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


                                    FORM 10-Q


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

            For the quarterly period ended September 30, 2000
                              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 (858) 587-1060




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

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


<PAGE>


                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 2000

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of September 30, 2000 (unaudited)
        and June 30, 2000 ............................................    1-2

      Unaudited Statements of Operations for the
        Three Months Ended September 30, 2000 and 1999 ...............     3

      Unaudited Statements of Cash Flows for the
        Three Months Ended September 30, 2000 and 1999 ...............     4

      Notes to Financial Statements ..................................    5-8


Item 2.- Management's Discussion and Analysis of
           Financial Condition and Results of Operations .............    9-11

Item 3.- Quantitative and Qualitative Disclosures about Market Risk ..    12

Part II - Other Information ........................................      13


Signatures .......................................................        14



<PAGE>

                       SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                      ASSETS

                                                     September 30,   June 30,
                                                         2000         2000
                                                      ------------  ----------
                                                       (Unaudited)

Current assets:
   Cash and cash equivalents                             $ 23,027     $ 13,961
   Current portion of notes receivable- affiliate             --        50,000
   Other receivables                                      112,195      193,510
   Inventories                                            276,933      304,906
   Prepaid expenses                                       279,888      238,719
                                                      ------------  ----------
      Total current assets                                692,043      801,096
                                                      ------------  ----------

Receivables due after one year:
   Note receivable- affiliate, net                          2,787       73,866
   Less current portion                                       --       (50,000)
                                                      ------------  ----------
                                                            2,787       23,866
                                                      ------------  ----------
Property and equipment, at cost:
   Land                                                   678,000      678,000
   Buildings                                            2,461,327    2,461,327
   Equipment and leasehold and tenant improvements      2,515,534    2,347,767
                                                      ------------  ----------
                                                        5,654,861    5,487,094
    Less accumulated depreciation and amortization     (2,242,911)  (2,160,132)
                                                      ------------  ----------
      Net property and equipment                        3,411,950    3,326,962
                                                      ------------  ----------

Other assets:
   Undeveloped land, at cost                            1,507,052    1,501,318
   Intangible assets, net                                 234,048      246,123
   Investments                                            549,446      564,446
   Other                                                  135,241      137,425
                                                      ------------  ----------
                                                        2,425,787    2,449,312
                                                      ------------  ----------

                                                       $6,532,567   $6,601,236
                                                      ============  ==========






                                       1
<PAGE>

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

                      LIABILITIES AND SHAREHOLDERS' DEFICIT


                                                     September 30,   June 30,
                                                         2000          2000
                                                      ------------  ----------
                                                      (Unaudited)

Current liabilities:
   Assessment district obligation- in default          $2,914,574   $2,831,180
   Notes payable-short term                             2,050,000    1,350,000
   Current portion of long-term debt                    1,819,000    1,874,000
   Accounts payable                                       937,501      796,483
   Accrued payroll and related expenses                   225,980      164,170
   Accrued property taxes- in default                     382,706      356,178
   Accrued interest                                        89,638       41,079
   Other liabilities                                      176,369      216,009
                                                      ------------  ----------
      Total current liabilities                         8,595,768    7,629,099
                                                      ------------  ----------

Long-term debt, excluding current portion               1,951,365    1,967,169
                                                      ------------  ----------

Distributions received in excess of basis
  in investment                                        14,525,401   14,498,208
                                                      ------------  ----------

Other liabilities                                         135,831      123,831
                                                      ------------  ----------

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


Shareholders' equity 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                                (20,099,532) (19,040,805)
                                                      ------------  ----------
                                                      (18,096,983) (17,038,256)
   Less note receivable from shareholder               (2,291,492)  (2,291,492)
                                                      ------------  ----------
     Total shareholders' deficit                      (20,388,475) (19,329,748)
                                                      ------------  ----------

Commitments and contingencies (Note 6)

                                                       $6,532,567   $6,601,236
                                                      ============  ==========









     See accompanying notes to consolidated condensed financial statements.


