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, 1997

                                       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, 1998 was 27,250,000 shares.


<PAGE>


                                 SPORTS ARENAS, INC.

                                      FORM 10-Q

                           QUARTER ENDED DECEMBER 31, 1997

                                        INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of December 31, 1997 and June 30, 1997 .........   1-2

      Statements of Operations for the Three Months
            Ended December 31, 1997 and 1996............................    3

      Statements of Operations for the Six Months
            Ended December 31, 1997 and 1996............................    4

      Statements of Cash Flows for the Six Months
            Ended December 31, 1997 and 1996............................    5

      Notes to Financial Statements.....................................   6-8


Item 2.- Management's Discussion and Analysis of Financial Condition
            and Results of Operations...................................   9-12



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


Signature...............................................................    14


<PAGE>


                       SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                      ASSETS
<TABLE>
<CAPTION>
                                                       December 31,     June 30,
                                                            1997         1997
                                                       ------------   -----------
<S>                                                   <C>            <C>    
                                                        (Unaudited)
Current assets:
   Cash and cash equivalents .......................   $   138,135    $   821,513
   Current portion of notes receivable .............        25,000         25,000
   Current portion of notes receivable-affiliate ...        50,000         50,000
   Construction contract receivables ...............       300,175        384,732
   Other receivables ...............................        41,370         82,972
   Costs in excess of billings on
     uncompleted contracts .........................          --           17,462
   Inventories .....................................       104,077         89,118
   Prepaid expenses ................................       242,709        138,583
                                                       -----------    -----------
      Total current assets .........................       901,466      1,609,380
                                                       -----------    -----------

Receivables due after one year:
   Note receivable .................................       710,702        728,838
   Less deferred gain ..............................      (716,025)      (716,025)
   Note receivable- Affiliate ......................       501,797        539,306
   Note receivable- Other ..........................        24,521         35,477
                                                       -----------    -----------
                                                           520,995        587,596
   Less current portion ............................       (75,000)       (75,000)
                                                       -----------    -----------
                                                           445,995        512,596
                                                       -----------    -----------
Property and equipment, at cost:
   Land ............................................       678,000        678,000
   Buildings .......................................     2,461,327      2,461,327
   Equipment and leasehold and tenant improvements .     1,969,131      1,752,244
                                                       -----------    -----------
                                                         5,108,458      4,891,571
      Less accumulated depreciation and amortization    (1,480,670)    (1,291,861)
                                                       -----------    -----------
       Net property and equipment ..................     3,627,788      3,599,710
                                                       -----------    -----------

Other assets:
   Undeveloped land, at cost .......................     1,665,643      1,665,643
   Intangible assets, net ..........................       381,313        447,608
   Investments .....................................     1,922,891      2,012,119
   Other ...........................................        91,203         86,699
                                                       -----------    -----------
                                                         4,061,050      4,212,069
                                                       -----------    -----------

                                                       $ 9,036,299    $ 9,933,755
                                                       ===========    ===========
</TABLE>


                                       1
<PAGE>


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

                LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

<TABLE>
<CAPTION>
                                                       December 31,      June 30,
                                                            1997           1997
                                                       ------------    -----------
                                                        (Unaudited)
<S>                                                   <C>            <C>  
Current liabilities:
   Assessment district obligation-in default .....     $  2,208,904   $  2,097,982
   Current portion of long-term debt .............          422,000        481,000
   Notes payable, short-term .....................          650,000        250,000
   Accounts payable ..............................          837,296        738,185
   Accrued payroll and related expenses ..........           49,765        116,249
   Accrued property taxes ........................          438,754        408,784
   Accrued interest ..............................           29,396         29,353
   Accrued frequent bowler program expense .......           60,059         60,239
   Other liabilities .............................          191,934        147,324
                                                       ------------   ------------
      Total current liabilities ..................        4,888,108      4,329,116
                                                       ------------   ------------

Long-term debt, excluding current portion ........        3,921,721      4,061,987
                                                       ------------   ------------

Distributions received in excess
   of basis in investment ........................       10,337,012     10,083,802
                                                       ------------   ------------

Tenant security deposits .........................           26,148         27,847
                                                       ------------   ------------

