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, 2002

                                 OR

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

       For the transition period from __________________ to ______________


                          Commission File Number 0-2380

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


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


             7415 Carroll Road, Suite C, San Diego, California 92121
             -------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (858) 408-0364




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

The number of shares  outstanding  of the  issuer's  only class of common  stock
($.01 par value) as of January 31, 2003 was 27,250,000 shares.

<PAGE>


                               SPORTS ARENAS, INC.

                                    FORM 10-Q

                         QUARTER ENDED DECEMBER 31, 2002

                                      INDEX



Part I - Financial Information:


Item 1.- Consolidated Condensed Financial Statements:

      Unaudited Balance Sheets as of December 31, 2002
             and June 30, 2002 ........................................   1-2

      Unaudited Statements of Operations for the Three Months Ended
             December 31, 2002 and 2001 ...............................    3

      Unaudited Statements of Operations for the Six Months Ended
             December 31, 2002 and 2001 ...............................    4

      Unaudited Statements of Cash Flows for the Six Months Ended
             December 31, 2002 and 2001 ...............................    5

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


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

Item 3.- Quantitative and Qualitative Disclosures about Market Risk ...    13

Item 4.- Controls and Procedures .....................................     13

Part II - Other Information...........................................     14

Signatures............................................................     15

Officer Certifications ...............................................    16-17



<PAGE>

                      SPORTS ARENAS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS

                                     ASSETS
                                  (Unaudited)

                                                    December 31,   June 30,
                                                         2002         2002
                                                     -----------  -----------


Current assets:
   Cash and cash equivalents ........................$     8,632  $    39,345
   Receivables ......................................    330,375      444,996
   Inventories ......................................    729,805      792,690
   Prepaid expenses .................................     87,942       38,706
                                                     -----------  -----------
      Total current assets ..........................  1,156,754    1,315,737
                                                     -----------  -----------

Receivables due after one year:
   Note receivable- affiliate, net ..................       --           --
                                                     -----------  -----------

Property and equipment, at cost:
   Equipment and leasehold improvements .............  2,349,716    2,345,406
      Less accumulated depreciation and amortization  (1,419,608)  (1,314,680)
                                                     -----------  -----------
       Net property and equipment ...................    930,108    1,030,726
                                                     -----------  -----------

Other assets:
   Intangible assets, net ...........................     18,642       37,284
   Investments ......................................    423,657      423,657
   Other ............................................     95,999       95,999
                                                     -----------  -----------
                                                         538,298      556,940
                                                     -----------  -----------

                                                     $ 2,625,160  $ 2,903,403
                                                     ===========  ===========







                                       1
<PAGE>


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

                      LIABILITIES AND SHAREHOLDERS' DEFICIT
                                  (Unaudited)


                                                    December 31,   June 30,
                                                         2002         2002
                                                     -----------  -----------

Current liabilities:
   Notes payable-short term .........................$   725,631  $   445,000
   Current portion of long-term debt ................      7,000        8,000
   Accounts payable .................................  1,152,645      963,402
   Accrued payroll and related expenses .............    264,498      215,093
   Accrued interest .................................     40,730      276,735
   Other liabilities ................................     98,722       92,803
                                                     -----------  -----------
      Total current liabilities .....................  2,289,226    2,001,033
                                                     -----------  -----------

Long-term debt, excluding current portion ...........      2,277        5,456
                                                     -----------  -----------

Distributions received in excess of basis
  in investment ..................................... 18,374,342   18,008,401
                                                     -----------  -----------

Other liabilities ...................................    216,000      192,000
                                                     -----------  -----------

Minority interest in consolidated subsidiary ........    802,677      802,677
                                                     -----------  -----------


Shareholders' deficit:
   Common stock, $.01 par value, 50,000,000
     shares authorized, 27,250,000 shares
     issued and outstanding .........................    272,500      272,500
   Additional paid-in capital .......................  1,730,049    1,730,049
   Accumulated deficit ..............................(18,770,419) (17,817,221)
                                                     -----------  -----------
                                                     (16,767,870) (15,814,672)
   Less note receivable from shareholder ............ (2,291,492)  (2,291,492)
                                                     -----------  -----------

     Total shareholders' deficit ....................(19,059,362) (18,106,164)
                                                     -----------  -----------

Commitments and contingencies (Note 4)

                                                     $ 2,625,160  $ 2,903,403
                                                     ===========  ===========









     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, 2002 AND 2001
                                  (Unaudited)

