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, 1998
                                       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 October 31, 1998 was 27,250,000 shares.


<PAGE>


                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                        QUARTER ENDED SEPTEMBER 30, 1998

                                      INDEX






Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Balance Sheets as of September 30, 1998 and June 30, 1998.........   1-2

      Statements of Operations for the Three Months Ended 
        September 30, 1998 and 1997.....................................    3

      Statements of Cash Flows for the Three Months Ended
        September 30, 1998 and 1997.....................................    4

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


Item 2.- Management's Discussion and Analysis of Financial Condition
            and Results of Operations.................................... 7-10



Part II - Other Information..............................................  11


Signature................................................................  12



<PAGE>


                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS


                                                      September      June 30,
                                                       30, 1998        1998
                                                     -----------    -----------
                                                     (Unaudited)

Current assets:
   Cash and cash equivalents .....................   $ 1,017,835    $ 1,416,460
   Current portion of notes receivable ...........         6,129         12,105
   Current portion of notes receivable-affiliate .        50,000         50,000
   Other receivables .............................       160,143        166,427
   Inventories ...................................       335,150        302,595
   Prepaid expenses ..............................       276,415        246,135
                                                     -----------    -----------
      Total current assets .......................     1,845,672      2,193,722
                                                     -----------    -----------

Receivables due after one year:
   Note receivable- Affiliate ....................       544,607        523,408
   Note receivable- Other ........................         6,129         12,105
                                                     -----------    -----------
                                                         550,736        535,513
   Less current portion ..........................       (56,129)       (62,105)
                                                     -----------    -----------
                                                         494,607        473,408
                                                     -----------    -----------
Property and equipment, at cost:
   Land ..........................................       678,000        678,000
   Buildings .....................................     2,461,327      2,461,327
   Equipment and leasehold and tenant improvements     2,011,205      1,997,192
                                                     -----------    -----------
                                                       5,150,532      5,136,519
   Less accumulated depreciation and amortization     (1,731,342)    (1,654,521)
                                                     -----------    -----------
       Net property and equipment ................     3,419,190      3,481,998
                                                     -----------    -----------

Other assets:
   Undeveloped land, at cost .....................     1,665,643      1,665,643
   Intangible assets, net ........................       301,956        315,015
   Investments ...................................       624,327      1,209,944
   Other .........................................       107,650        108,923
                                                     -----------    -----------
                                                       2,699,576      3,299,525
                                                     -----------    -----------

                                                     $ 8,459,045    $ 9,448,653
                                                     ===========    ===========





                                       1
<PAGE>


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

                      LIABILITIES AND SHAREHOLDERS' DEFICIT


                                                       September     June 30,
                                                        30, 1998       1998
                                                     -----------    -----------
                                                     (Unaudited)

Current liabilities:
   Assessment district obligation-in default .....   $ 2,377,576    $ 2,319,826
   Current portion of long-term debt .............       342,000        347,000
   Accounts payable ..............................       649,747        577,847
   Accrued payroll and related expenses ..........        85,269        108,497
   Accrued property taxes, in default ............       510,530        487,728
   Accrued interest ..............................        26,699         28,581
   Other liabilities .............................       132,310        143,631
                                                     -----------    -----------
      Total current liabilities ..................     4,124,131      4,013,110
                                                     -----------    -----------

Long-term debt, excluding current portion ........     3,234,792      3,287,783
                                                     -----------    -----------

Distributions received in excess
  of basis in investment .........................    12,364,268     12,280,101
                                                     -----------    -----------

Tenant security deposits .........................        25,023         25,951
                                                     -----------    -----------

Minority interest in consolidated subsidiary .....     1,762,677      1,762,677
                                                     -----------    -----------

Commitments and contingencies (Note 4)

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 ...........................   (12,812,078)   (11,736,312)
                                                     -----------    -----------
                                                     (10,809,529)    (9,733,763)
   Less note receivable from shareholder .........    (2,242,317)    (2,187,206)
                                                     -----------    -----------
     Total shareholders' deficit .................   (13,051,846)   (11,920,969)
                                                     -----------    -----------

                                                     $ 8,459,045    $ 9,448,653
                                                     ===========    ===========









        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, 1998 AND 1997
                                  (Unaudited)

