UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC 20549



                                  10-QSB



                Quarterly Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934



FOR QUARTER ENDED    JANUARY 31, 1998        COMMISSION FILE NO. 0-8512
                    ------------------                          --------


                            MONARCH AVALON, INC.
------------------------------------------------------------------------
    (Exact name of small business issuer as specified in its charter)


          Delaware                                52-1073628
----------------------------------     ---------------------------------
 (State or other jurisdiction of       (IRS Employer Identification No.)
        incorporation)


        4517 Harford Road, Baltimore, Maryland                  21214
------------------------------------------------------        ----------
       (Address of principal executive offices)               (Zip Code)


Issuer's telephone number, including area code           410-254-9200
                                                     -------------------

                              Not applicable
------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.


Check  whether  the issuer (1) has filed all reports required  to  be  filed  by
Section  13 or 15(d) of the Securities Exchange Act of 1934 during the  past  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 [   ]

As  of January 31, 1998, the number of shares outstanding of the issuer's common
stock was 1,619,820 shares.


Transitional Small Business Issue Format (check one): YES [   ] NO [ X ]
<PAGE>
<TABLE>
                       PART I.      FINANCIAL INFORMATION

ITEM I.  FINANCIAL STATEMENTS

                       MONARCH AVALON, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

<CAPTION>
                                               January 31,    April 30,
                                                  1998          1997
                                              -----------  -----------
<S>                                             <C>          <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                    $1,540       $2,131
   Investments (at lower of cost or market)        148          148
   Accounts receivable, net                      1,280        1,213
   Inventories, net                              2,221        2,070
   Other current assets                            313          134
                                                ------       ------
           TOTAL CURRENT ASSETS                  5,502        5,696

PROPERTY AND EQUIPMENT                           4,612        4,494
   Less allowance for depreciation              (4,018)      (3,921)
                                                ------       ------
                                                   594          573
OTHER ASSETS AND DEFERRED CHARGES                   54           43
                                                ------       ------
TOTAL ASSETS                                    $6,150       $6,312
                                                ------       ------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                             $  514       $  459
   Accrued expenses                                221          281
   Deferred subscription revenues                1,396          617
                                                ------       ------
           TOTAL CURRENT LIABILITIES             2,131        1,357

STOCKHOLDERS' EQUITY
   Preferred Stock - par value $.01 per share:
      Authorized 100,000 shares; no shares
      issued
   Common Stock - par value $.25 per share:
      Authorized 3,000,000 shares; shares
      issued - 2,109,985; shares outstanding
      1,619,820 on January 31, 1998 and
      April 30, 1997                               527          527
   Capital surplus                               3,378        3,378
   Retained earnings                               236        1,172
                                                ------       ------
                                                 4,141        5,077
   Treasury stock at par - shares
      outstanding 490,165 on January
      31, 1998 and April 30, 1997                 (122)        (122)
                                                ------       ------
                                                 4,019        4,955
                                                ------       ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $6,150       $6,312
                                                ------       ------
<FN>
See notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
                        MONARCH AVALON, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<CAPTION>
                                Three Months Ended    Nine Months Ended
                                    January 31,           January 31,
                                ---------------------------------------

                                 1998       1997       1998       1997
                                 ----       ----       ----       ----

                                 (000's omitted, except per share data)

<S>                            <C>        <C>        <C>        <C>
Net sales                      $ 1,748    $ 2,315    $ 5,963    $ 5,995
Cost of goods sold               1,717      1,210      4,381      3,734
                               -------    -------    -------    -------
Gross profit                        31      1,105      1,582      2,261

Selling, general and
  administrative expenses          616        700      2,223      1,796

Research and development           118        108        347        294
                               -------    -------    -------    -------
   Operating expenses              734        808      2,570      2,090
                               -------    -------    -------    -------

Income (loss) from operations     (703)       297       (988)     1,171

Other income, net                   17         36         52         96
                               -------    -------    -------    -------
Income (loss) before income       (686)       333       (936)       267
   taxes
Provision for income taxes           0          0          0          0
                               -------    -------    -------    -------
Net income (loss)                 (686)       333       (936)       267
                               -------    -------    -------    -------
Income (loss) per share        $ (0.42)   $  0.21   $  (0.58)  $   0.16
                               -------    -------    -------    -------

Weighted average shares
  outstanding                 1,619,820  1,619,820  1,619,820  1,619,995
                              ---------  ---------  ---------  ---------
<FN>
See notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
                    MONARCH AVALON, INC. AND SUBSIDIARY

             CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<CAPTION>

                                                    Nine Months Ended
                                                        January 31,
                                                    -----------------
                                                  1998             1997
                                                  ----             ----
                                                     (000's omitted)