                                                          2002        2001
                                                      ----------- -----------
Revenues:
   Bowling                                            $  394,945  $  445,947
   Rental                                                 22,311      58,539
   Golf                                                  496,677     343,276
   Other                                                 114,224     117,636
   Other-related party                                    48,645      46,315
                                                      ----------- -----------
                                                       1,076,802   1,011,713
                                                      ----------- -----------
Costs and expenses:
   Bowling                                               332,799     319,376
   Rental                                                 18,700      57,207
   Golf                                                  498,880     407,133
   Selling, general, and administrative                  612,840     656,374
   Depreciation and amortization                          65,819      71,189
   Impairment loss on deferred lease costs                  --        41,915
                                                      ----------- -----------
                                                       1,529,038   1,553,194
                                                      ----------- -----------

Loss from operations                                    (452,236)   (541,481)
                                                      ----------- -----------

Other income (charges):
   Investment income-related party                         7,214       9,457
   Interest expense                                      (11,874)    (23,103)
   Equity in income of investees                          31,194       5,020
                                                      ----------- -----------
                                                          26,534      (8,626)
                                                      ----------- -----------

Net income (loss)                                     $ (425,702) $ (550,107)
                                                      =========== ===========


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








     See accompanying notes to consolidated condensed financial statements.


                                       3
<PAGE>

                     SPORTS ARENAS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                  SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001
                                  (Unaudited)

                                                          2002          2001
                                                      -----------   ----------
Revenues:
   Bowling                                            $  752,548    $  829,768
   Rental                                                 40,287       117,398
   Golf                                                1,131,751       787,499
   Other                                                 156,052       155,775
   Other-related party                                    96,869        92,384
                                                      -----------   ----------
                                                       2,177,507     1,982,824
                                                      -----------   ----------
Costs and expenses:
   Bowling                                               675,564       666,295
   Rental                                                 37,400       115,917
   Golf                                                1,145,141       906,202
   Selling, general, and administrative                1,189,593     1,309,137
   Depreciation and amortization                         131,638       142,852
   Impairment loss on deferred lease costs                  --          41,915
                                                      -----------   ----------
                                                       3,179,336     3,182,318
                                                      -----------   ----------

Loss from operations                                  (1,001,829)   (1,199,494)
                                                      -----------   ----------

Other income (charges):
   Investment income:
     Related party                                        16,284        16,228
     Other                                                  --           1,807
   Interest expense                                      (45,522)      (48,085)
   Equity in income (loss) of investees                   77,869       (28,281)
                                                      -----------   ----------
                                                          48,631       (58,331)
                                                      -----------   ----------


Net income (loss)                                    $  (953,198)  $(1,257,825)
                                                      ===========   ==========


Basic and diluted net income (loss) per
  common share (based on 27,250,000 weighted
  average common shares outstanding)                    $(0.03)       $(0.05)
                                                        =======       =======



     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, 2002 AND 2001
                                  (Unaudited)

                                                          2001          2001
                                                      ------------   -----------
Cash flows from operating activities:
  Net income (loss)                                   $  (953,198)  $(1,257,825)
  Adjustments to reconcile net income (loss) to
    the net cash used by operating activities:
      Depreciation and amortization                       131,638       142,852
      Equity in (income) loss of investees                (77,869)       28,281
      Deferred income                                      24,000        24,000
      Impairment loss on deferred lease costs                --          41,915

    Changes in assets and liabilities:
      Decrease in receivables                             114,621       145,446
      Decrease in inventories                              62,885        63,407
     (Increase) decrease in prepaid expenses              (49,236)      (25,734)
      Increase (decrease) in accounts payable             189,243       (40,889)
      Increase in accrued expenses                         99,950       105,546
      Other                                                18,642        18,642
                                                       -----------   -----------
        Net cash used by operating activities            (439,324)     (754,359)
                                                       -----------   -----------

Cash flows from investing activities:
   Capital expenditures                                    (4,310)         --
   Distribution to holder of minority interest               --         (25,000)
   Distributions from investees                           417,100       150,820
                                                       -----------   -----------
    Net cash provided by investing activities             412,790       125,820
                                                       -----------   -----------

Cash flows from financing activities:
   Scheduled principal payments on long-term debt          (4,179)      (19,221)
   Proceeds from short-term notes payable                    --         150,000
                                                       -----------   -----------
    Net cash provided by (used) financing activities       (4,179)      130,779
                                                       -----------   -----------

Net increase (decrease) in cash and cash equivalents      (30,713)     (497,760)
Cash and cash equivalents, beginning of year               39,345       515,204
                                                       -----------   -----------
Cash and cash equivalents, end of year                 $    8,632    $   17,444
                                                       ===========   ===========

Supplemental Disclosure of Non-Cash Financing Activities:
  Reclassification of principal payments on short-term
    debt to accrued interest ........................  $  280,631    $      --
                                                       ===========   ===========

     See accompanying notes to consolidated condensed financial statements.


