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

                                   FORM 10-QSB

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

For the quarterly period  ended    JUNE 30, 1998
                               -------------------------------------------------

                                       OR

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

For the transaction period from                       to
                               -------------------------------------------------

Commission File Number   0 - 23136
                      ------------


                         COUNTRY STAR RESTAURANTS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         DELAWARE                                               62-1536550
--------------------------------------------------------------------------------
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                           Identification No.)


           4929 WILSHIRE BOULEVARD, SUITE # 428, LOS ANGELES, CA 90010
--------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (323) 634-5588
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
--------------------------------------------------------------------------------
              (Former name, former address, and former fiscal year,
                         if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 of common stock outstanding as of August 1, 1998: 9,004,293

<PAGE>

                         COUNTRY STAR RESTAURANTS, INC.


                                      INDEX


                                                                            Page
                                                                            ----


PART I      -       Financial Information

         Item 1.    Financial Statements

                    Condensed Balance Sheet at
                      June 30, 1998 (unaudited)...........................   3

                    Condensed Statements of Operations
                      for the Quarter Ended June 30, 1998
                      and June 30, 1997  (unaudited)......................   4

                    Condensed Statements of Operations
                      for the Six Months Ended June 30, 1998
                      and June 30, 1997  (unaudited)......................   5

                    Condensed Statements of Cash Flows
                      for the Quarter Ended June 30, 1998
                      and June 30, 1997  (unaudited)......................   6

                    Condensed Statements of Cash Flows
                      for the Six Months Ended June 30, 1998
                      and June 30, 1997  (unaudited)......................   7

                    Notes to Condensed Financial Statements
                      (unaudited).........................................   8


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

PART II      -      Other Information

         Item 2.    Changes in Securities.................................  14
         Item 6.    Exhibits and Reports on Form 8-K......................  15

SIGNATURES               .................................................  16

                                       2
<PAGE>

                         COUNTRY STAR RESTAURANTS, INC.
                             Condensed Balance Sheet
                                  June 30, 1998
                                   (Unaudited)

                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                        $      8,810
  Inventories                                                           167,461
  Prepaid expenses                                                       78,389
  Other                                                                 140,247
                                                                   ------------

    TOTAL CURRENT ASSETS                                                394,907
                                                                   ------------

PROPERTY AND EQUIPMENT AT COST, NET OF ACCUMULATED
  DEPRECIATION AND AMORTIZATION OF $1,004,959:
  Leasehold improvements                                              3,316,875
  Furniture and equipment                                             1,262,797
  Memorabilia                                                           318,648
                                                                   ------------

    TOTAL PROPERTY AND EQUIPMENT                                      4,898,320
                                                                   ------------

OTHER                                                                   260,427
                                                                   ------------

                                                                   $  5,553,654
                                                                   ============

                            LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Line of credit                                                   $  2,152,000
  Accounts payable                                                      506,618
  Accrued legal settlements                                             332,000
  Accrued salaries                                                      140,000
  Other accrued expenses                                                238,989
                                                                   ------------

    TOTAL CURRENT LIABILITIES                                         3,369,607
                                                                   ------------


STOCKHOLDERS' EQUITY:
  PREFERRED STOCK, $0.001 par value, 2,000,000 shares authorized,
    no shares issued and outstanding                                         --
  COMMON STOCK,  $0.01 par value, 250,000,000 shares authorized,
    9,004,293 shares issued and outstanding                              90,043
  ADDITIONAL PAID-IN CAPITAL                                         47,820,427
  ACCUMULATED DEFICIT                                               (45,726,423)
                                                                   ------------

    NET STOCKHOLDERS' EQUITY                                          2,184,047
                                                                   ------------

                                                                   $  5,553,654
                                                                   ============

   The accompanying notes are an integral part of these financial statements.

                                        3
<PAGE>


<TABLE>
<CAPTION>
                         COUNTRY STAR RESTAURANTS, INC.

                       Condensed Statments of Operations
                                  (Unaudited)

                                                                   FOR THE QUARTER ENDED JUNE 30,
                                                                   ------------------------------
                                                                       1998              1997
                                                                    -----------       -----------
<S>                                                                 <C>               <C>        
REVENUES:
  Food and beverage                                                 $ 1,103,129       $ 1,571,927
  Merchandise                                                            41,787           159,474
                                                                    -----------       -----------

                                                                      1,144,916         1,731,401
                                                                    -----------       -----------
COST AND EXPENSES:
  Cost of revenues:
    Food and beverage                                                   326,272           451,662
    Merchandise                                                          25,196           134,047
  Labor                                                                 477,203           655,210
  Rent                                                                  163,997           753,434
  Other restaurant operating                                            216,636           238,681
  Selling, general and administrative                                   448,057           813,090
  Depreciation and amortization                                         146,699           386,011
                                                                    -----------       -----------

