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               March 31, 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 90025
                         (Address of Principal Executive
                               Offices) (Zip Code)

                                 (213) 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 May 14, 1998:   9,004,293


<PAGE>

                         COUNTRY STAR RESTAURANTS, INC.




                                      INDEX


                                                                            Page
                                                                            ----


PART I      -              Financial Information

         Item 1.           Financial Statements

                           Condensed Balance Sheet at
                                March 31, 1998 (unaudited)...............     3

                           Condensed Statements of Operations
                                for the Quarter Ended March 31, 1998
                                and March 31, 1997  (unaudited)..........     4

                           Condensed Statements of Cash Flows
                                for the Quarter Ended March 31, 1998
                                and March 31, 1997  (unaudited)..........     5

                           Notes to Condensed Financial Statements
                                (unaudited)..............................     6


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

PART II     -              Other Information

         Item 2.           Changes in securities.........................     9
         Item 6.           Exhibits and Reports on Form 8-K..............     9

SIGNATURES                      .........................................    10

                                       2
<PAGE>

                          COUNTRY STAR RESTAURANTS, INC.


                              Condensed Balance Sheet
                                  March 31, 1998
                                    (Unaudited)
<TABLE>
<CAPTION>

                                      ASSETS
<S>                                                                 <C>          
CURRENT ASSETS:
  Cash and cash equivalents                                         $     144,943
  Inventories                                                             183,194
  Other                                                                   223,314
                                                                    -------------
    TOTAL CURRENT ASSETS                                                  551,451
                                                                    -------------

PROPERTY AND EQUIPMENT AT COST, NET OF ACCUMULATED
  DEPRECIATION AND AMORTIZATION OF $861,758:
  Leasehold improvements                                                3,374,062
  Furniture and equipment                                               1,321,952
  Memorabilia                                                             345,507
                                                                    -------------
    TOTAL PROPERTY AND EQUIPMENT                                        5,041,521

OTHER                                                                     263,925
                                                                    -------------
                                                                    $   5,856,897
                                                                    =============

                            LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Line of credit                                                    $   1,750,000
  Accounts payable                                                        513,997
  Accrued legal settlements                                               332,000
  Accrued salaries                                                        100,000
  Other accrued expenses                                                  253,217
                                                                    -------------
    TOTAL CURRENT LIABILITIES                                           2,949,214
                                                                    -------------


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                                           47,719,927
  ACCUMULATED DEFICIT                                                 (44,902,287)
                                                                    -------------
    NET STOCKHOLDERS' EQUITY                                            2,907,683
                                                                    -------------
                                                                    $   5,856,897
                                                                    =============
</TABLE>

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

                                         3
<PAGE>

                            COUNTRY STAR RESTAURANTS, INC.


                          Condensed Statements of Operations
                                     (Unaudited)
<TABLE>
<CAPTION>


                                                     For The Quarter Ended March 31,
                                                     -------------------------------
                                                           1998           1997
                                                     -------------    --------------
<S>                                                    <C>            <C>
REVENUES:
  Food and beverage                                    $   845,778       $ 2,027,617
  Merchandise                                               43,482           236,858
                                                       -----------       -----------
                                                           889,260         2,264,475
                                                       -----------       -----------
COST AND EXPENSES:
  Cost of revenues:
    Food and beverage                                      293,532           730,615
    Merchandise                                             39,492           189,821
  Labor                                                    453,599           940,143
  Rent                                                      81,629           676,175
  Other restaurant operating                               187,064           476,074
  Selling, general and administrative                      547,813         1,401,356
  Depreciation and amortization                            148,349           385,522
                                                       -----------       -----------
                                                         1,751,478         4,799,706
                                                       -----------       -----------
LOSS FROM OPERATIONS                                      (862,218)       (2,535,231)
                                                       -----------       -----------

OTHER INCOME (EXPENSE):
  Interest income                                               --             2,447
  Interest expense                                         (30,876)          (70,204)
  Embedded interest expense                               (212,500)       (1,009,662)
                                                       -----------       -----------
                                                          (243,376)       (1,077,419)
                                                       -----------       -----------

LOSS BEFORE MINORITY INTEREST AND EXTRAORDINARY ITEM    (1,105,594)       (3,612,650)

MINORITY INTEREST                                               --           413,050
                                                       -----------       -----------
LOSS BEFORE EXTRAORDINARY ITEM                          (1,105,594)       (3,199,600)

EXTRAORDINARY ITEM - SETTLEMENT OF NOTES PAYABLE,
  NET OF 0 TAXES                                         1,527,890                --
                                                       -----------       -----------

NET INCOME (LOSS)                                      $   422,296       $(3,199,600)
                                                       ===========       ===========