                                       5
<PAGE>
                      SPORTS ARENAS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001
                                   (Unaudited)

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

     Revenue recognition:
     The Company recognizes  revenue when persuasive  evidence of an arrangement
     exists,  delivery has  occurred,  the amount is fixed or  determinable  and
     collectibility  is probable.  All of these  conditions are typically met at
     the time the Company ships products to its customers.

2. Due to  the  seasonal  fluctuations  of  the  bowling  and  golf  club  shaft
   manufacturing operations, the financial results for the interim periods ended
   December 31, 2002 and 2001, are not necessarily  indicative of operations for
   the entire year.

3. Investments:
   (a) Investments consist of the following:
                                                     December 31,   June 30,
                                                         2002         2002
                                                     -----------  -----------
     Vail Ranch Limited Partnership
       (equity method) ..............................$   423,657  $   423,657
                                                     ===========  ===========
     Investment in UCV, L.P. classified
      as liability- Distributions received
      in excess of basis in investment ..............$18,374,342  $18,008,401
                                                     ===========  ===========

      The  following  is a  summary  of  the  equity  in  income  (loss)  of the
      investments  accounted for by the equity method for the six-month  periods
      ended December 31:
                                           2002         2001
                                         --------    --------
        UCV, L.P. ....................   $ 77,869    $ 44,719
        Vail Ranch Limited Partnership       --       (73,000)
                                         --------    --------
                                         $ 77,869    $(28,281)
                                         ========    ========

     The following is a summary of distributions received from investees for the
     six-month periods ended December 31,:
                                           2002        2001
                                         --------    --------
        UCV, L.P. ....................   $417,100    $150,820
        Vail Ranch Limited Partnership       --          --
                                         --------    --------
                                         $417,100    $150,820
                                         ========    ========

   (b) Investment in UCV, L.P.

      The operating  results of this investment are included in the accompanying
      consolidated   condensed   statements   of   operations   based  upon  the
      partnership's  fiscal year (March 31).  Summarized  information  from UCV,
      L.P.'s (UCV)  unaudited  statements of income for the six and  three-month
      periods ended September 30, 2001 and 2000 are as follows:
                                        Six Months            Three Months
                                 ---------------------- ---------------------
                                     2002       2001       2002        2001
                                 ----------  ---------- ---------- ----------
        Revenues                 $2,818,000  $2,683,000 $1,442,000 $1,354,000
        Operating and general
          and administrative
          costs                     978,000     841,000    517,000    423,000
        Depreciation                  6,000       7,000      3,000      4,000
        Interest expense          1,678,000   1,745,000    842,000    877,000
        Net income                  156,000      90,000     80,000     50,000

      As disclosed in the annual  financial  statements  for the year ended June
      30,  2002,  the  Company  performs  management  services  and  development
      services  for UCV  pursuant to separate  agreements  with UCV. The Company
      believes that the terms of these  agreements  are no less favorable to the
      Company or UCV than could be obtained with an independent third party.

                                       6
<PAGE>

4. Contingencies

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

5. Impact of Adopting SFAS No. 142, Goodwill and Other Intangible Assets

     The  Company  does  not  have  goodwill  or  intangible  assets  that  have
     indefinite useful lives recorded on the accompanying consolidated condensed
     balance  sheets.  The Company only  maintains  intangible  assets that have
     finite useful lives which are amortized over their useful lives.

6. Liquidity

     The  accompanying  consolidated  condensed  financial  statements have been
     prepared assuming the Company will continue as a going concern. The Company
     has suffered  recurring losses,  has a working capital  deficiency,  and is
     forecasting  negative  cash flows for the next twelve  months.  These items
     raise  substantial doubt about the Company's ability to continue as a going
     concern.  The Company's ability to continue as a going concern is dependent
     on either  refinancing  or selling  certain real estate  assets,  obtaining
     additional investors in its subsidiary,  Penley Sports, or increases in the
     sales  volume  of  Penley  Sports.  The  consolidated  condensed  financial
     statements  do  not  contain  adjustments,  if  any,  including  diminished
     recovery  of  asset  carrying   amounts,   that  could  arise  from  forced
     dispositions and other insolvency costs.

7. Business segment information

     The  Company  operates  principally  in  four  business  segments:  bowling
     centers,  commercial real estate rental, real estate development,  and golf
     club  shaft  manufacturing.  Other  revenues,  which  are  not  part  of an
     identified  segment,  consist of property  management and development  fees
     (earned from both a property 50 percent owned by the Company and a property
     in which the Company has no ownership) and commercial brokerage.