                                       2
<PAGE>

                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                  (Unaudited)

                                                          2000        1999
                                                       ----------   ----------
Revenues:
   Bowling                                             $  661,597   $  624,572
   Rental                                                 168,833      156,277
   Golf                                                   287,009      123,930
   Other                                                   34,282       28,457
   Other-related party                                     44,351       42,699
                                                       ----------   ----------
                                                        1,196,072      975,935
                                                       ----------   ----------
Costs and expenses:
   Bowling                                                533,377      534,770
   Rental                                                  69,283       62,742
   Golf                                                   526,176      272,872
   Development                                             41,280       61,333
   Selling, general, and administrative                   827,345      848,391
   Depreciation and amortization                           99,116       95,569
                                                       -----------  ----------
                                                        2,096,577    1,875,677
                                                       -----------  ----------

Loss from operations                                     (900,505)    (899,742)
                                                       -----------  ----------

Other income (charges):
   Investment income:
     Related party                                            --         9,920
     Other                                                    --           316
   Interest expense:
     Development activities                               (83,394)     (63,376)
     Other and amortization of finance costs             (129,990)     (88,768)
   Loss on sale of undeveloped land                           --          (638)
   Equity in income of investees                           55,162      141,089
                                                       -----------  ----------
                                                         (158,222)      (1,457)
                                                       -----------  ----------


Net loss                                              $(1,058,727)   $(901,199)
                                                       ===========  ==========


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









     See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>
                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                  (Unaudited)

                                                          2000          1999
                                                       -----------   ---------
Cash flows from operating activities:
  Net loss                                            ($1,058,727)   ($901,199)
  Adjustments to reconcile net loss to the
    net cash used by operating activities:
      Amortization of deferred financing costs              2,280        2,280
      Depreciation and amortization                        99,116       95,569
      Equity in income of investees                       (55,162)    (141,089)
      Deferred income                                      12,000       12,000
      Loss on sale of undeveloped land                        --           638
      Interest accrued on assessment
        district obligations                               83,394       63,377
    Changes in assets and liabilities:
      Decrease in receivables                              81,315        4,154
      Decrease in inventories                              27,973        5,669
      Increase in prepaid expenses                        (41,169)     (69,351)
      Increase in accounts payable                        141,018      118,566
      Increase (decrease) in accrued expenses              97,257      (32,220)
      Other                                                 8,997       (5,904)
                                                       -----------  ----------
        Net cash used by operating activities            (601,708)    (847,510)
                                                       -----------  ----------

Cash flows from investing activities:
   (Increase) decrease in notes receivable                 71,079       (6,623)
   Capital expenditures                                  (167,767)     (43,576)
   Increase in development costs on
     undeveloped land                                      (5,734)     (17,278)
   Proceeds from sale of undeveloped land                     --       190,362
   Distributions from investees                            84,000      157,000
                                                       -----------  ----------
        Net cash provided (used) by
          investing activities                            (18,422)     279,885
                                                       -----------  ----------

Cash flows from financing activities:
   Scheduled principal payments on long-term debt         (70,804)     (68,934)
   Extinguishment of long-term debt                           --       (75,927)
   Proceeds from note payable                             700,000      550,000
                                                       -----------  ----------
       Net cash provided by financing activities          629,196      405,139
                                                       -----------  ----------

Net increase (decrease) in cash and
   cash equivalents                                         9,066     (162,486)
Cash and cash equivalents, beginning of year               13,961      357,906
                                                       -----------  ----------
Cash and cash equivalents, end of year                 $   23,027   $  195,420
                                                       ===========  ==========





     See accompanying notes to consolidated condensed financial statements.

                                       4
<PAGE>


                            SPORTS ARENAS, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     SEPTEMBER 30, 2000 AND 1999 (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  and  golf  shaft
      manufacturing  operations,  the financial  results for the interim periods
      ended  September  30, 2000 and 1999,  are not  necessarily  indicative  of
      operations for the entire year.

3. Investments:

   (a) Investments consist of the following:
                                                September 30,    June 30,
                                                     2000          2000
                                                 -----------   -----------
         Vail Ranch Limited Partnership
          (equity method)                           $549,446      $564,446
                                                 ===========   ===========
        Investment in UCV, L.P. classified as
         liability- Distributions received
         in excess of basis in investment        $14,525,401   $14,498,208
                                                 ===========   ===========

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:
                                             2000        1999
                                          ---------   ---------
        UCV, L.P.                          $ 70,162   $ 141,089
        Vail Ranch Limited Partnership      (15,000)        --
                                          ---------   ---------
                                           $ 55,162   $ 141,089
                                          =========   =========