                                                                      1,804,060         3,432,135
                                                                    -----------       -----------

LOSS FROM OPERATIONS                                                   (659,144)       (1,700,734)
                                                                    -----------       -----------

OTHER INCOME (EXPENSE):
  Interest income                                                            --             1,609
  Interest expense                                                      (64,492)         (128,225)
  Embedded interest expense                                            (100,500)         (992,064)
                                                                    -----------       -----------

                                                                       (164,992)       (1,118,680)
                                                                    -----------       -----------

LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM                   (824,136)       (2,819,414)

MINORITY INTEREST                                                            --           322,280
                                                                    -----------       -----------

LOSS BEFORE EXTRAORDINARY ITEM                                         (824,136)       (2,497,134)

EXTRAORDINARY ITEM - SETTLEMENT OF NOTES PAYABLE, NET OF  0 TAXES            --         1,325,986
                                                                    -----------       -----------

NET LOSS                                                            $  (824,136)      $(1,171,148)
                                                                    ===========       ===========

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
  Loss before extraordinary item                                    $     (0.09)      $     (1.43)
  Extraordinary item                                                         --              0.76
                                                                    -----------       -----------

  Net loss per common share                                         $     (0.09)      $     (0.67)
                                                                    ===========       ===========


BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING                                          9,004,293         1,752,408
                                                                    ===========       ===========

            The accompanying notes are an integral part of these financial statements.

                                                4
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                    COUNTRY STAR RESTAURANTS, INC.

                                  Condensed Statments of Operations
                                             (Unaudited)

                                                                    FOR THE SIX MONTHS ENDED JUNE 30,
                                                                    ---------------------------------
                                                                       1998                  1997
                                                                    -----------           -----------
<S>                                                                 <C>                   <C>        
REVENUES:
  Food and beverage                                                 $ 1,950,680           $ 3,599,544
  Merchandise                                                            83,497               396,332
                                                                    -----------           -----------

                                                                      2,034,177             3,995,876
                                                                    -----------           -----------
COST AND EXPENSES:
  Cost of revenues:
    Food and beverage                                                   619,804             1,182,275
    Merchandise                                                          64,688               323,868
  Labor                                                                 930,802             1,595,354
  Rent                                                                  245,626             1,429,608
  Other restaurant operating                                            403,700               714,755
  Selling, general and administrative                                   995,839             2,241,939
  Depreciation and amortization                                         295,047               771,533
                                                                    -----------           -----------

                                                                      3,555,506             8,259,332
                                                                    -----------           -----------

LOSS FROM OPERATIONS                                                 (1,521,329)           (4,263,456)
                                                                    -----------           -----------

OTHER INCOME (EXPENSE):
  Interest income                                                            --                 4,055
  Interest expense                                                      (95,369)             (198,429)
  Embedded interest expense                                            (313,000)           (2,001,786)
                                                                    -----------           -----------

                                                                       (408,369)           (2,196,160)
                                                                    -----------           -----------

LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM                 (1,929,698)           (6,459,616)

MINORITY INTEREST                                                            --               735,330
                                                                    -----------           -----------

LOSS BEFORE EXTRAORDINARY ITEM                                       (1,929,698)           (5,724,286)

EXTRAORDINARY ITEM - SETTLEMENT OF NOTES PAYABLE, NET OF  0 TAXES     1,527,858             1,353,478
                                                                    -----------           -----------

NET LOSS                                                            $  (401,840)          $(4,370,808)
                                                                    ===========           ===========

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
  Loss before extraordinary item                                    $     (0.22)          $     (3.55)
  Extraordinary item                                                       0.17                  0.84
                                                                    -----------           -----------

  Net loss per common share                                         $     (0.05)          $     (2.71)
                                                                    ===========           ===========


BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING                                          8,750,115             1,612,239
                                                                    ===========           ===========

            The accompanying notes are an integral part of these financial statements.

                                                  5
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                               COUNTRY STAR RESTAURANTS, INC.