Minority interest in consolidated subsidiary .....        2,212,677      2,212,677
                                                       ------------   ------------

Commitments and contingencies (Note 4)

Shareholders' equity (deficiency):
   Common stock, $.01 par value, 50,000,000 shares
authorized,
     27,250,000 shares issued and outstanding ....          272,500        272,500
   Additional paid-in capital ....................        1,730,049      1,730,049
   Accumulated deficit ...........................      (12,279,511)   (10,813,818)
                                                       ------------   ------------
                                                        (10,276,962)    (8,811,269)
   Less note receivable from shareholder .........       (2,072,405)    (1,970,405)
                                                       ------------   ------------
     Total shareholders' equity (deficiency) .....      (12,349,367)   (10,781,674)
                                                       ------------   ------------

                                                       $  9,036,299   $  9,933,755
                                                       ============   ============
</TABLE>








        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, 1997 AND 1996
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                              1997         1996
                                                              ----         ----
<S>                                                    <C>            <C>
Revenues:
   Bowling ..........................................   $   694,538    $   677,310
   Rental ...........................................       122,164        127,733
   Construction .....................................       601,365      1,093,999
   Golf .............................................        33,202           --
   Other ............................................        24,867         20,970
   Other-related party ..............................        28,284         27,664
                                                        -----------    -----------
                                                          1,504,420      1,947,676
                                                        -----------    -----------
Costs and expenses:
   Bowling ..........................................       499,834        450,862
   Rental ...........................................        60,558         64,267
   Construction .....................................       510,799        986,776
   Golf .............................................       127,933           --
   Development ......................................        40,770         37,849
   Selling, general, and administrative .............       804,592        451,477
   Depreciation and amortization ....................        87,108        160,401
                                                        -----------    -----------
                                                          2,131,594      2,151,632
                                                        -----------    -----------

Loss from operations ................................      (627,174)      (203,956)
                                                        -----------    -----------

Other income (charges):
   Investment income:
     Related party ..................................        61,830         57,573
     Other ..........................................           683         52,193
   Interest expense related to development activities       (59,024)       (68,692)
   Interest expense and amortization of finance costs      (121,174)      (129,657)
   Equity in income of investees ....................        86,029         64,616
   Gain on sale, other ..............................          --           55,000
   Gain on sale of bowling centers ..................          --             --
                                                        -----------    -----------
                                                            (31,656)        31,033
                                                        -----------    -----------

Net loss ............................................      (658,830)      (172,923)
                                                        ===========    ===========

Per common share (based on weighted average shares outstanding):
   Net loss .........................................      ($0.02)     ($0.01)
                                                           ======      ======
</TABLE>











        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, 1997 AND 1996
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                            1997           1996
                                                            ----           ----
<S>                                                    <C>            <C>
Revenues:
   Bowling ..........................................   $ 1,315,642    $ 1,667,808
   Rental ...........................................       247,843        252,144
   Construction .....................................     1,361,485      1,760,704
   Golf .............................................        83,903           --
   Other ............................................        52,688         61,832
   Other-related party ..............................        56,883         55,430
                                                        -----------    -----------
                                                          3,118,444      3,797,918
                                                        -----------    -----------
Costs and expenses:
   Bowling ..........................................       998,294      1,257,608
   Rental ...........................................       121,363        118,963
   Construction .....................................     1,211,739      1,559,825
   Golf .............................................       258,018           --
   Development ......................................        73,698         67,459
   Selling, general, and administrative .............     1,632,389        972,653
   Depreciation and amortization ....................       271,671        339,725
                                                        -----------    -----------
                                                          4,567,172      4,316,233
                                                        -----------    -----------

Loss from operations ................................    (1,448,728)      (518,315)
                                                        -----------    -----------

Other income (charges):
   Investment income:
     Related party ..................................       123,803        113,831
     Other ..........................................        34,006         65,815
   Interest expense related to development activities      (110,922)      (137,312)
   Interest expense and amortization of finance costs      (242,352)      (247,019)
   Equity in income of investees ....................       178,500        127,447
   Gain on sale, other ..............................          --           55,000
   Gain on sale of bowling centers ..................          --        1,099,514
                                                        -----------    -----------
                                                            (16,965)     1,077,276
                                                        -----------    -----------

