating activities         (1,637,617)    (1,781,790)
                                                      -----------    -----------

Cash flows from investing activities:
   Decrease in notes receivable                           36,479         10,077
   Capital expenditures                                  (83,114)       (59,269)
   Increase in development costs on
     undeveloped land                                    (17,278)           --
   Proceeds from sale of undeveloped land                190,362            --
   Contributions to investees                            (19,460)           --
   Distributions from investees                        2,024,500        886,171
                                                      -----------    -----------
        Net cash provided by investing activities      2,131,489        836,979
                                                      -----------    -----------

Cash flows from financing activities:
   Scheduled principal payments on long-term debt       (139,032)      (129,362)
   Extinguishment of long-term debt                      (75,927)           --
   Proceeds from note payable                            550,000            --
   Payment of note payable                              (550,000)           --
   Payment of assessment district obligation             (22,455)           --
                                                      -----------    -----------
       Net cash used by financing activities            (237,414)      (129,362)
                                                      -----------    -----------

Net increase (decrease) in cash and cash equivalents     256,458     (1,074,173)

Cash and cash equivalents, beginning of year             357,906      1,416,460
                                                      -----------    -----------
Cash and cash equivalents, end of year                $  614,364     $  342,287
                                                      ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
 Supplemental schedule of non-cash  investing and financing  activities:
     In   July 1999, the Company  discarded fully  depreciated  equipment with a
          cost and accumulated depreciation of $16,893.


        See accompanying notes to consolidated condensed financial statements.

                                       5
<PAGE>


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     DECEMBER 31, 1999 AND 1998 (Unaudited)

1.    The  information  furnished  reflects  all  adjustments  which  management
      believes are  necessary to a fair  statement  of the  Company's  financial
      position, results of operations and cash flows for the interim periods.

2.    Due to the seasonal fluctuations of the bowling operations,  the financial
      results for the interim  periods ended December 31, 1999 and 1998, are not
      necessarily indicative of operations for the entire year.

3. Investments:

   (a) Investments consist of the following:

                                                  December 31,   June 30,
                                                     1999         1999
                                                  -----------   -----------
         Vail Ranch Limited Partnership
          (equity method)                          $  575,387    $  580,927
         All Seasons Inns, La Paz (cost basis)         37,926        37,926
                                                  -----------   -----------
            Total                                  $  613,313    $  618,853
                                                  ===========   ===========

        Investment in UCV, L.P. classified as
          liability- Distributions received
          in excess of basis in investment        $14,471,719   $12,688,808
                                                  ===========   ===========

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments  accounted  for by the equity  method for the six months  ended
     December  31,  1999 and 1998,  before  the  extraordinary  loss of  $98,500
     related to UCV , L.P. in 1998:

                                               1999          1998
                                            ---------     ---------
        UCV, L.P.                           $ 268,299     $ 244,849
        Vail Ranch Limited Partnership        (25,000)      (20,000)
                                            ---------     ---------
                                            $ 243,299     $ 224,849
                                            =========     =========

     The following is a summary of distributions received from investees:

                                               1999         1998
                                           -----------   ----------
        UCV, L.P.                          $ 2,024,500   $  240,000
        Vail Ranch Limited Partnership             --       646,171
                                           -----------   ----------
                                           $ 2,024,500   $  886,171
                                           ===========   ==========

   (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 six-month periods ended
     September 30, 1999 and 1998 are as follows:

                                                     1999           1998
                                                  ----------     ----------
        Revenues                                  $2,365,000     $2,300,000
        Operating and general and
           administrative costs                      837,000        734,000
        Depreciation                                  13,000         14,000
        Interest expense                             978,000      1,062,000
        Income before extraordinary item             537,000        490,000
        Extraordinary loss from early
          extinguishment of debt                         --         197,000
        Net income                                   537,000        293,000

