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


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

ITEM I.  FINANCIAL STATEMENTS

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

<CAPTION>
                                                   (000's Omitted)

                                                July 31,    April 30,
                                                  1998        1998
                                               -----------  ----------
<S>                                              <C>          <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                     $1,337       $1,738
   Accounts receivable, net                         756          973
   Inventories, net                               1,910        1,968
   Other current assets                             210           47
                                                --------     --------
           TOTAL CURRENT ASSETS                   4,213        4,726

PROPERTY AND EQUIPMENT                            4,634        4,634
   Less allowance for depreciation               (4,117)      (4,076)
                                                --------     --------
                                                    517          558
OTHER ASSETS AND DEFERRED CHARGES                    48           45
                                                --------     --------
TOTAL ASSETS                                     $4,778       $5,329
                                                --------     --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                              $  300       $  352
   Accrued expenses                                 698          723
   Deferred subscription revenues                 1,126        1,024
                                                --------     --------
           TOTAL CURRENT LIABILITIES              2,124        2,099

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 July 31, 1998 and
      April 30, 1998                               527           527
   Capital surplus                               3,378         3,378
   Retained (deficit) earnings                  (1,129)         (553)
                                               --------      --------
                                                 2,776         3,352
   Treasury stock at par - shares
      outstanding 490,165 on July
      31, 1998 and April 30, 1998                 (122)         (122)
                                               --------      --------
                                                 2,654         3,230
                                               --------      --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $4,778        $5,329
                                               --------      --------
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
                        MONARCH AVALON, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<CAPTION>
                                             Three Months Ended
                                                  July 31,
                                            ----------------------

                                               1998       1997
                                               ----       ----

                                  (000's omitted, except per share data)

<S>                                          <C>        <C>
Net sales                                    $ 1,281    $ 1,628
Cost of goods sold                             1,394      1,178
                                             -------    -------
Gross (loss) profit                             (113)       450

Selling, general and
  administrative expenses                        383        616

Research and development                          90        113
                                             -------    -------
   Operating expenses                            473        729
                                             -------    -------

Loss from operations                            (586)      (279)

Other income, net                                 10         23
                                             -------    -------
Loss before income taxes                        (576)      (256)

Provision for income taxes                         0          0
                                             -------    -------
Net loss                                        (576)      (256)
                                             -------    -------
Loss per share                               $  (.36)   $  (.16)
                                             -------    -------

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

             CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


<CAPTION>
                                                    Three Months Ended
                                                         July 31,
                                                    ------------------
                                                     1998         1997
                                                     ----         ----
                                                      (000's omitted)

<S>                                                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss from operations                        $ (576)      $ (256)
                                                   ------       ------
   Adjustments to reconcile net loss
   to net cash used in operating
   activities:
      Depreciation and amortization                    41           13
      Changes in accounts receivable,
       inventories, other assets, accounts
      payable, accrued expenses and
      deferred subscription revenue                   134         (164)
                                                    ------     -------
   Net cash used in operating activities             (401)        (407)
                                                    ------     -------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                  0         (59)
                                                  -------      -------
   Net cash used in investing activities                0         (59)
                                                  -------      -------
Net decrease in cash and cash equivalents            (401)        (466)

Cash and cash equivalents at beginning of
   period                                           1,738        2,131
                                                  -------      -------
Cash and cash equivalents at end of period         $1,337       $1,665
                                                  -------      -------

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

             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  subsidiary,  Girls'   Life,
Inc.(Monarch  and  Girls'  Life 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 three months ended  July
31,  1998 are not necessarily indicative of the results that may be expected for
the  year  ending April 30, 1999.  The subsidiaries Creampuffs, Inc. and  Broken
Windows,  Inc. did not engage in any operations for the quarter ending July  31,
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, 1998.

NOTE B - ACCOUNTS RECEIVABLE

Accounts receivable are net of the following allowances:

                               July 31, 1998          April 30, 1998
                              ---------------        ----------------
                                         (000's Omitted)

Doubtful accounts                 $142                    $142
Customer returns                    45                      45
                                  ----                    ----
                                  $187                    $187
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:

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

Raw materials                    $  656               $  694
Work in progress                    144                  174
Finished goods                    1,110                1,100
                                 ------               ------
                                 $1,910               $1,968

The  above  components are shown net of lower of cost of market  reserves  of
$350,000  at  July  31,  1998 and April 30, 1998.   The  Company  values  its
inventories at the lower of cost (first-in, first-out) or market.


NOTE D - SUBSEQUENT EVENTS

On  August 14, 1998, the Company filed an 8-K for a report dated August 3,  1998
that announced that Monarch Avalon, Inc. had entered into a definitive agreement
to  sell  its  games division to a newly formed subsidiary of Hasbro,  Inc.  for
$6,000,000  in  cash.  The assets being sold include trademarks, copyrights  and
other intellectual property rights, inventory and tooling.
<PAGE>

ITEM II              MONARCH AVALON, INC. AND SUBSIDIARIES

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

For  purposes of this discussion references to "fiscal 1999" are to  the  fiscal
year  ending April 30, 1999, and references to "fiscal 1998" are to  the  fiscal
year ended April 30, 1998.