     The following is a summary of distributions received from investees:
                                             2000        1999
                                           --------   ---------
        UCV, L.P.                          $ 84,000   $ 157,000
        Vail Ranch Limited Partnership          --          --
                                           --------   ---------
                                           $ 84,000   $ 157,000
                                           ========   =========

   (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  three-month  periods
     ended June 30, 2000 and 1999 are as follows:

                                                     2000           1999
                                                  ---------      ---------
        Revenues                                  $1,235,000     $1,158,000
        Operating and general and
          administrative costs                       407,000        392,000
        Depreciation                                   5,000          7,000
        Interest expense                             683,000        477,000
        Net income                                   140,000        282,000

                                       5
<PAGE>


4. Undeveloped land:

   RCSA Holdings,  Inc. (RCSA), a wholly owned subsidiary of the Company, owns a
   50 percent  managing  general  partnership  interest in Old Vail Partners,  a
   general  partnership  (OVPGP),  which  owns 33 acres of  undeveloped  land in
   Temecula,  California.  On September 23, 1999, the other partner assigned his
   partnership interest to Downtown Properties,  Inc., a wholly owned subsidiary
   of the Company. 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.  The 33 acres of land  owned by OVPGP  are  located  within a
   special  assessment  district  of the County of  Riverside,  California  (the
   County)  which was created to fund and develop  roadways,  sewers,  and other
   required infrastructure  improvements in the area necessary for the owners to
   develop  their  properties.   Property  within  the  assessment  district  is
   collateral for an allocated portion of the bonded debt that was issued by the
   assessment  district to fund the improvements.  The annual payments (required
   in semiannual  installments) due related to the bonded debt are approximately
   $144,000. The payments continue through the year 2014 and include interest at
   approximately  7-3/4  percent.  OVPGP has been  delinquent  in the payment of
   property taxes and assessments for over the last eight years. The property is
   currently subject to default judgments to the County of Riverside, California
   totaling  approximately  $2,242,342 regarding delinquent  assessment district
   payments  ($1,859,636) and property taxes  ($382,706).  On June 23, 2000, the
   County of  Riverside  agreed to remove the property  from the planned  public
   sale  originally  scheduled  for June 26, 2000 in exchange  for an  immediate
   payment of $330,000  with the balance of property  taxes due on December  29,
   2000.  Separately,  the County of Riverside  stated that a  foreclosure  sale
   related to the default  judgement for assessment  district payments would not
   be scheduled until some time after January 1, 2001.

   The  delinquent  principal,  interest  and  penalties  ($1,859,636)  and  the
   remaining  principal  balance  of the  allocated  portion  of the  assessment
   district  bonds   ($1,054,938)   are   classified  as  "Assessment   district
   obligation-  in default" in the  consolidated  balance sheet at September 30,
   2000.  In addition,  the  consolidated  balance  sheet at September  30, 2000
   includes  $382,706 of delinquent  property taxes and late fees related to the
   33-acre parcel.

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

5. Notes payable:

   Pursuant to a short term loan  agreement  with the Company's  partner in UCV,
   the  Company  borrowed  an  additional  $700,000  in the three  months  ended
   September 30, 2000, $350,000 on October 17, 2000 and $150,000 on November 10,
   2000.

                                       6
<PAGE>


   The Company has agreed in principle to repay  principal  from the proceeds of
   the following events:  $500,000 from the sale proceeds of the office building
   as disclosed in Note 7(a);  up to $500,000  from any  distributions  received
   from proceeds of future refinancing of UCV; up to $350,000 from distributions
   received from the sale of the 33 acres owned by Old Vail Partners,  a general
   partnership;  up to $350,000 from 50% of the distributions  received from the
   sale of the shopping  center in which Old Vail  Partners,  Ltd. is a partner.
   The remaining balance will become due on July 31, 2001, however,  the Company
   will have the ability to extend the due date for up to one additional year.