                                       6
<PAGE>


     On October  14,  1999,  UCV  increased  the loan  amount and  modified  its
     existing  long-term  loan  agreement.  The loan amount was  increased  from
     $25,000,000 to $29,450,000 of which the lender is holding back $410,510 for
     capital  replacements.  The interest  rate on the  original  loan amount is
     unchanged.  The interest rate on the additional loan amount, which is based
     on the additional loan amount less the hold back for capital  replacements,
     is the greater of ten percent or a base rate plus 4.75 percent  (11-1/4% at
     December 31,  1999).  Monthly  payments of interest  only are due until May
     2000, whereupon a monthly payment of principal and interest is due based on
     a 25-year amortization period. In addition to the monthly payment, UCV will
     pay a  quarterly  principal  payment to be applied to the  additional  loan
     amount  equal to fifty  percent of UCV's cash flow after debt  service  and
     capital replacement expenditures.  The loan is due October 15, 2001 but may
     be extended to October 15, 2002 upon  payment of a 1/4 percent loan fee and
     meeting certain  financial  criteria.  The loan may not be prepaid prior to
     January 1, 2001.  On  maturity,  a fee of up to  $294,500  may be due under
     certain  circumstances.  The proceeds of the additional loan of $4,039,490,
     which is net of the capital  replacement  hold back,  were used to pay loan
     costs of approximately $125,000 and make distributions to partners of which
     the Company received $1,757,000.

4. Notes payable:

   On August 24, 1999 and  September  25,  1999 the Company  borrowed a total of
   $550,000 on an unsecured  note  payable from its partner in UCV.  Payments of
   interest  only were due monthly at a base rate plus 1 percent  (9-1/4%).  The
   loan was paid on October 14, 1999 from the Company's distribution from UCV.

5. Contingencies:

    (a) 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.  Once the legal matters
        described below are resolved,  OVPGP is obligated to assign its interest
        in the 33 acres of land to Old Vail Partners,  L.P. (OVP). RCSA and OVGP
        own a combined 50 percent  general and limited  partnership  interest in
        OVP. 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
        the last seven  years.  The  property  is  currently  subject to default
        judgments to the County of Riverside,  California totaling approximately
        $2,219,108   regarding    delinquent    assessment   district   payments
        ($1,593,529) and property taxes ($625,579).

        The County had  scheduled the 33 acres for public sale for the defaulted
        property taxes on September 27, 1999. OVPGP had unsuccessfully attempted
        to  negotiate a payment plan with the County  subject to the  successful
        resolution of the zoning problems with the property  described below. On
        September 23, 1999 OVPGP filed a petition for relief under Chapter 11 of
        the federal  bankruptcy laws in the United States  Bankruptcy Court. The
        primary claim affected by this action is the County's  secured claim for
        delinquent taxes and assessment  district payments.  OVPGP's plan was to
        use the relief to continue its efforts to negotiate a settlement  of the
        zoning issues and restore the economic value of the property. On January
        28, 2000 OVPGP agreed to the dismissal of the  bankruptcy  proceeding on
        February  15,  2000.  This will allow the County of Riverside to proceed
        with a public sale of the property  within 60 days after giving  notice,
        which  cannot  occur  prior to  February  15,  2000.  If the  zoning  is
        restored,  OVPGP expects that it would either be able to develop or sell
        the  property,  using the  proceeds  from  development  loans or sale to
        satisfy the County's claims.

                                       7
<PAGE>

        The delinquent  principal,  interest and penalties  ($1,593,529) and the
        remaining  principal  balance of the allocated portion of the assessment
        district  bonds  ($1,082,196)  are  classified as  "Assessment  district
        obligation-  in default" in the  consolidated  balance sheet at December
        31, 1999. In addition,  the  consolidated  balance sheet at December 31,
        1999  includes  $625,579  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 has 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 is  seeking  to have the
        effective  re-zoning  invalidated and an unspecified  amount of damages.
        OVPGP has 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. The outcome of this litigation is uncertain. If
        the City of  Temecula is  successful  in its  attempt to  down-zone  the
        property, the value of the property may be significantly impaired.

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

6. Reclassifications - Certain  reclassifications  have  been made to the prior
   year financial statements to conform to the classifications used in 1999.