                                                          1998           1997
                                                     -----------    -----------
Revenues:
  Bowling ........................................   $   641,070    $   621,104
  Rental .........................................       137,229        125,679
  Golf ...........................................        73,833         50,701
  Other ..........................................        53,246         27,821
  Other-related party ............................        29,077         28,599
                                                     -----------    -----------
                                                         934,455        853,904
                                                     -----------    -----------
Costs and expenses:
  Bowling ........................................       526,225        498,460
  Rental .........................................        64,471         60,805
  Golf ...........................................       275,020        130,085
  Development ....................................        41,261         32,928
  Selling, general, and administrative ...........       953,174        743,136
  Depreciation and amortization ..................        93,434        182,925
                                                     -----------    -----------
                                                       1,953,585      1,648,339
                                                     -----------    -----------

Loss from operations .............................    (1,019,130)      (794,435)
                                                     -----------    -----------

Other income (charges):
  Investment income:
    Related party ................................        65,716         61,973
    Other ........................................        11,885         33,323
  Interest expense:
   Development activities ........................       (57,750)       (51,898)
   Other and amortization of finance costs .......       (90,675)      (120,855)
  Equity in income of investees ..................        14,188         92,471
                                                     -----------    -----------
                                                         (56,636)        15,014
                                                     -----------    -----------

Loss from continuing operations ..................    (1,075,766)      (779,421)

Loss from discontinued operations ................          --          (27,442)
                                                     -----------    -----------

Net loss .........................................   $(1,075,766)   $  (806,863)
                                                     ===========    ===========

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



        See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>


                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)

                                                         1998           1997
                                                     -----------    -----------
Cash flows from operating activities:
  Net loss .......................................   ($1,075,766)   ($  806,863)
  Adjustments to reconcile net loss to the net
    cash provided (used) by operating activities:
      Amortization of deferred financing costs ...         5,839          5,865
      Depreciation and amortization ..............        93,434        184,563
      Equity in income of investees ..............       (14,188)       (92,471)
      Interest income accrued on note receivable
       from shareholder ..........................       (55,111)       (51,000)
      Interest accrued on assessment district
       obligations ...............................        57,750         51,898
    Changes in assets and liabilities:
      Decrease in receivables ....................         6,284         26,741
      (Increase) decrease in inventories .........       (32,555)         6,970
      Increase in prepaid expenses ...............       (30,280)       (62,176)
      Decrease in assets of discontinued
       operation .................................          --          109,991
      Increase in accounts payable ...............        71,900        125,756
      Decrease in accrued expenses ...............       (13,629)       (40,047)
      Decrease in liabilities of discontinued
       operation .................................          --           34,970
      Other ......................................         4,307            685
                                                     -----------    -----------
        Net cash used by operating activities ....      (982,015)      (505,118)
                                                     -----------    -----------

Cash flows from investing activities:
   Increase in notes receivable ..................       (15,223)        (6,459)
   Capital expenditures ..........................       (14,013)       (98,131)
   Distributions from investees ..................       670,617        185,000
                                                     -----------    -----------
        Net cash provided by investing activities        641,381         80,410
                                                     -----------    -----------

Cash flows from financing activities-
   Scheduled principal payments on long-term debt        (57,991)      (117,182)
                                                     -----------    -----------

Net decrease in cash and cash equivalents ........      (398,625)      (541,890)
Cash and cash equivalents, beginning of year .....     1,416,460        821,513
                                                     ===========    ===========
Cash and cash equivalents, end of year ...........   $ 1,017,835    $   279,623
                                                     ===========    ===========











        See accompanying notes to consolidated condensed financial statements.



                                       4
<PAGE>



                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                     SEPTEMBER 30, 1998 AND 1997(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 September 30, 1998 and 1997, are not
      necessarily indicative of operations for the entire year.