6. Contingencies:

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

7. Significant events:

   (a) Agreement to sell Office Building:
     On September  28, 2000 the Company  agreed to sell the office  building for
     $3,725,000. The sale is contingent on the existing lender's approval of the
     buyer  assuming the loan  (balance of  $1,953,353 as of September 30, 2000)
     related to the office  building.  The following is a summary of the results
     from  operations  of  the  office   building   included  in  the  financial
     statements:
                                            2000          1999
                                        ----------      ---------
         Rents                           $ 127,000      $ 113,000
         Costs                              28,000         28,000
         Allocated SG&A                      6,000          6,000
         Depreciation                       16,000         21,000
                                        ----------      ---------
         Income from operations             77,000         58,000
         Interest expense                   41,000         42,000
                                        ----------      ---------
         Income from continuing
           operations                       36,000         16,000
                                        ==========      =========

   (b) Agreement to sell Valley Bowl real estate:
     On  October  23,  2000 the  Company  agreed  to sell the land and  building
     occupied by the Valley Bowling Center for $2,215,000. The land and building
     are collateral for a $1,660,977  note payable as of September 30, 2000. The
     sale is contingent on the buyer obtaining  financing.  Once the building is
     sold the bowling center will discontinue its operations. The following is a
     summary of the results of operations of the bowling center  included in the
     financial statements:

                                            2000          1999
                                        ----------      ---------
         Revenues                       $  238,000      $ 278,000
         Costs                             171,000        204,000
         Direct SG&A                        63,000         73,000
         Allocated SG&A                     17,000         22,000
         Depreciation                       23,000         23,000
                                        ----------      ---------
         Income from operations           ( 36,000)      ( 44,000)
         Interest expense                   37,000         36,000
                                        ----------      ---------
         Income from continuing
           operations                     ( 73,000)      ( 80,000)
                                       ===========      =========

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.  Other revenues,  which are not part of an identified segment,
   consist of property  management  and  development  fees  (earned  from both a
   property 50 percent  owned by the Company and a property in which the Company
   has no ownership) and commercial brokerage.

                                       7
<PAGE>

   The following is  summarized  information  about the Company's  operations by
   business segment.
<TABLE>
<CAPTION>
                                                 Real Estate   Real Estate                   Unallocated
                                      Bowling        Rental     Development        Golf        And Other       Totals
                                   ------------   ------------  ------------   ------------   ------------   ------------
THREE MONTHS ENDED SEPTEMBER 30, 2000:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   661,597    $   185,081   $      --      $   287,009    $    78,633    $ 1,212,320
Depreciation and amortization...        25,842         29,612          --           33,585         10,077         99,116
Interest expense ...............        37,417         41,423        83,394          2,019         49,131        213,384
Equity in income of investees ..          --           70,162       (15,000)          --             --           55,162
Loss on sale ...................          --             --            --             --             --             --
Segment profit (loss) ..........      (155,380)       108,925      (144,674)      (742,411)      (125,187)    (1,058,727)
Investment income ..............                                                                                    --
Loss from operations ...........                                                                              (1,058,727)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1999:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   624,572    $   171,829   $      --      $   123,930    $    71,156    $   991,487
Depreciation and amortization...        26,670         34,404          --           22,202         12,293         95,569
Interest expense ...............        36,285         41,754        64,397          4,231          5,477        152,144
Equity in income of investees ..          --          141,089          --             --             --          141,089
Loss on sale ...................          --             --            (638)          --             --             (638)
Segment profit (loss) ..........      (201,625)       168,018      (131,368)      (636,120)      (110,340)      (911,435)
Investment income ..............                                                                                  10,236
Loss from operations ...........                                                                                (901,199)
</TABLE>
                                        2000         1999
                                    -----------   ---------
Revenues per segment schedule ..    $1,212,320    $ 991,487
Intercompany rent eliminated ...       (16,248)     (15,552)
                                    -----------   ---------
Consolidated revenues ..........    $1,196,072    $ 975,935
                                    ===========   =========

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,  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.



                                       8
<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 $4,606,445 at
September 30, 2000, which is a $965,800  increase from the similarly  calculated
working  capital deficit of $3,640,645 at June 30, 2000. The decrease in working
capital is primarily  attributable to the cash used by operating  activities for
the three months ended  September  30, 2000.  The following is a schedule of the
cash provided  (used) before  changes in assets and  liabilities,  segregated by
business segments:

                                         2000         1999       Change
                                      ----------   ----------   ---------
     Bowling                          $(129,000)    (174,000)   $  45,000
     Rental                              70,000       63,000        7,000
     Golf                              (709,000)    (614,000)     (95,000)
     Development                        (46,000)     (67,000)      21,000
     General corporate expense and
       other                           (103,000)     (76,000)     (27,000)
                                      ----------   ----------   ---------
     Cash used by continuing
       operations                      (917,000)    (868,000)     (49,000)
     Capital expenditures              (174,000)     (61,000)    (113,000)
     Principal payments on long-term
       debt                             (71,000)     (69,000)      (2,000)
                                      ----------   ----------   ---------
     Cash used                        (1,162,000)   (998,000)    (164,000)
                                      ==========   ==========   =========
     Distributions received from
       investees                         84,000      157,000      (73,000)
                                      ==========   ==========   =========