7. Business segment information:

   The Company operates principally in four business segments:  bowling centers,
   commercial  real  estate  rental,  real  estate  development,  and golf shaft
   manufacturing. The golf shaft manufacturing segment commenced in January 1997
   when the Company  acquired a small golf shaft  manufacturer.  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.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                  Real Estate   Real Estate                   Unallocated
                                      Bowling        Rental     Development        Golf        And Other       Totals
                                   ------------   ------------  ------------   ------------   ------------   ------------
SIX MONTHS ENDED:
      DECEMBER 31, 1999:
--------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $ 1,249,954    $   348,190   $      --      $   281,531    $   146,081    $ 2,025,756
Depreciation and amortization...        52,633         69,100          --           45,570         24,649        191,952
Interest expense ...............        72,136         83,428       134,022          7,906         14,994        312,486
Equity in income (loss) of
  investees ....................          --          268,299       (25,000)          --             --          243,299
Loss on sale ...................          --             --            (638)          --             --             (638)
Segment profit (loss) ..........      (350,783)       324,581      (261,973)    (1,338,212)      (269,877)    (1,896,264)
Investment income ..............                                                                                  29,062
Loss from operations
 before extraordinary loss .....                                                                              (1,867,202)

      DECEMBER 31, 1998:
--------------------------------
Revenues .......................   $ 1,327,334    $   306,776    $     --      $   145,774    $   185,996    $ 1,965,880
Depreciation and .amortization..        53,115         65,587          --           42,371         26,107        187,180
Interest expense ...............        69,624         66,018       126,126         12,115         16,017        289,900
Equity in income (loss) of
 investees......................          --          244,849       (20,000)          --             --          224,849
Segment profit (loss) ..........      (240,651)       285,556      (230,558)    (1,387,409)      (223,122)    (1,796,184)
Investment income ..............                                                                                 145,570
Loss from operations
 before extraordinary loss .....                                                                              (1,650,614)
</TABLE>
                                      1999         1998
                                  -----------   -----------
Revenues per segment schedule ..  $2,025,756    $1,965,880
Intercompany rent eliminated ...     (31,800)      (30,507)
                                  -----------   -----------
Consolidated revenues             $1,993,956    $1,935,373
                                  ===========   ===========

<TABLE>
<CAPTION>
THREE MONTHS ENDED:
      DECEMBER 31, 1999:
--------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   625,382    $   176,361   $      --      $   157,601    $    74,925    $ 1,034,269
Depreciation and amortization...        25,963         34,696          --           23,368         12,356         96,383
Interest expense ...............        35,851         41,674        69,625          3,675          9,517        160,342
Equity in income (loss) of
 investees .....................          --          127,210       (25,000)          --             --          102,210
Segment profit (loss) ..........      (149,158)       156,563      (130,605)      (702,092)      (159,537)      (984,829)
Investment income ..............                                                                                  18,826
Loss from operations
 before extraordinary loss .....                                                                                (966,003)

      DECEMBER 31, 1998:
--------------------------------
Revenues .......................   $   686,264    $   154,592   $      --      $    71,941    $   103,673    $ 1,016,470
Depreciation and amortization...        26,586         33,119          --           20,903         13,138         93,746
Interest expense ...............        31,691         32,961        66,651          5,807          4,365        141,475
Equity in income (loss) of
 investees .....................          --          122,161       (10,000)          --             --          112,161
Segment profit (loss) ..........       (57,137)       145,680      (119,822)      (585,989)      (124,049)      (741,317)
Investment income ..............                                                                                  67,969
Loss from operations
 before extraordinary loss .....                                                                                (673,348)
</TABLE>
                                        1999         1998
                                    -----------   -----------
Revenues per segment schedule ..    $1,034,269    $1,016,470
Intercompany rent eliminated ...       (16,248)      (15,552)
                                    -----------   -----------
Consolidated revenues ..........    $1,018,021    $1,000,918
                                    ===========   ===========

                                       9
<PAGE>


8. 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  from  operations,  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.