3. Investments:

   (a) Investments consist of the following:
                                                    September     June 30,
                                                     30, 1998       1998
                                                   ----------    ----------
        Vail Ranch Limited
          Partnership (equity method).............    586,401     1,172,018
        All Seasons Inns, La Paz (cost basis).....     37,926        37,926
                                                   ----------    ----------
           Total                                    $ 624,327    $1,209,944
                                                   ==========    ==========

       Investment in UCV, L.P. classified as
         liability- Distributions received
         in excess of basis in investment         $12,364,268   $12,280,101
                                                  ===========   ===========

     The  following  is a  summary  of  the  equity  in  income  (loss)  of  the
     investments accounted for by the equity method:
                                             1998       1997
                                           --------    -------
          UCV, L.P. ....................   $ 24,188    $92,471
          Vail Ranch Limited Partnership    (10,000)      --   
                                           --------    -------
                                           $ 14,188    $92,471
                                           ========    =======

     The following is a summary of distributions received from investees:
                                             1998      1997 
                                           --------   -------

          UCV, L.P. ....................   $ 95,000   $185,000
          Vail Ranch Limited Partnership    575,617      --
                                           --------   --------
                                           $670,617   $185,000
                                           ========   ========

   (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  unaudited  statements of income for the  three-month  periods ended
     June 30, 1998 and 1997 are as follows:


                                                   1998         1997 
                                                ----------   ----------
          Revenues ..........................   $1,134,000   $1,117,000
          Operating and general and .........      343,000      360,000
            administrative costs
          Depreciation ......................        7,000       48,000
          Interest expense ..................      534,000      524,000
          Write off of unamortized loan costs      197,000         --
          Net income ........................       53,000      185,000



                                       5
<PAGE>


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 six  years.  The  property  is  currently  subject  to default
     judgments to the County of  Riverside,  California  totaling  approximately
     $1,727,606 regarding delinquent  assessment district payments  ($1,217,076)
     and property taxes ($510,530).

     The principal balance of the allocated  portion of the assessment  district
     bonds  ($1,160,500 at September 30, 1998 and June 30, 1998), and delinquent
     principal,  interest and  penalties  ($1,217,076  at September 30, 1998 and
     $1,159,326  at June  30,  1998)  are  classified  as  "Assessment  district
     obligation- in default" in the  consolidated  condensed  balance sheet.  In
     addition,  accrued  property taxes in the  consolidated  condensed  balance
     sheet include  $510,530 at September 30, 1998 and $487,728 at June 30, 1998
     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. A stipulation
     was entered that dismissed  this suit without  prejudice and agreed to toll
     all applicable  statute of  limitations  while OVP and the City of Temecula
     attempted  to  informally  resolve  this  litigation.  The outcome of
     this litigation is uncertain.  If the City of Temecula is successful in its
     attempt  to  down-zone  the  property,  the  value of the  property  may be
     significantly impaired.

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

5. Comprehensive  Income- On July 1,  1998,  the  company  adopted  Statement of
     Financial  Accounting  Standards ("SFAS") No. 130, Reporting  Comprehensive
     Income.  SFAS No. 130 requires the  reporting  of  comprehensive  income in
     addition to net income.  Comprehensive income is a more inclusive financial
     reporting   methodology  that  includes  disclosure  of  certain  financial
     information that historically has not been recognized in the calculation on
     net income.  The adoption of this  statement  did not have an effect on the
     consolidated condensed financial statements.

6.   Reclassifications-  Certain  reclassifications  have been made to the prior
     year financial statements to conform to the classifications used in 1998.

                                       6
<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 working  capital of $609,647 at September
30, 1998,  which is a $378,519  decrease from the similarly  calculated  working
capital of  $988,166  at June 30,  1998.  The  decrease  in  working  capital is
primarily  attributable  to the cash used by operating  activities for the three
months  ended  September  30,  1998.  The  following  is a schedule  of the cash
provided (used) before changes in assets and liabilities, segregated by business
segments:

                                         1998           1997         Change
                                     -----------    -----------    -----------
     Bowling .....................   $  (156,000)   $  (153,000)   $    (3,000)
     Rental ......................        51,000         43,000          8,000
     Golf ........................      (780,000)      (480,000)      (300,000)
     Development .................       (43,000)       (35,000)        (8,000)
     General corporate expense and
       other .....................       (60,000)       (57,000)        (3,000)
                                     -----------    -----------    -----------
     Cash used by continuing
       operations ................      (988,000)      (682,000)      (306,000)
     Discontinued operations .....          --          (28,000)        28,000
     Capital expenditures, net of
       financing .................       (14,000)       (98,000)        84,000
     Principal payments on
       long-term debt ............       (58,000)      (117,000)        59,000
                                     -----------    -----------    -----------
     Cash used ...................    (1,060,000)      (925,000)      (135,000)
                                     ===========    ===========    ===========

     Distributions received from
       investees .................       670,000        185,000        485,000
                                     ===========    ===========    ===========

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
September 30, 1998 is $1,728,000.  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.  Management does
not expect the  redevelopment  planning  process to affect the  distributions to
partners from operating  activities because $500,000 of the refinancing proceeds
(May 1998) were allocated for the planning costs.