                              Condensed Statments of Cash Flows
                                         (Unaudited)


                                                              FOR THE QUARTER ENDED JUNE 30,
                                                             -------------------------------
                                                                1998                1997
                                                             -----------         -----------

<S>                                                          <C>                 <C>         
 NET CASH USED IN OPERATING ACTIVITIES                       $  (538,133)        $(1,727,505)
                                                             -----------         -----------

 NET CASH USED IN INVESTING ACTIVITIES                                --             (10,445)
                                                             -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from line of credit                                   402,000                  --
  Payment of note payable                                             --                  --
  Net proceeds from issuance of common and preferred stock            --           1,983,999
  Capital lease payments                                              --            (504,711)
                                                             -----------         -----------

 NET CASH PROVIDED BY FINANCING ACTIVITIES                       402,000           1,479,288
                                                             -----------         -----------

Net decrease in cash                                            (136,133)           (258,662)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   144,943             425,361
                                                             -----------         -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                     $     8,810         $   166,699
                                                             ===========         ===========


SUPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:

 Common stock issued upon conversion of debt                          --                  --

 Common stock issued upon extinguishment of debt                      --                  --

 Common stock issued upon purchase of leased equipment                --         $   447,462

 Embedded interest relating to convertible debt              $   100,500         $   992,064


         The accompanying notes are an integral part of these financial statements.

                                             6

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                COUNTRY STAR RESTAURANTS, INC.

                               Condensed Statments of Cash Flows
                                          (Unaudited)


                                                             FOR THE SIX MONTHS ENDED JUNE 30,
                                                             ---------------------------------
                                                                1998                  1997
                                                             -----------           -----------
<S>                                                          <C>                   <C>         
 NET CASH USED IN OPERATING ACTIVITIES                       $(1,162,035)          $(2,723,680)
                                                             -----------           -----------

 NET CASH USED IN INVESTING ACTIVITIES                                --               (10,445)
                                                             -----------           -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from line of credit                                 1,252,000               500,000
  Payment of note payable                                     (1,300,000)                   --
  Net proceeds from issuance of common and preferred stock            --             1,991,856
  Capital lease payments                                              --              (540,237)
                                                             -----------           -----------

 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES             (48,000)            1,951,619
                                                             -----------           -----------

Net decrease in cash                                          (1,210,035)             (782,506)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                 1,218,845               949,205
                                                             -----------           -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                     $     8,810           $   166,699
                                                             ===========           ===========


SUPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:

 Common stock issued upon conversion of debt                 $   150,000                    --

 Common stock issued upon extinguishment of debt             $   167,500                    --

 Common stock issued upon purchase of leased equipment                --           $   447,462

 Embedded interest relating to convertible debt              $   313,000           $ 2,001,726

          The accompanying notes are an integral part of these financial statements.

                                               7
</TABLE>
<PAGE>

                         COUNTRY STAR RESTAURANTS, INC.

                     Notes to Condensed Financial Statements
                                   (Unaudited)

NOTE A - BASIS OF PRESENTATION

         The accompanying  unaudited condensed  financial  statements of Country
         Star  Restaurants,  Inc. have been prepared by the Company  pursuant to
         the rules and regulations of the Securities and Exchange Commission.

         The information  furnished herein reflects all adjustments,  consisting
         of only normal  recurring  accruals and  adjustments  which are, in the
         opinion of management,  necessary to fairly state the operating results
         for  the  respective   periods.   Certain   information   and  footnote
         disclosures  normally included in annual financial  statements prepared
         in accordance with generally accepted  accounting  principles have been
         omitted  pursuant  to such  rules  and  regulations.  The  notes to the
         condensed  financial  statements should be read in conjunction with the
         notes  to  the  consolidated  financial  statements  contained  in  the
         Company's  Form 10-KSB for the year ended  December 31,  1997.  Company
         management  believes that the  disclosures  are  sufficient for interim
         financial reporting purposes.


NOTE B - EMBEDDED INTEREST EXPENSE

         Under the terms of line of credit  agreement,  amounts  advanced may be
         converted to common  stock at the lesser of (i) $13.30,  or (ii) 80% of
         the  average  closing  bid  price  of the  common  stock  for the  five
         consecutive trading days preceding the date of conversion. Accordingly,
         the Company records  embedded  interest expense for advances made under
         the line of  credit.  For the three  months  ended June 30,  1998,  the
         Company recorded  $100,500 of net embedded interest expense relating to
         these advances.


NOTE C - EXTRAORDINARY ITEM

         During the six months  ended June 30,  1998,  the  Company  recorded an
         extraordinary  gain  of  $1.53  million  on the  extinguishment  of its
         $2,995,358 note payable to Cameron Capital.

         Under the terms of the  Settlement  Agreement  dated February 18, 1998,
         Cameron  agreed to dismiss  its legal  action  against  the Company and
                                                                     (continued)

                                       8
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

                Notes to Condensed Financial Statements-Continued
                                   (Unaudited)


         to accept as payment in full of its unconverted  debt $1.3 million cash
         and 670  thousand  shares of the  Company's  common stock with a market
         value of $167,500.  Cameron does not have any registration  rights with
         respect to the common stock,  but is eligible to resell certain amounts
         immediately pursuant to the provisions of Rule 144 under the Securities
         Act of 1933.