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

As  described  in  Note 4 of  the  Notes  to  Consolidated  Condensed  Financial
Statements,  OVPGP is delinquent in the payment of special  assessment  district
obligations  and  property  taxes on 33 acres of  undeveloped  land.  The annual
obligation for the assessment district is approximately  $144,000. The County of
Riverside  obtained  judgments  for the  default  in the  delinquent  assessment
district  payments.  The amounts due to cure the judgment for the default  under
the  assessment  district  obligation  on the 33 acre parcel as of September 30,
2000 was  approximately  $1,859,000.  The  principal  balance  of the  allocated
portion of the bonds  ($1,384,153  as of September  30,  2000),  and  delinquent
interest and penalties  ($1,530,421  as of September 30, 2000) are classified as
"Assessment  district obligation- in default" in the consolidated balance sheet.
In addition,  the  consolidated  balance sheet  includes  $382,706 of delinquent
property  taxes and late fees as of September  30, 2000.  On June 23, 2000,  the
County of Riverside  agreed to remove the property from the planned  public sale
originally  scheduled for June 26, 2000 in exchange for an immediate  payment of
$330,000  with  the  balance  of  property  taxes  due  on  December  29,  2000.
Separately,  the County of Riverside  stated that a foreclosure  sale related to
the default  judgement for assessment  district  payments would not be scheduled
until some time after January 1, 2001.  The Company  estimates the value of this
land is  approximately  $4,000,000  to  $5,000,000  if the  property  was  zoned
"commercial".  However,  the City of Temecula adopted a general development plan
as a means of down-zoning the property to a lower use and, if uncontested, might
have  significantly  impaired the value of the property.  The Company  contested
this action.  On October 23, 2000, the City of Temecula's  city council  granted
preliminary approval of OVPGP's request for re-zoning and general plan amendment
related to a development  plan which includes a combination of multi-family  and
commercial  uses.  Once the  re-zoning and general plan  amendment  requested by
OVPGP are adopted by the City of  Temecula,  OVPGP will abandon its legal claims
against the City of Temecula. OVPGP is now marketing the property for sale.

On  September  28,  2000 the  Company  agreed to sell the  office  building  for
$3,725,000.  The sale is  contingent  on the existing  lender's  approval of the
buyer assuming the loan (balance of $1,953,353 as of September 30, 2000) related
to the office building.

                                       9
<PAGE>

On October 23, 2000 the Company agreed to sell the land and building occupied by
the Valley Bowling Center for  $2,215,000.  The land and building are collateral
for a $1,660,977  note payable as of September 30, 2000.  The sale is contingent
on the buyer obtaining  financing.  Once the building is sold the bowling center
will discontinue its operations.

Excluding  the  possible  sale of the Valley Bowl real estate and the closing of
that bowling  center,  Management  estimates  negative  cash flow of $500,000 to
$700,000  for the  remaining  quarters  of the year  ending  June 30,  2001 from
operating  activities after adding the estimated sales proceeds from the sale of
the office building 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.

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

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

                              RESULTS OF OPERATIONS

The  following is a summary of the changes in the results of  operations  of the
three-month  period  ended  September  30, 2000 to the same period in 1999 and a
discussion of the significant changes:

<TABLE>
<CAPTION>
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $  37,025  $    13,252        --      $  163,079   $   7,477    $ 220,833
 Costs ..........................      (1,393)       6,541     (20,053)      253,304        --        238,399
 SG&A-direct ....................      (3,322)        --          --           2,895     (19,923)     (20,350)
 SG&A-allocated .................      (4,809)        --          --           4,000         809         --
 Depreciation and amortization ..        (828)      (4,792)       --          11,383      (2,216)       3,547
 Interest expense ...............       1,132         (331)     18,997        (2,212)     43,654       61,240
 Equity in investees ............        --        (70,927)    (15,000)         --           --       (85,927)
 Loss on sale ...................        --           --           638          --           --           638
 Segment profit (loss) ..........      46,245      (59,093)    (13,306)     (106,291)    (14,847)    (147,292)
 Investment income ..............                                                                     (10,236)
 Loss from operations ...........                                                                    (157,528)
</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 $696.