Old Vail  Partners  received a  $576,000  distribution  from Vail Ranch  Limited
Partnership  in  August  1998 as its  share  of the  distribution  from  the new
partnership with an affiliate of Excel Realty. It is unlikely that there will be
significant  distributions in the future until the remaining undeveloped land in
the new partnership is developed and sold.

Management  estimates  negative cash flow of  $1,200,000  to $1,500,000  for the
remaining  quarters of the year ending June 30, 1999 from  operating  activities
after adding estimated  distributions  from UCV ($115,000) and deducting capital
expenditures and scheduled  principal payments on long-term debt.  Management is
currently  evaluating  other  sources of working  capital from  refinancing  its
office  building  or the  sale  of  undeveloped  land  in  Temecula  to  provide
sufficient funds for this cash flow deficit.

                              YEAR 2000 COMPLIANCE
                              --------------------
The Company has a program to  identify,  evaluate and  implement  changes to its
computer  systems as  necessary  to address the Year 2000 issue.  The program is
broken  down  into  three  separate  categories:   computer  systems,   embedded
technologies, and third party relationships.

                                       7
<PAGE>

   Computer systems- This category consists  primarily of the Company's software
     and hardware for its  accounting  system.  The Company is in the process of
     evaluating its existing desktop computers and software systems.  Based upon
     an initial evaluation as well as representations  from some of the software
     suppliers,  the management's best estimate is that, other than software and
     equipment upgrades made in the normal course of business, it will not incur
     any significant expenses to become fully Year 2000 compliant.

   Embedded  Technologies-  This  category  includes  company  owned  or  leased
     equipment with microprocessors or microcontrollers.  This type of equipment
     principally  consists of phone equipment,  automatic  scorekeepers and cash
     registers at the bowling centers,  and manufacturing  equipment at the golf
     shaft   manufacturer.   Based  upon  an  initial   evaluation  as  well  as
     representations from some of the equipment suppliers, the management's best
     estimate is that, other than acquiring a software upgrade for the automatic
     scorekeeping equipment, the price of which has not yet been determined,  it
     will  not  incur  any  significant  expenses  to  become  fully  Year  2000
     compliant.

   Third Party Relationships- This category includes critical relationships with
     vendors  such as  graphite  manufacturers  in the golf shaft  segment,  and
     providers  of local  utilities  (water and  electricity).  The Company will
     implement a program of initiating discussions with these types of suppliers
     in the beginning of calendar year 1999.  There can be no guarantee that the
     systems of other  companies that support the Company's  operations  will be
     timely converted or that a failure by these companies to correct their Year
     2000 problems would not have a material  adverse effect on the Company.  At
     the present time, the Company does not have a contingency  plan in place in
     the  event  of a Year  2000  failure  at one of the  Company's  significant
     suppliers.  However,  the Company plans to create a contingency plan in the
     calendar year 1999.

If the steps taken by the Company and its vendors to be Year 2000  compliant are
not successful,  the Company could experience various operational  difficulties.
These could include, among other things, processing transactions to an incorrect
accounting  period,  difficulties in posting general ledger interfaces and lapse
of certain  services by vendors to the  Company's  operations.  If the Company's
plan to install new systems which effectively address the Year 2000 issue is not
successfully  or  timely  implemented,  the  Company  may  need to  devote  more
resources  to the  process and  additional  costs may be  incurred.  The Company
believes  that the Year  2000  issue is  being  appropriately  addressed  by the
Company and its critical vendors and does not expect the Year 2000 issue to have
a material  adverse impact on the financial  position,  results of operations or
cash  flows of the  Company in future  periods.  However,  should the  remaining
review  of the  Company's  Year  2000  risks  reveal  potentially  non-compliant
computer systems or material third parties,  contingency plans will be developed
at that time.

              "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.