Net income (loss) ...................................    (1,465,693)       558,961
                                                        ===========    ===========

Per common share (based on weighted average shares outstanding):
   Net income (loss)                                       ($0.05)       $0.02
                                                           ======        =====
</TABLE>












        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, 1997 AND 1996
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                            1997        1996
                                                            ----        ----
<S>                                                    <C>            <C>
Cash flows from operating activities:
  Net income (loss) .................................   ($1,465,693)   $   558,961
  Adjustments to reconcile net income (loss) to the
    net cash provided (used) by operating activities:
      Amortization of deferred financing
        costs and discount ..........................        11,728         16,135
      Depreciation and amortization .................       271,671        339,725
      Undistributed income of investees .............      (178,500)      (127,447)
      Interest income accrued on note
        receivable from shareholder .................      (102,000)       (90,450)
      Interest accrued on assessment
        district obligations ........................       110,922        108,476
      Gain on sale ..................................          --       (1,154,514)
    Changes in assets and liabilities:
      Decrease in receivables .......................       126,159        298,174
     (Increase) decrease in costs in
        excess of billings ..........................        39,445         71,940
      Decrease in inventories .......................       (14,959)          --
      Increase in prepaid expenses ..................      (104,126)       (48,975)
      Increase in accounts payable ..................        99,111       (359,617)
      Decrease in accrued expenses ..................       (14,024)      (350,856)
      Other .........................................         5,962         26,807
                                                        -----------    -----------
        Net cash used by operating activities .......    (1,214,304)      (711,641)
                                                        -----------    -----------

Cash flows from investing activities:
   Increase in notes receivable .....................        66,601        265,289
   Other capital expenditures .......................      (200,151)       (31,185)
   Proceeds from sale of bowling centers ............          --        2,045,891
   Proceeds from sale of other ......................        15,000         10,000
   Other ............................................          --             (648)
   Contributions to investees .......................          --          (30,000)
   Distributions from investees .....................       494,228        380,884
                                                        -----------    -----------
        Net cash provided by investing activities ...       375,678      2,640,231
                                                        -----------    -----------

Cash flows from financing activities:
   Scheduled principal payments .....................      (244,752)      (690,549)
   Proceeds from short term debt ....................       400,000           --
   Other ............................................          --             (750)
                                                        -----------    -----------
        Net cash used by financing activities .......       155,248       (691,299)
                                                        -----------    -----------

Net increase (decrease) in cash and equivalents .....      (683,378)     1,237,291
Cash and cash equivalents, beginning of year ........       821,513      1,093,465
                                                        -----------    -----------
Cash and cash equivalents, end of year ..............   $   138,135    $ 2,330,756
                                                        ===========    ===========
</TABLE>

SUPPLEMENTAL CASH FLOW INFORMATION:
   Supplemental Schedule of Non-Cash Investing and Financing Activities:

     Long-term debt of $45,486 was incurred to finance  capital  expenditures of
          $79,572 in 1997.


        See accompanying notes to consolidated condensed financial statements.

                                       5
<PAGE>

                         SPORTS ARENAS, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                              DECEMBER 31, 1997 AND 1996
                                     (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 changes in cash flow for the interim
      periods.

2.    Due to the seasonal fluctuations of the bowling operations,  the financial
      results for the interim  periods ended December 31, 1997 and 1996, are not
      necessarily indicative of operations for the entire year.

3. Investments:

(a)  Investments consist of the following:
                                                  December 31,     June 30,
                                                      1997           1997
                                                 ------------   ------------
   Accounted for on the equity method:
     Investment in UCV, L.P. ..................  $(10,337,012)  $(10,083,802)

     Vail Ranch Limited Partnership ...........     1,884,965      1,974,193
                                                 ------------   ------------
                                                   (8,452,047)    (8,109,609)
     Less Investment in UCV, L.P. classified
        as liability-
       Distributions received in excess of
        basis in investment ...................    10,337,012     10,083,802
                                                 ------------   ------------
                                                    1,884,965      1,974,193
                                                 ------------   ------------
   Accounted for on the cost basis:
     All Seasons Inns, La Paz .................        37,926         37,926
                                                 ------------   ------------