                                       7
<PAGE>


<TABLE>
<CAPTION>
                                                  Real Estate   Real Estate                   Unallocated
                                      Bowling        Rental     Development        Golf        And Other       Totals
                                   ------------   ------------  ------------   ------------   ------------   ------------
SIX MONTHS ENDED DECEMBER 31, 2002:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   752,548    $    40,287   $      --       $ 1,131,751    $   252,921    $ 2,177,507
Depreciation and amortization...        12,198         26,710          --            83,514          9,216        131,638
Interest expense ...............          --             --            --              --           45,522         45,522
Equity in income (loss)
  of investees .................          --           77,869          --              --             --           77,869
Impairment loss ................          --             --            --              --             --             --
Segment profit (loss) ..........      (108,269)        54,046          --          (797,913)      (117,346)      (969,482)
Investment income ..............                                                                                   16,284
Net loss.. .....................                                                                                 (953,198)
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31, 2001:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   829,768    $   117,398   $      --       $   787,499    $   248,159    $ 1,982,824
Depreciation and amortization...         4,980         27,184          --            85,548         25,140        142,852
Interest expense ...............          --            1,662          --              --           46,423         48,085
Equity in income (loss)
  of investees .................          --           44,719       (73,000)           --             --          (28,281)
Impairment loss ................          --           41,915          --              --             --           41,915
Segment profit (loss) ..........       (14,386)       (24,561)      (77,000)       (975,581)      (184,332)    (1,275,860)
Investment income ..............                                                                                   18,035
Net loss.. .....................                                                                               (1,257,825)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 2002:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   394,945    $    22,311   $      --      $   496,677    $   162,869    $ 1,076,802
Depreciation and amortization...         6,099         13,355          --           41,757          4,608         65,819
Interest expense ...............          --             --            --             --           11,874         11,874
Equity in income (loss)
  of investees .................          --           40,194       (9,000)           --             --           31,194
Impairment loss.................          --             --            --             --             --             --
Segment profit (loss) ..........       (33,747)        30,450       (9,000)       (426,041)         5,422       (432,916)
Investment income ..............                                                                                   7,214
Net loss........................                                                                                (425,702)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 2001:
--------------------------------------
<S>                                <C>            <C>           <C>            <C>            <C>            <C>
Revenues .......................   $   445,947    $    58,539   $      --      $   343,276    $   163,951    $ 1,011,713
Depreciation and amortization...         2,490         13,355          --           42,774         12,570         71,189
Interest expense ...............          --            1,662          --             --           21,441         23,103
Equity in income (loss)
  of investees .................          --           25,020       (20,000)          --             --            5,020
Impairment loss.................          --           41,915          --             --             --           41,915
Segment profit (loss) ..........        39,187        (30,580)      (19,000)      (510,327)       (38,844)      (559,564)
Investment income ..............                                                                                   9,457
Net loss........................                                                                                (550,107)
</TABLE>




                                       8
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS:
The independent  auditors'  report dated September 23, 2002 included in our June
30,  2002  Annual  Report  on Form  10-K  contained  the  following  explanatory
paragraph:

     The  accompanying  consolidated  financial  statements  have been  prepared
     assuming that the Company will continue as a going concern. As discussed in
     Note 14 to the consolidated financial statements,  the Company has suffered
     recurring  losses,  has a  working  capital  deficiency  and  shareholders'
     deficit,  and is forecasting  negative cash flows from operating activities
     for the next twelve months.  These items raise  substantial doubt about the
     Company's  ability to continue as a going  concern.  Management's  plans in
     regard to these  matters are also  described  in Note 14. The  consolidated
     financial  statements do not include any adjustments that might result from
     the outcome of this uncertainty.

Management estimates negative cash flow of $200,000 to $400,000 in total for the
remaining  two  quarters  of the  year  ending  June  30,  2003  from  operating
activities after deducting capital  expenditures and principal payments on notes
payable and adding estimated distributions from UCV.

The  short-term  loan from the  Company's  partner in UCV is due on demand.  The
Company is exploring selling its partner a portion of the Company's  interest in
UCV in satisfaction of the remaining loan obligations.  At this point management
is unable to assess the likelihood a transaction will be consummated.

Vail Ranch Limited Partners is negotiating the sale of its partnership  interest
in Temecula Creek Partners to its other partner in Temecula  Creek.  The Company
estimates  that its share of the  proceeds  from  this sale to be  approximately
$550,0000 to $650,000. The Company is obligated to pay approximately one-half of
these proceeds to its minority partner.