                                       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 $1,594,389 at
December 31, 1999, which is a $1,460,841 increase from the similarly  calculated
working  capital  deficit of $133,548 at June 30, 1999.  The decrease in working
capital is  primarily  attributable  to an increase  in the  current  portion of
long-term debt related to a $1,725,999 note payable that matures in August 2000.
Cash used by operating  activities  for the six months  ended  December 31, 1999
also reduced working capital,  however this was offset by distributions received
from  investees.  The following is a schedule of the cash provided (used) before
changes in assets and liabilities, segregated by business segments:

                                        1999         1998        Change
                                     -----------   ----------   ---------
     Bowling ........................$ (297,000)  $ (186,000)   $(111,000)
     Rental .........................   129,000      109,000       20,000
     Golf ...........................(1,293,000)  (1,345,000)      52,000
     Development ....................  (103,000)     (88,000)     (15,000)
     General corporate expense
       and other ....................  (192,000)    (151,000)     (41,000)
                                     -----------   ----------   ----------
     Cash used by continuing
       operations .................. (1,756,000)  (1,661,000)     (95,000)
     Capital expenditures, net
       of financing ................    (83,000)     (59,000)     (24,000)
     financing
     Principal payments on
       long-term debt ..............   (139,000)    (129,000)     (10,000)
                                     -----------   ----------   ----------
       Cash used ................... (1,978,000)  (1,849,000)   (129,000)
                                     ===========   ==========   ==========

     Distributions received from
     investees .....................  2,025,000      886,000    1,139,000
                                     ===========   ==========   ==========

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  three  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 5 of the Notes to Consolidated 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  at  December  31,  1999  was  approximately
$1,593,000.  The  principal  balance  of the  allocated  portion  of  the  bonds
($1,384,153  as of December 31,  1999),  and  delinquent  interest and penalties
($1,291,572  as of December 31, 1999) are  classified  as  "Assessment  district
obligation- in default" in the consolidated balance sheet. In addition,  accrued
property taxes in the consolidated  balance sheet include $625,579 of delinquent
property taxes and late fees as of December 31, 1999. The Company  estimates the
value of this land is approximately $4,000,000 to $5,000,000 if the property was
zoned "commercial".  This value is in addition to the non-delinquent  portion of
the  assessment  district  obligation  ($1,082,195  at December 31, 1999) that a
buyer  would  assume.  However,  the City of  Temecula  has  adopted  a  general
development  plan as a means of down-zoning  the property to a lower use and, if
successful,  may significantly impair the value of the property.  The Company is
contesting  this action.  The County had  scheduled the 33 acres for public sale
for the defaulted property taxes on September 27, 1999. OVPGP had unsuccessfully
attempted to negotiate a payment plan with the County  subject to the successful
resolution of the zoning problems with the property. On September 23, 1999 OVPGP
filed a petition for relief under Chapter 11 of the federal  bankruptcy  laws in
the United States Bankruptcy Court. The primary claim affected by this action is
the  County's  secured  claim  for  delinquent  taxes  and  assessment  district
payments.  OVPGP's  plan  was to use the  relief  to  continue  its  efforts  to
negotiate a settlement  of the zoning  issues and restore the economic  value of
the  property.  On  January  28,  2000  OVPGP  agreed  to the  dismissal  of the
bankruptcy  proceeding  on  February  15,  2000.  This will  allow the County of
Riverside  to proceed  with a public sale of the  property  within 60 days after
giving notice, which cannot occur prior to February 15, 2000. OVPGP's plan is to
continue  its efforts to restore an  economically  feasible  zoning prior to any
date of public  sale.  If the zoning is  restored,  OVPGP  expects that it would
either  be able to  develop  or sell  the  property,  using  the  proceeds  from
development  loans or sale to satisfy the  County's  claims.  As a result of the
judgment  and  the  down-zoning  of  the  property,  the  recoverability  of the
remaining $1,408,746 carrying value of this property is uncertain.