        Total investments .....................  $  1,922,891   $  2,012,119
                                                 ============   ============

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:

                                         1997      1996
                                       --------  --------
       UCV, L.P. ....................  $178,500  $127,447
       Vail Ranch Limited Partnership      --        --   
                                       --------  --------
                                       $178,500  $127,447
                                       ========  ========

     The following is a summary of distributions received from investees:
                                         1997      1996 
                                       --------  --------
       UCV, L.P. ....................  $405,000  $273,500
       Vail Ranch Limited Partnership    89,228   107,384
                                       --------  --------
                                       $494,228  $380,884
                                       ========  ========

   (b) Investment in UCV, L.P.

     The operating  results of this investment are included in the  accompanying
     consolidated  statements of operations based upon the partnership's  fiscal
     year  (March  31).  Summarized   information  from  UCV,  L.P.'s  unaudited
     statements of income for the six-month periods ended September 30, 1997 and
     1996 are as follows:


                                    1997        1996 
                                 ----------  ----------
     Revenues .................  $2,250,000  $2,160,000
     Operating and general and      744,000     752,000
           administrative costs
     Depreciation .............      95,000      98,000
     Interest expense .........   1,054,000   1,054,000
     Net income ...............     357,000     255,000


                                       6
<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31 1997 AND 1996
                                     (Unaudited)

(c)  Investment in Vail Ranch Limited Partners:

     On January 1, 1998,  Vail Ranch Limited  Partners (VRLP) sold the developed
     portion of the  development  for  $9,500,000  to Excel Realty  Trust,  Inc.
     (Excel).  In addition,  VRLP entered into a joint  venture  agreement  with
     Excel to  develop  the  remaining  13 acres for which  VRLP will  receive a
     $1,000,000  distribution  from the new joint venture upon  execution of the
     joint venture agreement, which is expected in February 1998. VRLP is in the
     process of  determining  the total  distributions  to be made from the sale
     proceeds,   however,   the  Company  received  a  partial  distribution  of
     $1,286,600 in January 1998. VRLP estimates that the Company will receive an
     additional $700,000 in February when the final distributions from the sales
     proceeds are calculated.

4. Contingencies:

(a)  Old Vail Partners (OVP), a consolidated  subsidiary and 50 percent owned by
     the  Company,  owns  approximately  33 acres of  undeveloped  land that 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 (made in semiannual  installments)  due related to the
     bonded  debt are  approximately  $144,000  for the 33 acres.  The  payments
     continue through the year 2014 and include interest at approximately  7-3/4
     percent. OVP is delinquent in the payment of property taxes and assessments
     for the last five  years.  The  property  is  currently  subject to default
     judgments to the County of  Riverside,  California  totaling  approximately
     $1,467,976 regarding delinquent  assessment district payments  ($1,024,542)
     and property taxes ($443,434).

     The principal balance of the allocated  portion of the assessment  district
     bonds  ($1,184,362  at December 31, 1997 and  $1,208,224 at June 30, 1997),
     and delinquent  principal,  interest and penalties  ($1,024,542 at December
     31,  1997 and  $889,758 at June 30,  1997) are  classified  as  "Assessment
     district  obligation- in default" in the  consolidated  balance  sheet.  In
     addition,  accrued  property taxes in the balance sheet include $443,434 at
     December  31, 1997 and  $399,140 at June 30,  1997 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 OVP 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 OVP's property from a "commercial" to "professional office" use.
     The property is subject to Assessment District liens that were allocated in
     1989 based on a higher  "commercial"  use.  Since the  Assessment  District
     liens  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.  OVP has
     filed suit against the City of Temecula  claiming that the City's  adoption
     of a general  plan as a means of  effectively  re-zoning  the  property  is
     invalid.  Additionally, OVP is claiming that, if the effective re-zoning is
     valid,  the  action is a taking  and  damaging  of OVP's  property  without
     payment  of  just  compensation.  OVP is  seeking  to  have  the  effective
     re-zoning  invalidated and an unspecified amount of damages. 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
     affect on the Company's financial position.