         The  Company  funded  Cameron's  settlement  with  an  advance  on  the
         Company's  $3.5 million line of credit.  The Company also issued to the
         lender warrants to acquire 43,333 shares of the Company's  common stock
         at an exercise price of $6.25 per share. No value was assigned to these
         warrants.  The  Company has  recorded  $212.5  thousand  as  additional
         paid-in  capital for the discount  related to the embedded  interest in
         the line of credit advances and fully amortized the expense on February
         18, 1998.

                                       9
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997

Revenues.

Total  revenues  decreased to $1.145 million for the three months ended June 30,
1998,  compared with $1.731  million for the three months ended June 30, 1997, a
decrease of $586 thousand or 34%. Same store revenues decreased 26% in Hollywood
and  38% in  Las  Vegas.  The  decreases  were  due  to  the  Company's  limited
advertising  budget and customer  resistance to changes in food  preparation and
presentation.  Steps are being taken which  management  believes  will  increase
sales at each restaurant.

Costs and expenses.

Cost of revenues  decreased  from $586  thousand for the three months ended June
30, 1997 to $351  thousand for the three  months  ended June 30,  1998.  Cost of
revenues as a percentage of revenues  decreased from 34% to 31% primarily due to
the new plans and policies implemented by management.

Operating expenses decreased from $1.647 million for the three months ended June
30,  1997 to $858  thousand  for the three  months  ended  June 30,  1998.  As a
percentage of revenues,  operating  expenses decreased from 95% to 75% primarily
due to the new plans and policies implemented by management.

General and  administrative  expenses decreased from $813 thousand for the three
months  ended June 30, 1997 to 448  thousand for the three months ended June 30,
1998. As a percentage of revenues, general and administrative expenses decreased
from 47% to 39%  primarily  due to the new plans  and  policies  implemented  by
management.

Depreciation and amortization  decreased from $386 thousand for the three months
ended June 30, 1997 to $147  thousand  for the three months ended June 30, 1998,
reflecting the decrease in the number of buildings owned from three to one. As a
percentage of total revenues,  depreciation and amortization  decreased from 22%
to 13%.

Interest  expense  decreased from $1.119  million to $165  thousand,  reflecting
primarily the embedded  interest  expense  associated with the convertible  debt
financing arrangements entered into on February 12, 1997. 
                                                                     (continued)

                                       10
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (continued)


Minority  interest  for the three  months  ended  June 30,  1997  reflected  the
Company's controlling interest of 50.05% in Country Star Las Vegas LLC triggered
by the opening of the Las Vegas  facility in July,  1996.  The Company  sold its
interest in Country Star Las Vegas LLC on December 30, 1997,  and entered into a
new  sublease  agreement  directly  between  the  Company  and a nominee  of the
landlord.  The Company is obligated to pay base rent of 50% of monthly  positive
cash flow.  During the three months ended June 30, 1998,  the Las Vegas location
did not generate  positive  cash flow and,  therefore,  no rental  payments were
made.

LIQUIDITY AND CAPITAL RESOURCES

Net cash  provided by financing  activities  for the three months ended June 30,
1997 and June 30, 1998 were $1.479 million and $402 thousand  respectively,  due
primarily  to the net  proceeds  from  issuance  of  common  stock  in 1997  and
borrowing through the convertible debts in 1998.

Net cash used in operating  activities  for the three months ended June 30, 1997
and June 30, 1998  decreased  from $1.728 million to $538 thousand due primarily
to the settlement with over 300 creditors during the three months ended June 30,
1997.


RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

Revenues.

Total  revenues  decreased  to $2.034  million for the six months ended June 30,
1998,  compared  with $3.996  million for the six months  ended June 30, 1997, a
decrease  of  $1.962  million  or 49%.  Same  store  revenues  decreased  37% in
Hollywood and 50% in Las Vegas. The decreases were due to the Company's  limited
advertising  budget and customer  resistance to changes in food  preparation and
presentation.  Steps are being taken which  management  believes  will  increase
sales at each restaurant. 
                                                                     (continued)

                                       11
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (continued)


Costs and expenses.

Cost of revenues decreased from $1.506 million for the six months ended June 30,
1997 to $684  thousand for the six months ended June 30, 1998.  Cost of revenues
as a percentage of revenues  decreased  from 38% to 34% primarily due to the new
plans and policies implemented by management.