                                       11
<PAGE>

As described in Note 3 of the Notes to  Consolidated  Financial  Statements,  on
October  14,  1999,  UCV  borrowed  additional  funds from its  existing  lender
pursuant to a modification  of its long-term  note payable.  The proceeds of the
additional  financing,  after  loan  costs,  were  used  to  make  approximately
$3,700,000  of  distributions  to the  partners  in UCV,  of which  the  Company
received  $1,757,000,   and  establish  working  capital  for  UCV's  additional
redevelopment  planning  costs.  Management  estimates  that  the  debt  service
(principal  and interest) for the  additional  borrowing  will be  approximately
$800,000 annually.

A $1,725,999 note payable  collateralized by the real property underlying one of
the  bowling  centers  matures in August  2000 and the lender has  notified  the
Company that it will not extend the due date.  The Company is uncertain  whether
it will be  successful in obtaining  financing to refinance  the  property.  The
Company is currently  evaluating  alternatives  for selling the property for the
purpose  of paying the note  payable.  The  carrying  value of the  property  at
December 31, 1999 was approximately $1,587,000.

Management  estimates  negative cash flow of  $1,300,000  to $1,500,000  for the
remaining  quarters of the year ending June 30, 2000 from  operating  activities
after  adding  estimated   distributions  from  UCV  operations  ($100,000)  and
deducting  capital   expenditures  and  principal  payments  on  notes  payable.
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  other  sources of working  capital from the
sale of undeveloped land in Temecula or 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.

                              YEAR 2000 COMPLIANCE
                              --------------------

The Company had a program to  identify,  evaluate and  implement  changes to its
computer  systems as  necessary  to address  the Year 2000  issue.  The  Company
developed the plan for converting  impacted items,  and completed the conversion
at a cost less than $5,000.  Through the date of this report, there have been no
adverse  effects on the Company's  business,  results of operations or financial
condition  as a result of Year  2000  problems  with its  computer  systems  and
operations.  In addition, the Company has not encountered any Year 2000 problems
with any of its vendors or customers.  Although the Company has made  reasonable
efforts to identify  and  protect  itself  with  respect to  external  Year 2000
problems,  there can be no  assurance  that the Company  will not be affected by
such  problems.  The Company will  consider  the  necessity  of  implementing  a
contingency  plan to mitigate any adverse effects  associated with the Year 2000
issue, should one arise.

                   "SAFE HARBOR" STATEMENT UNDER THE PRIVATE
                    SECURITIES LITIGATION REFORM ACT OF 1995
                    ----------------------------------------

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

                                       12
<PAGE>

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

The  following is a summary of the changes in the results of  operations  of the
six and  three-month  periods ended December 31, 1999 to the same period in 1998
and a discussion of the significant changes:

Six months ended December 31, 1999 versus 1998:
-----------------------------------------------
<TABLE>
<CAPTION>
                                                  Rental    Real Estate               Unallocated
                                      Bowling    Operation  Development     Golf       And Other     Totals
                                    ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>          <C>         <C>          <C>          <C>          <C>
 Revenues .......................   $ (77,380)   $  41,414   $    --      $ 135,757    $ (39,915)   $  59,876
 Costs ..........................      31,742          916       5,881      110,181         --        148,720
 SG&A-direct ....................      (8,299)        --          --        (38,611)      48,600        1,690
 SG&A-allocated .................       7,279        4,000      12,000       16,000      (39,279)        --
 Depreciation and amortization ..        (482)       3,513        --          3,199       (1,458)       4,772
 Interest expense ...............       2,512       17,410       7,896       (4,209)      (1,023)      22,586
 Equity in investees ............        --         23,450      (5,000)        --           --         18,450
 Loss on sale ...................        --           --          (638)        --           --           (638)
 Segment profit (loss) ..........    (110,132)      39,025     (31,415)      49,197      (46,755)    (100,080)
 Investment income ..............                                                                    (116,508)
 Loss from operations before
    extraordinary loss ..........                                                                    (216,588)
</TABLE>