                                       7
<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31 1997 AND 1996
                                     (Unaudited)

5. Significant Events:

(a)  Short term debt: The Company's  $300,000 line of credit expired on November
     1, 1997 and was not renewed.  In November 1997, the Company  entered into a
     short-term loan agreement with Loma Palisades, Ltd. (Loma), an affiliate of
     the  Company's  partner in UCV,  whereby  Loma will lend the  Company up to
     $800,000.  The loan  bears  interest  at "Wall  Street"  prime  rate plus 1
     percent on the amounts drawn.  Interest is payable  monthly , the principal
     is due  within  30 days  of  demand  and the  agreement  will  expire  upon
     consummation of new financing for UCV. As of December 31, 1997, the Company
     had borrowed $450,000 of which $250,000 was repaid in January 1998.

(b)  Effective  January 1, 1998,  the Company sold its wholly owned  subsidiary,
     Ocean West Builders,  Inc. (OWB), to Michael Assof,  OWB's  president,  for
     approximately  $70,000 cash. The sale price is subject to adjustment  based
     on the profits  realized on jobs in progress  at  December  31,  1997.  The
     following is a summary of the results of OWB's operations for the three and
     six month periods ended December 31, 1997 and 1996:

                              Three Months             Six Months
                              ------------             ----------
                           1997        1996        1997        1996
                           ----        ----        ----        ----
     Revenues .........  601,365   1,093,999    1,361,485    1,760,704
     Construction costs  510,799     986,776    1,211,739    1,559,825
     Selling, general &
      administrative:
        Direct ........   65,986     100,393      123,647      145,111
        Allocated .....   17,000      43,000       44,000       63,000
     Depreciation .....    2,555       1,614        4,193        3,228
     Interest .........      657         397          980          817
     Net income (loss)     4,368     (38,181)     (23,074)     (11,277)

     The following is a summary of the assets and liabilities of OWB included in
     the  consolidated  financial  statements  at June 30, 1997 and December 31,
     1997:

                                              June 30   December 31
                                              -------   -----------
     Cash .................................    84,995     37,471
     Accounts receivable ..................   399,460    309,022
     Costs in excess of billings ..........    17,462    (21,983)
     Prepaid expense ......................    14,277     13,553
     Equipment ............................    35,117     44,041
       Accumulated depreciation ...........   (17,348)    (6,687)
     Accounts payable .....................   325,675    260,446
     Accrued expenses .....................    40,162     29,286
     Note payable .........................    11,052     19,007
     Advances from parent .................   134,829     68,829
     Accumulated deficit ..................    22,245     (2,151)

     The Company  will  continue to provide  administrative  services to OWB and
     receive a fee based on an allocation of its corporate overhead.


                                       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 $1,334,304 at
December 31, 1997, which is a $1,111,690 increase from the similarly  calculated
working  capital  deficit of  $222,614  at June 30,  1997.  The  increase in the
working capital deficit is attributable to the cash used by operating activities
for the six months ended  December 31, 1997.  The following is a schedule of the
cash provided  (used)  before  changes in assets and  liabilities  segregated by
business segments:

                                      1997         1996       Change
                                   ----------   ----------   ----------
     Bowling ....................    (209,000)    (207,000)      (2,000)
     Rental .....................      84,000       82,000        2,000
     Construction ...............     (19,000)      (8,000)     (11,000)
     Golf .......................    (981,000)        --       (981,000)
     Development ................     (78,000)    (100,000)      22,000
     General corporate expense
       and other ................    (149,000)    (116,000)     (33,000)
                                   ----------   ----------   ----------
     Cash provided (used) by
       operations ...............  (1,352,000)    (349,000)  (1,003,000)
     Capital expenditures, net
       of financing .............    (200,000)     (31,000)    (169,000)
     Principal payments on
       long-term  debt ..........    (245,000)    (691,000)     446,000
                                   ----------   ----------   ----------
     Cash used ..................  (1,797,000)  (1,071,000)    (726,000)
                                   ----------   ----------   ----------

     Distributions received
       from  investees ..........     494,000      381,000      113,000
     Proceeds from sale of assets      15,000    2,056,000   (2,041,000)