Management  expects  continuing  cash flow deficits until Penley Sports develops
sufficient  sales  volume  to  become  profitable.  Although,  there  can  be no
assurances  that  Penley  Sports  will  ever  achieve   profitable   operations,
management  estimates that a combination of continued  increases in the sales of
Penley Sports and reduction of its operating  costs will result in Penley Sports
and the Company achieving a breakeven level of operations at the end of the next
two quarters.

Management is currently  evaluating  other sources of working capital  including
the  sale  of  assets  or  obtaining  additional  investors  in  Penley  Sports.
Management  has not assessed the likelihood of any other sources of long-term or
short-term  liquidity.  If the  Company is not  successful  in  obtaining  other
sources of working  capital  this  could have a material  adverse  effect on the
Company's ability to continue as a going concern.  However,  management believes
it will be able to meet its financial obligations for the next twelve months.

The Company has a working  capital  deficit of  $1,132,472 at December 30, 2002,
which is a $447,176  increase  from the working  capital  deficit of $685,296 at
June 30, 2002. The increase in working capital deficit is primarily attributable
to the cash used by operating  activities  for the six months ended December 31,
2002. The following is a schedule of the cash provided  (used) before changes in
assets and liabilities, segregated by business segments:

                                      2002          2001        Change
                                  ----------    ----------    ----------
    Bowling ...................   $  (96,000)   $   (9,000)   $  (87,000)
    Rental ....................        3,000          --           3,000
    Golf ......................     (715,000)     (891,000)      176,000
    Development ...............         --          (4,000)        4,000
    General corporate expense
      and other ...............      (68,000)     (117,000)       49,000
                                  ----------    ----------    ----------
    Cash used by continuing
      operations ..............     (876,000)   (1,021,000)      145,000
    Capital expenditures, net
      of financing ............       (4,000)         --          (4,000)
    Principal payments on
      long-term debt ..........       (4,000)      (19,000)       15,000
                                  ----------    ----------    ----------
    Cash used .................     (884,000)   (1,040,000)      156,000
                                  ==========    ==========    ==========
    Distributions received from
      investees ...............      417,000       151,000       266,000
                                  ==========    ==========    ==========



                                       9
<PAGE>
                          CRITICAL ACCOUNTING POLICIES
                          ----------------------------
In  response to the SEC's  release No.  33-8040,  "Cautionary  Advice  Regarding
Disclosure About Critical Accounting  Policies",  the Company has identified its
most  critical  accounting  policy as that related to the carrying  value of its
long-lived  assets.  Any event or circumstance  that indicates to the Company an
impairment  of the fair  value of any asset is  recorded  in the period in which
such event or  circumstance  becomes known to the Company.  During the three and
six month periods ended December 31, 2002 no such event or circumstance occurred
that  would,  in the  opinion  of  management,  signify  the need for a material
reduction in the carrying value of any of the Company's assets.
                          NEW ACCOUNTING PRONOUNCEMENTS
                          -----------------------------

In June of 2002, the FASB issued SFAS No. 146;  Accounting for Costs  Associated
with Exit or Disposal  Activities.  SFAS No. 146 addresses financial  accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies   Emerging  Issues  Task  Force  (EITF)  Issue   No. 94-3,   Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including Certain Costs Incurred in a Restructuring).  The provisions
of this  statement  are  effective  for  exit or  disposal  activities  that are
initiated  after  December 31, 2002,  with early  application  encouraged.  This
statement will only have an effect on the Company's financial  statements to the
extent future exit or disposal activities relevant to SFAS No. 146 occur.

In October 2002, the FASB issued SFAS No. 147; Acquisitions of Certain Financial
Institutions.  This  Statement is not relevant to the Companys  operations  and
will not have an impact on the Company's financial statements.

In December  2002,  the FASB issued SFAS No.  148;  Accounting  for  Stock-Based
Compensation-  Transition and  Disclosure.  This statement  amends SFAS No. 123;
Accounting  for  Stock-Based  Compensation,  to provide  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.  This statement is effective for financial  statements for fiscal years
ending  after  December  15,  2002.  The  Company  does  not  have   stock-based
compensation  and  this  statement  will not  currently  have an  impact  on the
Company's financial statements.