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE:
  Loss before extraordinary item                       $     (0.13)      $     (2.18)
  Extraordinary item                                          0.18                --
                                                       -----------       -----------

  Net income (loss) per common share                   $      0.05       $     (2.18)
                                                       ===========       ===========


BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING                             8,493,113         1,470,800
                                                       ===========       ===========
</TABLE>



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

                                          4
<PAGE>

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


                         Condensed Statements of Cash Flows
                                     (Unaudited)



                                                    For The Quarter Ended March 31,
                                                    -------------------------------
                                                          1998            1997
                                                    -------------    --------------

<S>                                                   <C>            <C>         
NET CASH USED IN OPERATING ACTIVITIES                 $  (623,902)      $  (996,175)
                                                      -----------       -----------
NET CASH USED IN INVESTING ACTIVITIES                          --                --
                                                      -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from line of credit                              850,000           500,000
Payment of note payable                                (1,300,000)               --
Net proceeds from issuance of common and
  preferred stock                                              --             7,857
Capital lease payments                                         --           (35,526)
                                                      -----------       -----------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES      (450,000)          472,331
                                                      -----------       -----------

Net decrease in cash                                   (1,073,902)         (523,844)

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

CASH AND CASH EQUIVALENTS, END OF PERIOD              $   144,943       $   425,361
                                                      ===========       ===========

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:

Common stock issued upon Conversion of Debt           $   150,000                --

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

Embedded interest relating to Convertible Debt        $   212,500        $ 1,009,662


     The accompanying notes are an integral part of these financial statements.
</TABLE>

                                          5
<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  March  31,  1998,  the  Company
                  recorded  $212.5  thousand of net  embedded  interest  expense
                  relating to these advances.


NOTE C  -         EXTRAORDINARY ITEM

                  During the three  months  ended  March 31,  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 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.

                                        6
<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 March 31, 1998 compared to three months ended March 31, 1997

Revenues.

Total  revenues  decreased to $889 thousand for the three months ended March 31,
1998,  compared with $2.264 million for the three months ended March 31, 1997, a
decrease of $1.375 million or 60%,  partially due to the closing of Country Star
Atlanta.  Same store  revenues  decreased 49% in Hollywood and 62% 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 $920 thousand for the three months ended March
31, 1997 to $333  thousand for the three  months  ended March 31, 1998.  Cost of
revenues as a percentage of revenues  decreased from 41% to 37% primarily due to
the new plans and policies implemented by management.

Operating  expenses  decreased  from $2.092  million for the three  months ended
March 31, 1997 to $722  thousand for the three months ended March 31, 1998. As a
percentage of revenues,  operating  expenses decreased from 92% to 81% primarily
due to the new plans and policies implemented by management.

General and administrative  expenses decreased from $1.401 million for the three
months ended March 31, 1997 to 548 thousand for the three months ended March 31,
1998. As a percentage of revenues,  general and administrative expenses were 62%
of revenues for both periods.

Depreciation and amortization  decreased from $386 thousand for the three months
ended March 31, 1997 to $148 thousand for the three months ended March 31, 1998,
reflecting  the  decrease in the number of  restaurants  from three to two. As a
percentage of total revenues, depreciation and amortization were 17% of revenues
for both periods.

Interest  expense  decreased from $1.080  million to $243  thousand,  reflecting
primarily the embedded  interest  expense  associated with the convertible  debt
financing arrangements entered into on February 12, 1997.
                                                                     (continued)

                                       7
<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  March 31, 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 in
a new lease agreement directly between the Company and the landlord. The Company
is obligated to pay base rent of 50% of monthly  positive cash flow.  During the
three  months  ended March 31,  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 March 31,
1997 and used in the three  months  ended March 31, 1998 were $472  thousand and
$450  thousand  respectively,  due  to  the  borrowing  and  repayments  of  the
convertible debts in 1997 and 1998.

Net cash used in operating  activities for the three months ended March 31, 1997
and March 31, 1998  decreased  from $996 thousand to $624 thousand due primarily
to the extraordinary gain of $1.5 million in 1998.

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.

                                       8
<PAGE>

                         COUNTRY STAR RESTAURANTS, INC.



                                     PART II

                                OTHER INFORMATION

ITEM 2.           CHANGES IN SECURITIES

                  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  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 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.


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K


                  (a)      Exhibits         None

                  (b)      Reports on Form 8-K

                           On January  20,  1998,  the  Company  filed a Current
                  Report  on  Form  8-K  on the  sale  of  its  interest  in the
                  restaurant  operations  of the  Company's  Las  Vegas,  Nevada
                  restaurant  and  entering  into a new lease of the  restaurant
                  directly to the Company.

                                        9
<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:  May 19, 1998


                                       10