As  described  in  Note 4 of  the  Notes  to  Consolidated  Condensed  Financial
Statements, Old Vail Partners is delinquent in the payment of special assessment
district  obligations  and property taxes on 33 acres of  undeveloped  land. The
County of  Riverside  has  obtained  judgments  for the  defaults in  assessment
district payments and property taxes. The amount due to cure the judgments as of
December 31, 1997 is $1,467,000.  If the County of Riverside  takes the property
to public sale and the judgments are not satisfied  prior to the sale,  Old Vail
Partners  could lose title to the property and the property would not be subject
to  redemption.  Also  as  described  in  Note 4 of the  Notes  to  Consolidated
Condensed  Financial  Statements,  Old Vail Partners is contesting an attempt by
the City of Temecula to effectively  down-zone the property.  As a result of the
judgments and the attempts to down-zone the property,  the recoverability of the
carrying value of this property is uncertain.

UCV, L.P. (UCV) is currently  evaluating the  feasibility  of  redeveloping  the
apartment project from 542 units to approximately 1,100 units. UCV has commenced
seeking  new  short-term   financing  for  the  property  in  an  amount  up  to
$25,000,000,  which if  obtained  would  provide  sufficient  funds for  funding
redevelopment   planning   costs  over  the  next  18  months  and  for  funding
distributions  to the partners of  approximately  $2,000,000 each. UCV estimates
the annual debt service on the new  financing  will not exceed its current level
of debt service as a result of a reduction in the annual  interest  rate from 10
percent to current rates of approximately 7-1/2 percent.

The Company entered into a short-term  loan agreement with Loma Palisades,  Ltd.
(Loma), an affiliate of the Company's partner in UCV, whereby Loma will lend the
Company up to $800,000. The loan bears interest at "Wall Street" prime rate plus
1 percent on the amounts drawn. Interest is payable monthly and the principal is
due within 30 days of demand and the agreement will expire upon  consummation of
new financing for UCV.

On January 1,  1998,  Vail Ranch  Limited  Partners  (VRLP)  sold the  developed
portion of the development for $9,500,000 to Excel Realty Trust,  Inc.  (Excel).
In addition,  VRLP entered into a joint venture  agreement with Excel to develop
the  remaining 13 acres for which VRLP will  receive a  $1,000,000  distribution
from the new joint venture upon execution of the joint venture agreement,  which
is expected in February 1998.  VRLP is in the process of  determining  the total
distributions to be made from the sale proceeds, however, the Company received a
partial  distribution of $1,286,600 in January 1998. The Company  estimates that
it will receive an additional  $700,000 from the sales  proceeds.  In accordance
with the  partnership  agreement for Old Vail Partners  (OVP),  the Company paid
$400,000 to OVP's limited  partner in February 1998. The limited partner will be
entitled up to an additional $120,000 when the Company receives the remainder of
the distribution from VRLP.

                                       9
<PAGE>

Management estimates negative cash flow of $50,000 to $100,000 for the remaining
two quarters in the year ending June 30, 1998 from  operating  activities  after
adding  estimated  distributions  from  UCV  ($99,000)  and Vail  Ranch  Limited
Partners  ($1,466,000 net of distribution to OVP limited  partner) and deducting
capital  expenditures  and scheduled  principal  payments on long-term  debt and
short-term  debt.  The Company  believes  the cash at December 31, 1997 plus the
proceeds from the short-term  loan and the refinancing of UCV will be sufficient
to fund the cash flow deficit for the remaining year.


                                Results of Operations
                                ---------------------

The following is a summary of the comparison of the results of operations of the
six and three-month periods ended December 31, 1997 to the same period in 1996:
<TABLE>
<CAPTION>
                                   Real       Real                             Unallocated
                                  Estate     Estate     Constr-                   And
                       Bowling  Operation  Development  uction        Golf        Other       Totals
                       -------  ---------  -----------  ------        ----        -----       ------
<S>                 <C>         <C>        <C>        <C>        <C>          <C>         <C>
Six Months Ended
----------------
Revenues ..........    (352,166)   (4,301)      --     (399,219)      83,903   $  (7,691)    (679,474)
Costs .............    (259,314)    2,400      6,239   (348,086)     258,018        --       (340,743)
SG&A-direct .......     (32,039)     --         --      (21,464)     730,004     (16,765)     659,736
SG&A-allocated ....     (41,127)   (5,000)      --      (19,000)      61,000       4,127         --
Depreciation and
  amortization ....    (117,857)    4,763       --          965       37,321       6,754      (68,054)
Interest expense ..     (20,988)     (654)   (26,442)       163       15,901         963      (31,057)
Equity in investees        --      51,053       --         --           --          --         51,053
Gain (loss) on
  disposition .....  (1,154,514)     --         --         --           --          --     (1,154,514)
Segment profit
  (loss) ..........  (1,035,355)   45,243     20,203    (11,797)  (1,018,341)     (2,770)  (2,002,817)
Investment income .                                                                           (21,837)
Net loss ..........                                                                        (2,024,654)