In December  2002,  the FASB issued  Financial  Interpretation  No. 45 (FIN 45);
Guarantor's  Accounting and Disclosure  Requirements  for Guarantees,  Including
Indirect  Guarantees of  Indebtedness of Others.  FIN 45 requires  guarantors to
determine and  recognize the fair value of a guarantee at the issuance  date. In
addition,  FIN  45  contains  detailed  disclosure  requirements.   The  initial
recognition and measurement provisions of FIN 45 are applicable on a prospective
basis  to  guarantees  issued  or  modified  after  December  31,  2002  and the
disclosure  requirements  are effective  for financial  statements of interim or
annual  periods  ending after  December 15, 2002. The Company does not guarantee
debt of others  and does not  expect  FIN 45 to have an impact on the  Company's
financial statements.

In January  2003,  the FASB  issued  Financial  Interpretation  No. 46 (FIN 46);
Consolidation of Variable  Interest Entities (VIE). The FASB has transformed its
exposure   draft  on  accounting   for  special   purpose   entities  into  this
interpretation  on variable interest  entities.  FIN 46 provides new guidance on
consolidation of controlled entities,  irrespective of voting interests. Most of
the requirements  under FIN 46 are effective for new VIE's created after January
30, 2003. The Company is still in the process of determining  the accounting and
financial statement impact of FIN 46.


              "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.

                                       10
<Page>
                              Results of Operations
                              ---------------------
The  following is a summary of the changes in the results of  operations  of the
six and three-month periods ended December 31, 2002 compared to the same period
in 2001 and a discussion of the significant changes:
<TABLE>
<CAPTION>
                                  SIX MONTHS ENDED DECEMBER 31, 2002 VERSUS 2001
                                  ----------------------------------------------
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ----------   ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $ (77,220)  $   (77,111)  $     --     $  344,252   $   4,762    $  194,683
 Costs ..........................       9,269       (78,517)        --        238,939        --         169,691
 SG&A-direct ....................        (684)         --           --        (76,321)    (42,539)     (119,544)
 SG&A-allocated .................         860          --         (4,000)       6,000      (2,860)         --
 Depreciation and amortization ..       7,218          (474)        --         (2,034)    (15,924)      (11,214)
 Impairment loss ................        --         (41,915)        --           --          --         (41,915)
 Interest expense ...............        --          (1,662)        --           --          (901)       (2,563)
 Equity in investees ............        --          33,150       73,000         --           --        106,150
 Segment profit (loss) ..........     (93,883)       78,607       77,000      177,668      66,986       306,378
 Investment income ..............                                                                        (1,751)
 Income from operations ..........                                                                      304,627
</TABLE>
<TABLE>
<CAPTION>
                                THREE MONTHS ENDED DECEMBER 31, 2002 VERSUS 2001
                                ------------------------------------------------
                                                   Rental    Real Estate               Unallocated
                                      Bowling     Operation  Development     Golf       And Other     Totals
                                     ---------    ---------   ---------    ---------    ---------    ---------
<S>                                 <C>        <C>           <C>          <C>          <C>          <C>
 Revenues .......................   $ (51,002)  $  (36,228)   $    --      $ 153,401   $   (1,082)   $    65,089
 Costs ..........................      13,423      (38,507)        --         91,747         --           66,663
 SG&A-direct ....................       2,831         --           --        (26,615)     (19,750)       (43,534)
 SG&A-allocated .................       2,069         --          1,000        5,000       (8,069)           --
 Depreciation and amortization ..       3,609         --           --         (1,017)      (7,962)        (5,370)
 Impairment loss ................        --        (41,915)        --           --           --          (41,915)
 Interest expense ...............        --         (1,662)        --           --         (9,567)       (11,229)
 Equity in investees ............        --         15,174       11,000         --           --           26,174
 Gain on sale ...................        --           --           --           --           --             --
 Segment profit (loss) ..........     (72,934)      61,030       10,000       84,286       44,266        126,648
 Investment income ..............                                                                         (2,243)
 Income from operations .........                                                                        124,405
</TABLE>

BOWLING OPERATIONS:
-------------------
Bowl  revenues  decreased  by 9% and  11% in the six and  three  month  periods,
respectively, primarily due related declines in the number of games bowled. Both
open play and  league  play  decreased  by the same  percentages.  There were no
material  changes in bowl costs or  selling,  general and  administrative  costs
related to the bowling center.