Three months ended December 31, 1999 versus 1998:
-----------------------------------------------
<TABLE>
<CAPTION>
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>                        <C>          <C>          <C>
 Revenues .......................   $ (60,882) $    21,769        --      $  85,660    $ (28,748)   $  17,799
 Costs ..........................      23,197        2,645     (14,191)     112,329         --        123,980
 SG&A-direct ....................      (3,466)        --          --         83,101       26,241      105,876
 SG&A-allocated .................       7,871        3,000       7,000        6,000      (23,871)        --
 Depreciation and amortization ..        (623)       1,577        --          2,465         (782)       2,637
 Interest expense ...............       4,160        8,713       2,974       (2,132)       5,152       18,867
 Equity in investees ............        --          5,049     (15,000)        --           --         (9,951)
 Segment profit (loss) ..........     (92,021)      10,883     (10,783)    (116,103)     (35,488)    (243,512)
 Investment income ..............                                                                     (49,143)
 Loss from operations before
    extraordinary loss ..........                                                                    (292,655)
</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 $1,293
          and $696 for the six and three month periods respectively.

BOWLING OPERATIONS:
-------------------
Bowling  revenues  decreased  by 6% and 9% in the six and three  month  periods,
respectively,  which is approximately the same percentage decrease in the number
of games bowled in each period. All of the decrease is attributable to decreases
in the number of league games bowled, which have not been offset by increases in
open play games.  In each period the number of league games bowled  decreased by
approximately 17%.

Bowl  costs  increased  by 3%  and  5% in  the  six  and  three  month  periods,
respectively,  primarily  due to  due to an  increase  in the  lane  resurfacing
expense,   which  occurs   every  two  years.   Direct   selling,   general  and
administrative  expense  decreased  by 3% and  2% in the  six  and  three  month
periods, respectively, primarily due to a decrease in free-bowling expense.

                                       13
<PAGE>

RENTAL OPERATIONS:
------------------
Rental revenues increased 14% in the six and three month period primarily due to
a 14%  increase in the average  rental rate at the  Company's  office  building.
Interest  expense  increased  due to a refinancing  in May 1999 which  increased
long-term debt associated with the rental segment by approximately $827,000.

The  equity in income of UCV  increased  primarily  due to a  decrease  in UCV's
interest  expense  ($84,000  and  $27,000  in the six and three  month  periods,
respectively).  The decrease related to a decrease in the interest rate from 10%
to  approximately  7.1%,  which  was  partially  offset  by an  increase  in the
long-term debt of approximately $5,166,000.  Otherwise, UCV's rents increased by
3% in the six and three month period and expenses  increased  14% and 11% in the
six and three month  periods,  respectively.  The  increase in expenses  related
primarily to increases in water and maintenance  expenses.  Management  believes
these  increases in expenses are  indicative of a trend for the remainder of the
fiscal year.

REAL ESTATE DEVELOPMENT OPERATIONS:
-----------------------------------
Development  costs and expenses  primarily  consists of legal costs  incurred to
contest the City of Temecula's  attempts to down-zone the undeveloped land owned
by OVPGP.  Interest expense related to development  activities primarily relates
to interest accrued on the past due and current assessment district  obligations
of OVPGP.

GOLF OPERATIONS:
----------------
Sales  during  the years  1999 and 1998 were  small  because  Penley has not yet
developed sales with golf club  manufacturers  or  distributors.  The sales were
principally  to custom golf shops.  The Company  expects that it will be another
three to six  months  before  Penley is able to develop  significant  sales with
manufacturers or distributors.