Three Months Ended
------------------
Revenues ..........      17,228    (5,569)      --     (492,634)      33,202       4,517     (443,256)
Costs .............      48,972    (3,709)     2,921   (475,977)     127,933        --       (299,860)
SG&A-direct .......      31,333      --         --      (34,407)     369,252     (13,063)     353,115
SG&A-allocated ....     (14,572)   (4,000)      --      (26,000)      29,000      15,572         --
Depreciation and
  amortization ....     (99,759)    1,303       --          941       20,372       3,850      (73,293)
Interest expense ..     (18,040)     (332)    (9,794)       260        7,726       2,029      (18,151)
Equity in investees        --      21,413       --         --           --          --         21,413
Gain (loss) on
  disposition .....     (55,000)     --         --         --           --          --        (55,000)
Segment profit
  (loss) ..........      14,294    22,582      6,873     42,549     (521,081)     (3,871)    (438,654)
Investment income .                                                                           (47,253)
Net loss ..........                                                                          (485,907)
</TABLE>

BOWLING OPERATIONS:
-------------------
On August 7, 1996, the Company sold its three bowling centers located in Georgia
and then on December 15, 1996, the Company sold the video game  operations  that
were located in the two San Diego bowling  centers.  The Company has no plans to
sell the two remaining bowling centers located in San Diego.


                                       10
<PAGE>

The  following  is a summary of the changes to the  components  of the loss from
operations of the bowling segment during the six and  three-month  periods ended
December 31, 1997 compared to 1996:

                              Georgia      Video    California
                               Bowls       Games      Bowls      Combined
                               -----       -----      -----      --------
     Six Months:
     -----------
     Revenues ............   (332,787)    (25,603)      6,224    (352,166)
     Bowl costs ..........   (253,846)    (16,985)     11,517    (259,314)
     Selling, general & administrative:
       Direct ............    (87,679)       --        55,640     (32,039)
       Allocated .........    (33,296)       --        (7,831)    (41,127)
     Depreciation ........    (18,488)       --       (99,369)   (117,857)
     Interest expense ....    (20,301)     (2,355)      1,668     (20,988)
     Segment profit before
        gain on sale .....     80,823      (6,263)     44,599     119,159

     Three Months:
     -------------
     Revenues ............       (826)    (10,409)     28,463      17,228
     Bowl costs ..........      6,337      (8,381)     51,016      48,972
     Selling, general & administrative:
       Direct ............      3,116        --        28,217      31,333
       Allocated .........       --          --       (14,572)    (14,572)
     Depreciation ........       --          --       (99,759)    (99,759)
     Interest expense ....    (12,790)     (1,193)     (4,057)    (18,040)
     Segment profit before
        gain on sale .....      2,511        (835)     67,618      69,294

The following is a comparison of operations of the two remaining bowling centers
in California:

Although bowling revenues remained relatively flat in the six-month period, they
increased 4% in the  three-month  period due to a 20% increase in revenues  from
open play.  This increase was  partially  offset by a 4% decline in league play.
Revenues from open play for the six-month  period were 10% higher than the prior
year,  but  declines in league  play (4%)  offset  most of this  increase in the
six-month period.

Bowl costs  increased  by $12,000  (1%) and  $51,000  (12%) in the six and three
month periods,  respectively.  The increase in the three-month  period primarily
related to: a $16,000  increase in payroll and $28,000 of pin purchases and lane
maintenance that occurred in a different quarter in 1996

Selling,  general and  administrative  expense  directly  related to the bowling
segment  increased by $56,000 (21%) and $28,000 (21%) in the six and three month
periods  respectively.  The  increases  are  primarily  related to  increases of
$36,000 and  $18,000 in  promotion  expense in the six and three  month  periods
respectively.  The  increase  in the  six-month  period  primarily  relates to a
$17,000 credit  recorded in first quarter of 1996 when the Company  discontinued
its frequent bowler program.  These costs otherwise  increased  primarily due to
the Company hiring a full time outside marketer to serve both bowling centers.