RENTAL OPERATIONS:
------------------
This  segment  includes  the  equity in income  of the  operation  of a 542 unit
apartment   project  (UCV),  a  subleasehold   interest  in  land  underlying  a
condominium  project  (PS  Sublease)  (which  was sold in March  2002),  and the
sublease of a portion of the Penley  factory.  The following is a summary of the
changes in operations:
<TABLE>
<CAPTION>
                         Six Month Period                 Three Month Period
                  -----------------------------       ------------------------------
                  PS Sublease     Other    Combined    PS Sublease  Other     Combined
                  -----------    -------  ----------   ----------  -------  ----------
<S>               <C>           <C>      <C>          <C>         <C>      <C>
 Revenues             (82,598)     5,487     (77,111)     (41,139)   4,911     (36,228)
 Costs                (79,917)     1,400     (78,517)     (39,207)     700     (38,507)
 SG&A-allocated          --         --          --           --       --          --
 Depreciation and
  amortization           (474)      --          (474)        --       --          --
 Impairment loss      (41,915)      --       (41,915)     (41,915)    --       (41,915)
 Interest expense      (1,662)      --        (1,662)      (1,662)    --        (1,662)
 Equity in income
    of UCV               --       33,150      33,150         --     15,174      15,174
 Segment profit
  (loss)               41,370     37,237      78,607       41,645   19,385      61,030
</TABLE>

                                       11
<Page>
The primary  reason for the decline in rental  revenues and costs related to the
sale of the PS Sublease in March 2002.

The  equity in  income  of UCV  increased  in the six and  three  month  periods
primarily  due to decreases in interest  expense  related to the lower  interest
rate obtained in the refincing in March 2002. Rental revenues  increased in each
period  primarily  due to an 6%  increase  in the  average  rental rate for each
period, which was partially offset by increases in the vacancy rate from 1.2% to
2.1% for the six  month  period  and from  1.07% to 1.32%  for the  three  month
period.  Costs increased in each period  primarily due to increases in insurance
costs and maintenance and repairs.  The following is a summary of the changes in
the  operations of UCV, LP in the six and three months  periods of 2001 compared
to the prior period:
                                   Six Months  Three Months
                                   ----------  ------------
     Revenues                      $ 135,000      $ 88,000
     Costs                           137,000        94,000
     Depreciation                     (1,000)      ( 1,000)
     Interest and  amortization
      of loan costs                  (67,000)      (35,000)
     Net income                       66,000        30,000

REAL ESTATE DEVELOPMENT OPERATIONS:
----------------------------------
The  increase  in the equity in income of Vail Ranch  Limited  Partners  (VRLP),
relates  to the  increase  in the income  from the  operation  of the  partially
completed shopping center for which the first store commenced operations in July
2000 and is now reaching a level of stabilzed operations after being leased up.

GOLF OPERATIONS:
----------------
Golf  revenues  increased  in 2002 due to  increases in sales to small golf club
manufacturers and golf equipment  distributors.  The following is a breakdown of
the percentage of increases in sales by customer category:
                                     Six       Three
                                    Months     Months
                                     ----       ----
     Golf equipment distributors .    133%      158%
     Golf club manufacturers .....    102%       63%
     Golf shops ..................   ( 14%)    ( 13%)
     Other .......................   ( 46%)     348%


Operating expenses of the golf segment consisted of the following in 2002
and 2001:

                                       Six Months            Three Months
                                 ---------------------  --------------------
                                    2002        2001       2002       2001
                                 ----------  ---------  ---------  ---------
     Costs of goods sold and
        manufacturing overhead   $1,048,000  $ 792,000  $ 450,000  $ 352,000
     Research & development          97,000    114,000     49,000     55,000
                                 ----------  ---------  ---------  ---------
         Total golf costs         1,145,000    906,000    499,000    407,000
                                 ==========  =========  =========  =========
     Marketing & promotion          442,000    581,000    264,000    315,000
     Administrative-direct          135,000     72,000     56,000     32,000
                                 ----------  ---------  ---------  ---------
          Total SG&A-direct         577,000    653,000    320,000    347,000
                                 ==========  =========  =========  =========
     Allocated corporate costs      124,000    118,000     62,000     57,000
                                 ==========  =========  =========  =========

Total golf costs  increased in 2002  primarily due to the cost of goods sold and
other  manufacturing  overhead  (primarily  payroll)  associated  with increased
sales.  Marketing and promotion expenses decreased  primarily due to the Company
not renewing the contract with its marketing  consultant in May 2002.  Marketing
and promotion otherwise decreased due to a decrease in the tour program expenses
that  resulted  from  staffing  the  program  with one  person  instead  of two.
Administrative expenses increased primarily due to increases in bad debt expense
of $45,000 and $22,000 in the six and three month periods, respectively.

                                       12
<Page>

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

The Company is exposed to market risk primarily due to  fluctuations in interest
rates.  The  Company  utilizes  both fixed  rate and  variable  rate  debt.  The
following  table  presents  principal  maturities and related  weighted  average
interest rates of the Company's  long-term fixed rate and variable rate debt for
the fiscal years ended June 30.