Operating  expenses of the golf segment  consisted of the following in 1999, and
1998:
                                   1999       1998       1999       1998
                                 --------   --------   --------   --------
    Costs of goods sold and
        manufacturing overhead   $268,000   $165,000   $473,000   $399,000
    Research & development ...     64,000     55,000    132,000     96,000
                                 --------   --------   --------   --------
         Total golf costs ....    332,000    220,000    605,000    495,000
                                 ========   ========   ========   ========

    Marketing & promotion ....    383,000    280,000    753,000    769,000
    Administrative-direct ....     29,000     49,000     62,000     84,000
                                 --------   --------   --------   --------
         Total SG&A-direct ...    412,000    329,000    815,000    853,000
                                 ========   ========   ========   ========

    Allocated corporate costs      89,000     83,000    147,000    131,000
                                 ========   ========   ========   ========

Total golf costs increased primarily due to an increase in the amount of cost of
goods sold  related to  increased  sales,  an increase in the cost of  prototype
shafts developed during the periods, and an increase in the payroll for research
and  development.  Marketing and promotion  expenses  increased during the three
month period ended December 31, 1999 primarily due the sponsorship  costs of the
National Long-Drive Championships in October 1999.

UNALLOCATED AND OTHER
---------------------
Other revenues  decreased in the six and three month periods  primarily due to a
decrease in leasing commission income.

Selling, general and administrative expense increased in the six and three month
periods  because  of  increased  payroll  costs in 1999.  This  increase  in the
corporate segment expenses resulted in an increase in the costs allocated to the
business segments.

Investment  income  decreased in the six and three month periods ended  December
31, 1999 primarily due to  discontinuing  the accrual of interest  income on the
note  receivable from  shareholder  (decrease of $104,000 and $49,000 in the six
and three month periods, respectively).

                                       14
<PAGE>

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.
<TABLE>
<CAPTION>
                           2000          2001         2002      2003        2004     Thereafter        Total
                       ---------    -----------    --------   --------   --------    -----------    -----------
<S>                    <C>          <C>            <C>        <C>        <C>         <C>            <C>
  Fixed rate debt ..   $ 106,000    $ 1,796,000    $ 39,000   $ 21,000   $ 22,000    $ 1,879,000    $ 3,863,000
  Weighted average
     interest rate .       8.2%           8.2%        8.2%       8.2%       8.2%           8.2%           8.2%

  Variable rate debt   $  39,000    $    78,000    $  6,000       --          --             --      $  123,000
  Weighted average
     interest rate .      11.2%          11.2%       11.2%        --          --             --           11.2%
</TABLE>

The amounts for 2000 relate to the six months ending June 30, 2000.

The  Company's  unconsolidated  subsidiary,  UCV,  has  variable  rate  debt  of
approximately $29,040,000 after the additional advances under the loan agreement
on  October  14,  1999 for  which the  weighted  average  interest  rate was 7.7
percent. The principal maturities for each of UCV's fiscal years ending March 31
is: 2000- $230,000; 2001- $609,000; 2002- $28,201,000; and $29,040,000 in total.

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

                                       15
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        As of December 31, 1999, 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, 1999.

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 23, 1999 the Company held its annual shareholder  meeting in
        which the following item was voted upon:

                                          Tabulation of Votes
                                  --------------------------------
       Election of Directors:        For        Against    Abstain
       ----------------------     ----------    -------    -------
          Harold S. Elkan         24,118,926       0        13,849
          Steven R. Whitman       24,122,231       0        10,544
          Patrick D. Reiley       24,122,706       0        10,069
          James E. Crowley        24,122,756       0        10,019
          Robert A. MacNamara     24,122,781       0         9,994


ITEM 5. OTHER INFORMATION

          NONE

ITEM 6. EXHIBITS & REPORTS ON FORM 8-K

     (a) Exhibits: Financial Date Schedule

     (b) Reports on Form 8-K:  NONE

                                       16
<PAGE>

                                   SIGNATURES

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

     SPORTS ARENAS, INC.

     BY:  /S/ HAROLD S. ELKAN
         --------------------
                 Harold S. Elkan, President and Director

     DATE:   FEBRUARY 11, 2000
             -----------------


     BY:/S/ STEVEN R. WHITMAN
        ---------------------
           Steven R. Whitman, Treasurer,
           Principal Accounting Officer and Director

     DATE: FEBRUARY 11, 2000
           -----------------




                                       17
<PAGE>