Operating  expenses  decreased from $3.740 million for the six months ended June
30,  1997 to  $1.580  million  for the six  months  ended  June 30,  1998.  As a
percentage of revenues,  operating  expenses decreased from 94% to 78% primarily
due to the new plans and policies implemented by management.

General and  administrative  expenses  decreased from $2.242 million for the six
months  ended June 30, 1997 to 996  thousand  for the six months  ended June 30,
1998. As a percentage of revenues, general and administrative expenses decreased
from 56% to 49%  primarily  due to the new plans  and  policies  implemented  by
management.

Depreciation  and  amortization  decreased from $772 thousand for the six months
ended June 30, 1997 to $295  thousand  for the six months  ended June 30,  1998,
reflecting the decrease in the number of buildings owned from three to one. As a
percentage of total revenues,  depreciation and amortization  decreased from 19%
to 15%.

Interest  expense  decreased from $2.196  million to $408  thousand,  reflecting
primarily the embedded  interest  expense  associated with the convertible  debt
financing arrangements entered into on February 12, 1997.

Minority interest for the six months ended June 30, 1997 reflected the Company's
controlling  interest of 50.05% in Country  Star Las Vegas LLC  triggered by the
opening of the Las Vegas  facility in July,  1996. The Company sold its interest
in Country  Star Las Vegas LLC on December  30,  1997,  and  entered  into a new
sublease  agreement  directly between the Company and a nominee of the landlord.
The Company is obligated to pay base rent of 50% of monthly  positive cash flow.
During  the six months  ended  June 30,  1998,  the Las Vegas  location  did not
generate  positive  cash flow and,  therefore,  no rental  payments  were  made.
                                                                     (continued)

                                       12
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (continued)

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by financing activities for the six months ended June 30, 1997
and used in the six  months  ended June 30,  1998 were  $1.952  million  and $48
thousand respectively, due primarily to the net proceeds from issuance of common
stock and  borrowings in 1997 and  borrowing  and  repayment of the  convertible
debts in 1998.

Net cash used in operating activities for the six months ended June 30, 1997 and
June 30, 1998  decreased  from $2.724 million to $1.162 million due primarily to
the  settlement  with over 300  creditors  during the six months  ended June 30,
1997.

The  Company  will  need  to  raise  additional  capital  before  it can  attain
profitability  from  operations.  Management  believes it can raise this capital
through   private   placements   of  equity  and  the  granting  by  lenders  of
discretionary advances under outstanding lines of credit.


                                       13
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

                                     PART II

                                OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

         On January  31, 1998 the  Company's  Convertible  Debentures  issued in
         October 1997 for $150,000  were  automatically  converted  into 461,538
         common shares in accordance with their terms.


         On February 12, 1998 the Company  effected a one for ten reverse common
         stock split.  Accordingly,  all references to numbers of common shares,
         except shares authorized, and to per share information in the financial
         statements  have been  adjusted to reflect the reverse stock split on a
         retroactive basis.


         On February 18, 1998, the Company issued 670,000 shares of Common Stock
         to Cameron  Capital  Ltd.  under a  Settlement  Agreement  relating  to
         settlement  of the Company's  long term debt  obligation to Cameron and
         warrants to acquire  43,333 shares of the Company's  Common Stock at an
         exercise  price  of  $6.25  per  share to an  institutional  lender  in
         connection with the settlement.


         The  issuance of the  warrants  and of the Common Stock was exempt from
         registration  pursuant to Section 4 (2) of the  Securities Act of 1933,
         as amended.


         On March 10, 1998 the National Association of Securities Dealers,  Inc.
         (the "NASD") delisted the Company's securities from the NASDAQ National
         Market  because of the Company's  failure to meet listing  requirements
         concerning  minimum  bid price  and  market  value of public  float and
         advised the Company its  securities may be eligible to trade on the OTC
         Bulletin Board. The Company will take all actions reasonably  necessary
         for there to be an active  trading  market for its  outstanding  Common
         Stock. 
                                                                     (continued)

                                       14
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


         (a)  Exhibits                None

         (b)  Reports on Form 8-K     None

                                       15
<PAGE>


                         COUNTRY STAR RESTAURANTS, INC.

                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  authorized  and caused the  undersigned  to sign this
Report on the Registrant's behalf.

                               COUNTRY STAR RESTAURANTS, INC.

                               By:  /s/ DAN J. RUBIN
                                    -------------------------------------------
                                        Dan J. Rubin
                                        Chief Executive Officer, President, and
                                        Chairman of the Board


Dated:  August 18, 1998

                                       16