                                       10
<PAGE>

BOWLING OPERATIONS:

Bowl revenues increase by 6% primarily due to a 22% increase ($77,000) in one of
the bowling center's  revenues (Grove Bowl).  This was partially offset by a 14%
decrease in Valley Bowl's  revenues  ($40,000).  The Grove Bowl's  revenues have
consistently increased since the surrounding shopping center was redeveloped and
reopened in March 2000.  Grove Bowls increase was the result of a combination of
a 15% increase in games bowled and an overall  increase in the average  price of
5%.  Valley  Bowl's  decrease  in revenues is part of  consistent  decline  that
reflective of its poor location in a declining bowling market.

There was no  significant  change in bowling  costs,  however Grove Bowl's costs
increased by 10% ($32,000) and Valley Bowl's costs  decreased by 16%  ($33,000).
The Grove Bowl increase is primarily related to an increase in utility costs due
to the increase in electric rates in San Diego.  Although  Valley Bowl's utility
costs  increased  also  ($19,000),  this  increase  was offset by a decrease  in
payroll  and lane  maintenance  expenses.  The Company is  currently  evaluating
alternatives  for a supplier of electricity that will  significantly  reduce the
volatility in utility rates. There was not significant change in direct selling,
general and administrative expenses.

RENTAL OPERATIONS:

Rental revenues increased  primarily due to a 13% increase in the average rental
rate at the Company's office building. Rental costs increased due to an increase
in the rent expense for the subleasehold interest.

The  equity in income of UCV  decreased  primarily  due to a  increase  in UCV's
interest  expense  ($206,000)  related to the  increase in  financing in October
1999.  Otherwise,  UCV's  rents  increased  by 7%  ($77,000)  and  the  expenses
increased 3% ($13,000).

REAL ESTATE DEVELOPMENT OPERATIONS:

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

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

Operating  expenses of the golf segment  consisted of the  following in 2000 and
1999

                                          2000       1999
                                        --------  --------
       Costs  of  sales  and
         manufacturing overhead         $458,000  $205,000
       Research and development           68,000    68,000
                                        --------  --------
          Total golf costs               526,000   273,000
                                        ========  ========

       Marketing and promotion           345,000   370,000
       Administrative costs- direct       61,000    33,000
                                        --------  --------
         Total SG&A-direct               406,000   403,000
                                        ========  ========

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


                                       11
<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>
                         2001           2002      2003    2004      2005    Thereafter     Total
                     ------------    ---------  -------  -------   -------  ----------   ----------
<S>                  <C>             <C>        <C>      <C>       <C>      <C>          <C>
Fixed rate debt ..   $     84,000    $  39,000  $21,000  $22,000   $24,000  $1,855,000   $2,045,000
Weighted average
   interest rate .         8.2%         8.2%      8.2%     8.2%      8.2%       8.2%        8.2%

Variable rate debt   $  3,769,000    $   6,000     --      --         --         --      $3,775,000
Weighted average
   interest rate .        10.1%        10.5%       --      --         --         --        10.1%
</TABLE>

The amounts for 2001 relate to the nine months ended June 30, 2001.

The  Company's  unconsolidated  subsidiary,  UCV,  has  variable  rate  debt  of
$28,768,000 as of June 30, 2000 for which the interest rate is 9.0 percent.  The
principal  cash flows for each of UCV's  fiscal  years ending March 31 is: 2001-
$349,000; 2002- $28,419,000; and $28,768,000 in total.


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


                                       12
<PAGE>

                                     PART II
                                OTHER INFORMATION



ITEM 1. Legal Proceedings

        As of  September  30, 2000,  there were no changes in legal  proceedings
        from those set forth in Item 3 of the Form 10-K filed for the year ended
        June 30, 2000.


ITEM 2. Changes in Securities

          NONE


ITEM 3. Defaults upon Senior Securities

          N/A


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

          NONE

ITEM 5. Other Information

          NONE


ITEM 6. Exhibits & Reports on Form 8-K

     (a) Exhibits: Financial Data Schedule

     (b) Reports on Form 8-K:  NONE




                                       13
<PAGE>

                                   SIGNATURES


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




     SPORTS ARENAS, INC.



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


     Date:   November 14, 2000
             -----------------



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



     Date: November 14, 2000
           -----------------




                                       14
<PAGE>