<S>                                             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss) from operations            $  (936)          $  267
                                                -------          -------
   Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
      Depreciation and amortization                 97              115
      Unrealized loss (gain) on investments          0              ( 3)
      Changes in accounts receivable,
      inventories, other assets, accounts
      payable, accrued expenses and
      deferred subscription revenue                366             (204)
                                                ------           ------
   Net cash used in operating activities          (473)             175
                                                ------           ------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment            (118)            (126)
                                                ------           ------
   Net cash provided by (used in)                 (118)            (126)
      investing activities


CASH FLOWS FROM FINANCING ACTIVITIES:
   Purchase of treasury stock                        0              ( 1)
                                                ------           ------
   Net cash provided by (used in)                    0              ( 1)
      financing activities
                                                ------           ------
Net increase (decrease) in cash and cash
   equivalents                                    (591)              48

Cash and cash equivalents at beginning of
   period                                        2,131            1,966
                                                ------           ------
Cash and cash equivalents at end of period      $1,540           $2,014
                                                ------           ------

<FN>
See notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
                       MONARCH AVALON, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE A - BASIS OF PRESENTATION

The  accompanying  unaudited consolidated financial statements  include  Monarch
Avalon,  Inc. ("Monarch") and its wholly-owned subsidiaries, Girls'  Life,  Inc.
and  Broken  Windows, Inc. (Monarch, Girls' Life Inc. and Broken  Windows,  Inc.
collectively  referred  to  herein  as "the  Company")  have  been  prepared  in
accordance  with the instructions to Form 10-QSB and do not include all  of  the
information and disclosures required by generally accepted accounting principles
for   complete  financial  statements.   In  the  opinion  of  management,   all
adjustments  (consisting  of normal recurring accruals and  charges)  considered
necessary for a fair presentation have been included.  All material intercompany
balances   between   Monarch  and  its  subsidiary  have  been   eliminated   in
consolidation.  Operating results for the nine months ended January 31, 1998 are
not  necessarily  indicative of the results that may be expected  for  the  year
ending April 30, 1998.  For further information, reference should be made to the
financial statements and notes included in the Company's annual report  on  Form
10-KSB for the fiscal year ended April 30, 1997.

On  November  26, 1997, Broken Windows, Inc. opened a retail store in  Maryland,
trading as "Nickel Street", for the purpose of selling computer and board  games
manufactured  by Monarch Avalon, Inc. and computer and board games  manufactured
by  other  companies. Products associated with Girls' Life  Magazine  were  also
offered  for sale to the general public.  The retail store was closed on January
17, 1998.



NOTE B - ACCOUNTS RECEIVABLE

Accounts receivable are net of the following allowances:

                              January 31, 1998       April 30, 1997
                              ----------------       --------------
                                          (000's omitted)

Doubtful accounts                    $143                  $139
Customer returns                      194                   194
                                     ----                  ----
                                     $337                  $333
NOTE C - INVENTORIES

For  quarterly  reporting  purposes, Monarch  values  inventory  using   both
perpetual  records  and  physical  counts,  while  at  year-end  values   are
determined solely on the basis of physical counts.

The major components of inventories consist of the following:

                              January 31,1998        April 30, 1997
                              ---------------        --------------
                                        (000's omitted)

Raw materials                    $1,002                $  752
Work in progress                    153                   112
Finished goods                    1,066                 1,206
                                 ------                ------
                                 $2,221                $2,070

The  above  components are shown net of the inventory reserve of $350,000  to
reduce  the amounts to lower of cost or market at January 31, 1998 and  April
30, 1997.  The Company values its inventories at the lower of cost (first-in,
first-out) or market.
<PAGE>
ITEM II              MONARCH AVALON, INC. AND SUBSIDIARY

                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For  purposes of this discussion references to "fiscal 1998" are to  the  fiscal
year  ending April 30, 1998, and references to "fiscal 1997" are to  the  fiscal
year ended April 30, 1997.

RESULTS OF OPERATIONS

Monarch  consists  of  two divisions, games and printing, and  two  wholly-owned
active  subsidiaries,  Girls' Life, Inc., that publishes a magazine  and  Broken
Windows, Inc., t/a "Nickel Street" that operates a retail store.

Sales  of  products  in the games division, primarily board games  and  software
games  designed  for  use  on microcomputers, are somewhat  seasonal  in  nature
because of increased retail game sales during the Christmas season, while  sales
of  the  Company's other products (envelopes, printing and graphic arts services
and  Girls' Life magazine) are not seasonal.  The timing of new releases of  the
Company's games also may affect sales in the game division.