Depreciation expense decreased by $99,000 in the three and six month periods due
to  equipment  and  goodwill  acquired in 1983,  when the bowls were  purchased,
becoming fully depreciated during the periods.

RENTAL OPERATIONS:
------------------
There were no significant changes to the components of the rental segment in the
six and  three-month  periods ended December 31, 1997 except for the $51,053 and
$21,413  increases  in the  equity in income of UCV for the six and three  month
periods,  respectively.  The income of UCV increased  primarily due to a $91,000
and  $40,000   increase  in  revenues  in  the  six  and  three-month   periods,
respectively,  which  were  attributable  to a 2%  increase  in rent rates and a
decrease in the vacancy rate from 2.7% to 1.4%.


                                       11
<PAGE>

CONSTRUCTION OPERATIONS:
------------------------
Construction  revenues  decreased  by  $399,219  and  $492,634  in the  six  and
three-month  periods,  respectively,  because of an  unusually  large  amount of
contracts  completed in the previous year.  Construction costs also decreased by
$348,086 and $475,977 in the six and three-month periods,  respectively,  due to
the  decrease  in  contract  revenues.  Costs as a  percentage  of  construction
revenues  were 89% in the six-month  periods ended in 1997 and 1996.  Costs as a
percentage of construction revenues decreased from 90% to 85% in the three-month
periods  ended in 1997 and  1996.  Selling,  general  and  administrative  costs
related to the construction  segment decreased by $21,000 and $34,000 in the six
and  three-month  periods ended in 1997 primarily  related to reduced  incentive
compensation.

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.  Interest  expense  related  to  development  activities
primarily  relates to interest  accrued on the past due and  current  assessment
district  obligations of Old Vail Partners.  This interest expense  decreased by
$26,390 and 9,668 in the six and three-month periods,  respectively,  due to the
payment of a $340,000 note payable in April 1997.

GOLF OPERATIONS:
----------------
Sales during the six and  three-month  periods ended December 31, 1997 continued
to be  insignificant  because the Company has not yet developed  sales with golf
club manufacturers or distributors.  The Company expects that it will be another
three to six months before the Company is able to develop sales with these types
of customers.  Sales during the six and three-month  periods were principally to
custom golf shops.  The  following is a breakdown of the  character of the costs
associated with the golf operation:
                                    Six      Three
                                   Months    Months
                                   ------    ------
     Costs  of goods  sold &
        manufacturing  overhead   151,000    56,000
     Research & development ...   106,000    71,000
                                  -------   -------
         Total golf costs .....   257,000   127,000
                                  -------   -------
     Marketing & promotion ....   505,000   260,000
     Administrative-direct ....   225,000   109,000
                                  -------   -------
         Total SG&A-direct ....   730,000   369,000
                                  -------   -------
     Allocated corporate costs     61,000    29,000


                                       12
<PAGE>

                                       PART II
                                  OTHER INFORMATION



ITEM 1. Legal Proceedings

As of December 31, 1997,  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, 1997.


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, 1997 the Company held its annual  shareholder  meeting in which
the following item was voted upon:

                              Tabulation of Votes
                       -----------------------------------
                          For         Against      Abstain
                       --------       -------      -------
Election of Directors:
----------------------
Harold S. Elkan ...   22,932,896      105,399      105,054
Steven R. Whitman .   22,932,296      105,699      105,354
Patrick D. Reiley .   22,932,496      105,574      105,279
James E. Crowley ..   22,932,496      105,599      105,254
Robert A. MacNamara   22,932,496      105,574      105,279


ITEM 5. Other Information

          NONE


ITEM 6. Exhibits & Reports on Form 8-K

     (a) Exhibits: NONE

     (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:   February 17, 1998
           -------------------------




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



           Date: February 17, 1998
           -----------------------





                                       14
<PAGE>