                                       8
<PAGE>




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

The  following is a summary of the changes in the results of  operations  of the
three-month period ended September 30, 1998 to the same period in 1997:
<TABLE>
<CAPTION>
                                                                   Real              
                                                    Rental        Estate                 Unallocated
                                       Bowling     Operation    Development    Golf       And Other      Totals
                                       -------     ---------    -----------  ---------    ---------    ---------
<S>                                   <C>          <C>          <C>          <C>          <C>          <C>      
Revenues ..........................   $  19,966    $  12,126    $    --      $  23,132    $  25,903    $  81,127
Costs .............................      27,765        3,666        8,333      144,935         --        184,699
SG&A-direct .......................       4,812         --           --        163,705       15,097      183,614
SG&A-allocated ....................       5,170        1,000         --         16,000        4,830       27,000
Depreciation and   
  amortization.....................     (95,681)         627         --          4,519        1,044      (89,491)
Interest expense ..................     (17,533)        (359)       5,753       (1,867)     (10,322)     (24,328)
Equity in investees ...............        --        (68,283)     (10,000)        --           --        (78,283)
Segment profit (loss) .............      95,433      (61,091)     (24,086)    (304,160)      15,254     (278,650
Investment income .................                                                                      (17,695)
Net loss from continuing operations                                                                     (296,345)
</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 $592.

BOWLING OPERATIONS:
-------------------
The 3% increase in bowling  revenues was  attributable to a combination of small
increase in revenue  from open bowling and snack bar  revenues.  Declines in the
number of games  bowled (5%) have been offset with price  increases in open play
(12%).  The results of the quarter ended  September 30 typically  relate only to
the summer league season. However,  management feels that there will continue to
be a decline in league bowling but that this is likely to be offset by increases
in open play and the price per game of open play.

Bowl costs increased by 5% primarily due to pin purchases ($16,000) in 1998 that
occurred during a different time period in 1997.

Depreciation expense decreased by $95,681 due to equipment and goodwill acquired
in 1983 (when the bowls were purchased) becoming fully depreciated and amortized
in the year ended June 30, 1998.

Interest  expense  related  to the  bowling  segment  decreased  because  of the
extinguishment  of all bowl  related  financing  during  the year ended June 30,
1998.

RENTAL OPERATIONS:
------------------
There were no significant changes to the components of the rental segment in the
three-month  period ended September 30, 1998 except for the $68,283  decrease in
the equity in income of UCV.  The  income of UCV  decreased  primarily  due to a
$197,401 write-off of unamortized loan fees in May 1998 related to a refinancing
of long-term  debt.  This increase in UCV's  expense was  partially  offset by a
$41,000  reduction  in  UCV's  depreciation   expense,   which  relates  to  the
acquisition cost of the building  becoming fully  depreciated in the prior year.
Rental revenues and operating expenses of UCV remained relatively flat.



                                       9
<PAGE>




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.

GOLF OPERATIONS:
----------------
Sales during the  three-month  period ended  September 30, 1998  continued to be
insignificant  because the Company  has not yet  generated  sales with golf club
manufacturers or distributors.  The Company expects that it will be at least six
to nine months before the Company is able to generate  sales with these types of
customers.  Sales during the three-month periods were principally to custom golf
shops.  The  following  is a  breakdown  of the costs  associated  with the golf
operation:

                                             1998      1997
                                            -------   -------
     Costs of goods sold ................   $35,000   $10,000
     Underutilized manufacturing overhead   198,000    85,000
     Research & development .............    42,000    35,000
                                            -------   -------
          Total golf costs ..............   275,000   130,000
                                            -------   -------
     Marketing & promotion ..............   489,000   245,000
     Administrative-direct ..............    35,000   115,000
                                            -------   -------
          Total SG&A-direct .............   524,000   360,000
                                            -------   -------
     Allocated corporate costs ..........    48,000    32,000
                                            -------   -------




                                       10
<PAGE>




                                     PART II
                                OTHER INFORMATION



ITEM 1. Legal Proceedings

        As of  September  30, 1998,  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, 1998.


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: NONE

     (b) Reports on Form 8-K:  NONE





                                       11
<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 13, 1998
            -------------------



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



     Date: November 13, 1998
          -------------------



                                       12
<PAGE>