RESULTS FOR THE THIRD QUARTER OF FISCAL YEAR 1998 AND 1997

Net  sales decreased by $567,000 or 25% in the third quarter of fiscal  1998  as
compared  to  the  third quarter of fiscal 1997.  Sales in  the  games  division
decreased by $766,000 or 56% in the third quarter of fiscal 1998 compared to the
third  quarter of fiscal 1997 as a result of the decrease in the number  of  new
releases of computer games and returns of computer games in the third quarter of
fiscal  1998  compared  to  the third quarter in 1997.  Sales  in  the  printing
division  decreased by $82,000 in the third quarter of fiscal 1998 or  11%  from
the third quarter of fiscal 1997 as a result of increased competition. Sales  of
Girls'  Life magazine in the third quarter of fiscal 1998 increased by  $267,000
or  141% from the third quarter of fiscal 1997.  The increase in sales of Girls'
Life  magazine relates primarily to the increase in promotions and  direct  mail
advertising  of  the  magazine and increased revenue from  newsstand  sales  and
advertising.  Sales of Broken Windows, Inc. accounted for $14,000 or  less  than
1%  of  total  net sales for the third quarter of fiscal 1998.  Broken  Windows,
Inc. had no sales for the third quarter of fiscal 1997.

Gross  profit decreased by $1,074,000 or 97% during the third quarter of  fiscal
1998  compared to the third quarter of fiscal 1997.  Gross margin was 2%  during
the third quarter of fiscal 1998 as compared to 48% during the third quarter  of
fiscal 1997.  The decrease in gross margin primarily relates to the decrease  in
the sales of computer and board games and lower printing sales.

Operating expenses were 42% of net sales in the third quarter of fiscal 1998  as
compared to 35% in the third quarter of fiscal 1997.  Operating expenses for the
third quarter of fiscal 1998 decreased by $74,000 or 9% from the same period  in
fiscal  1997,  primarily because of lower promotional costs which  decreased  by
$59,000  or  90%  for  Girls' Life magazine and lower  royalty  expense  due  to
decreases in computer game sales.
<PAGE>
RESULTS FOR THE FIRST NINE MONTHS OF FISCAL YEAR 1997 AND 1996


Net  sales  decreased  by $32,000 or less than 1% in the first  nine  months  of
fiscal  1998 as compared to the same period in fiscal 1997.  Sales in  the  game
division for the first nine months of fiscal 1998 decreased by $863,000  or  26%
compared  to  the same period in fiscal 1997 as a result of fewer  new  computer
game  releases  and  the return of computer games in the first  nine  months  of
fiscal  1998. Sales in the printing division for the first nine months of fiscal
1998 decreased by $109,000 or 5% from the same period in fiscal 1997 as a result
of  increased  competition.  Sales of Girls' Life magazine for  the  first  nine
months  of fiscal 1998 increased by $927,000 or 139% compared to the same period
in  fiscal  1997 as a result of increased promotions and direct mail advertising
of the magazine and increased revenue from newsstand sales and advertising.

Gross profit decreased by $679,000 or 30% during the first nine months of fiscal
1998  compared to the same period in fiscal 1997.  Gross margin was  27%  during
the  first  nine  months of fiscal 1998 as compared to 38% for the  same  period
during fiscal 1997.  The decrease in gross margin primarily related to decreases
in both games and printing sales.

Operating expenses increased $480,000 or 23% for the first nine months of fiscal
1998  as  compared  to  the  same  period in fiscal  1997.   Operating  expenses
represented  43% and 35% of net sales for the first nine months of  fiscal  1998
and 1997, respectively.  The increase in operating expenses primarily relates to
higher  promotional  and  advertising expenses  for  publishing  sales  and  new
personnel associated with computer game sales and publishing sales.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

At  January 31, 1998, the Company has cash and cash equivalents of approximately
$1,540,000,  a  decrease of $591,000 from the amount at  April  30,  1997.   The
decrease  resulted  from  cash  used/provided by  operations  of  $473,000,  and
purchases  of equipment in the amount of $118,000. The Company's cash  and  cash
equivalents are subject to variation based upon the timing of receipts  and  the
payment of payables.

At January 31, 1998, the Company has no debt with third party lenders.
<PAGE>
                      PART II. OTHER INFORMATION


ITEMS 1 THROUGH 5
NONE / NOT APPLICABLE

ITEM 6.  EXHIBITS AND REPORTS FOR FORM 8-K

(a)          Exhibits

             Number                 Description
             ------                 -----------

             27.                     Financial Data Schedule

(b)          Reports on Form 8-K

             No reports have been filed on Form 8-K during this
             quarter.
<PAGE>
                                      SIGNATURES

In  accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




                                          MONARCH AVALON, INC.




Date     03/17/98                     By  /s/ A. Eric Dott
                                          -----------------------------
                                          A. Eric Dott
                                          Chariman of the Board



Date     03/17/98                         /s/ A. Eric Dott
                                          -----------------------------
                                          A. Eric Dott
                                          Chairman of the Board
                                          (Principal Executive Officer)



Date     03/17/98                         /s/ Marshall Chadwell
                                          -----------------------------
                                          Marshall Chadwell
                                          Chief Financial Officer
                                          (Principal Accounting and
                                              Financial Officer)