                           2003       2004       Total       Fair Value
                       ----------   -------    ----------    ----------
                                                                 (1)
Fixed rate debt ..     $    6,000   $ 3,000    $    9,000    $    9,000
Weighted average
   interest rate .         13.6%      13.6%        13.6%

Variable rate debt     $  726,000      --      $  726,000    $  726,000
Weighted average
   interest rate .          5.3%        --          5.3%

The amounts for 2003 relate to the six months ending June 30, 2003.

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

The variable rate debt  includes a $726,000  short term note payable that is due
on demand,  which for  purposes of this  calculation  has been treated as though
paid during the year ending June 30, 2003.

The Company's unconsolidated subsidiary, UCV, has two notes payable which mature
April 1, 2003 as a result of a  refinancing  in March  2002.  The first  loan is
variable rate debt of $36,000,000 for which the interest rate was 5.4 percent as
of December  31, 2002.  However,  there is a floor of 5.4%  established  by the
lender and a cap  purchased  by UCV which  effectively  caps the maximum rate on
this loan at 7%. The scheduled  principal payments for UCV's fiscal years ending
March  31 2003  is  $36,000,000.  The  estimated  fair  value  of  this  debt is
$36,000,000  based on the  current  rates  offered  for this  type of loan  with
similar risks and  maturities.  The second loan of $2,000,000 is fixed rate debt
at 12.5%. The scheduled  principal  payments for UCV's fiscal years ending March
31 2003 is $2,000,000. The estimated fair value of this debt is $2,000,000 based
on the  current  rates  offered  for this  type of loan with  similar  risks and
maturities.

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

ITEM 4. CONTROLS AND PROCEDURES
-------------------------------
We  maintain  disclosure  controls  and  procedures  (as  defined in  Securities
Exchange Act 1934 Rules 13a-14(c) and 15d-4(c)) that are designed to ensure that
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer,  as appropriate,  to allow timely decisions
regarding  required  disclosure.  In designing  and  evaluating  the  disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated,  can provide only reasonable assurance
of achieving the desired  control  objectives,  and management  necessarily  was
required to apply its judgment in evaluating the  cost-benefit  relationship  of
possible controls and procedures,

Within 90 days prior to the date of this  quarterly  report,  we carried  out an
evaluation,  under the  supervision  and with the  participation  of management,
including  our Chief  Executive  Officer  and Chief  Financial  Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  Based on the  foregoing,  our  Chief  Executive  Officer  and Chief
Financial  Officer  concluded that our disclosure  controls and procedures  were
effective.

Changes in Internal Controls:

There have not been any significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation. There were no significant deficiencies or material weaknesses,
and therefore no corrective actions were taken.

                                       13
<PAGE>



                                     PART II
                                OTHER INFORMATION



ITEM 1. Legal Proceedings
-------------------------
        As of December 31, 2002, 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, 2002.


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, 2002 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          23,668,148       0        48,761
            Steven R. Whitman        23,692,091       0        24,818
            Patrick D. Reiley        23,690,893       0        26,016
            James E. Crowley         23,692,643       0        24,266
            Robert A. MacNamara      23,690,643       0        26,266


ITEM 5. Other Information
-------------------------
          NONE


ITEM 6. Exhibits & Reports on Form 8-K
--------------------------------------
     (a) Exhibits: NONE

     (b) Reports on Form 8-K:  NONE






                                       14
<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 12, 2003
             -----------------



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



     Date: February 12, 2003
           -----------------




                                       15
<PAGE>

                                 CERTIFICATIONS

I, Harold S. Elkan, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Sports Arenas, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  or not there  were any  significant  changes in
     internal  controls  or in other  factors  that could  significantly  affect
     internal  controls  subsequent  to the date of our most recent  evaluation,
     including any corrective  actions with regard to  significant  deficiencies
     and material weaknesses.

Date: February 12, 2003     By:/s/ Harold S. Elkan
      -----------------        ---------------------
                                   Harold S. Elkan
                                    President and Chief Executive Officer

                                       16
<PAGE>


I, Steven R. Whitman, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Sports Arenas, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  or not there  were any  significant  changes in
     internal  controls  or in other  factors  that could  significantly  affect
     internal  controls  subsequent  to the date of our most recent  evaluation,
     including any corrective  actions with regard to  significant  deficiencies
     and material weaknesses.

Date: February 12, 2003         By:/s/ Steven R. Whitman
                                   ---------------------
                                       Steven R. Whitman
                                        Chief Financial Officer


                                       17