CERTAIN CAUTIONARY INFORMATION

In  connection with the Private Securities Litigation Reform Act  of  1995  (the
"Litigation  Reform  Act"), the Company is hereby disclosing certain  cautionary
information  to  be  used in connection with written materials  (including  this
Report on Form 10-QSB) and oral statements made by or on behalf of its employees
and  representatives  that may contain "forward-looking statements"  within  the
meaning  of the Litigation Reform Act.  Such statements consist of any statement
other  than a recitation of historical fact and can be identified by the use  of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue"  or  the negative thereof or other variations thereon  or  comparable
terminology.   The  listener  or reader is cautioned  that  all  forward-looking
statements  are  necessarily  speculative  and  there  are  numerous  risks  and
uncertainties  that  could cause actual events or results to  differ  materially
from  those  referred  to  in such forward-looking statements.   The  discussion
contained in the Company's Annual Report on Form 10-KSB for the year ended April
30,  1998  and  incorporated herein by reference highlights  some  of  the  more
important  risks identified by management, but should not be assumed to  be  the
only  factors that could affect future performance.  Included in these risks  is
the  Company's  history  of  losses, its efforts to  identify  and  implement  a
strategic  alternative  (sale of the games business to a subsidiary  of  Hasbro,
Inc.), its fluctuations in operating results and seasonality, its dependence  on
new  product  introductions, the impact of product delays,  the  uncertainty  of
market acceptance of its products and short product life cycles, competition and
other risks.  The reader or listener is cautioned that the Company does not have
a  policy of updating or revising forward-looking statements and thus he or  she
should  not assume that silence by management over time means that actual events
are bearing out as estimated in such forward-looking statements.

RESULTS OF OPERATIONS

Monarch  consists of two divisions, games and printing.  Girls'  Life,  Inc.,  a
wholly-owned subsidiary, publishes a magazine.

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 games division.

RESULTS FOR THE FIRST QUARTER OF FISCAL YEAR 1999 AND 1998

Net  sales decreased by $347,000 or 21% in the first quarter of fiscal  1999  as
compared  to  the  first quarter of fiscal 1998.  Sales in  the  games  division
decreased by $527,000 or 71% in the first quarter of fiscal 1999 compared to the
first  quarter of fiscal 1998 as a result of increased returns of computer games
during  the first quarter of fiscal 1999 compared to the first quarter in  1998.
Net  of returns, computer game sales for the first quarter of fiscal 1999 was  a
negative $75,000.  On August 4, 1998, the Company announced that it has  entered
into a definitive agreement to sell the games division of the Company to a newly
formed subsidiary of Hasbro, Inc. for $6,000,000 in cash.  The assets being sold
include trademarks, copyrights and other intellectual property rights, inventory
and  tooling.   In light of the Company's agreement to sell the  assets  of  the
games  division, and pursuant to such agreement, the Company has taken steps  to
cut  costs in the games division.  Such steps have included curtailment  of  the
research and dvelopment and sales and marketing activities of the games division
and layoffs of games division employuees.  Management expects that the result of
such  steps  will be to further decrease sales of the games division during  the
remainder of fiscal 1999. Sales in the printing division decreased by $3,000  in
the  first quarter of fiscal 1999 or 0.5% from the first quarter of fiscal  1997
due  to competition in the printing business.  Sales of Girls' Life magazine  in
the  first  quarter of fiscal 1999 increased by $184,000 or 58% from  the  first
quarter  of  fiscal 1998. The increase in sales of Girls' Life magazine  relates
primarily to the increase in promotional and direct mailing advertising  of  the
magazine and increased revenue from newstand sales and advertising.

Gross  profit decreased by $563,000 or 125% during the first quarter  of  fiscal
1999  compared to the first quarter of fiscal 1998.  Consolidated  gross  margin
was  a  negative  9%  of net sales during the first quarter of  fiscal  1999  as
compared to 28% during the first quarter of fiscal 1998.  The decrease in  gross
margin primarily related to the return of computer games.

Operating expenses were 37% of net sales in the first quarter of fiscal 1999  as
compared to 45% in the first quarter of fiscal 1998.  Operating expenses for the
first  quarter of fiscal 1999 decreased by $256,000 or 35% from the same  period
in  fiscal 1998, primarily because of lower promotional and advertising expenses
for  publishing sales and lower royalties and research and development costs for
game sales.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

At  July  31,  1998, the Company has cash and cash equivalents of  approximately
$1,337,000,  a  decrease of $401,000 from the amount at  April  30,  1998.   The
decrease  resulted from cash used in operations of $401,000. The Company's  cash
and  cash equivalents are subject to variation based upon the timing of receipts
and the payment of payables.

At July 31, 1998, the Company has no debt with third party lenders.

YEAR 2000 DISCLOSURE

The  Company  has  reviewed existing computer programs, including  software  and
hardware, and plans to replace the existing software and hardware by the end  of
1998  at  an  estimated  cost of under $100,000.  Company  management  does  not
believe the change over to new software and hardware will have a material effect
on the Company's business, operations or financial condition.
<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

         The Company filed three reports on Form 8-K during the three
         months ended July 31, 1998.

         On May 1, 1998, the Company filed a report on Form 8-K dated
         November 12, 1997 to report, under Item Five of Form 8-K, a
         lawsuit filed in the United States District Court for the
         Central District of California pertaining to certain
         CIVILIZATION game products.

         On May 13, 1998, the Company filed a report on Form 8-K dated
         May 13, 1998 to report, under Item Five of Form 8-K, the
         Company applied for transfer of the Company's stock listing
         from the Nasdaq National Market to the Nasdaq SmallCap Market.

         On June 17, 1998, the Company filed a report on Form 8-K dated
         June 17, 1998 to report, under Item Five of Form 8-K, the
         Company had been advised by the staff of The Nasdaq Stock
         Market that the Company's application to transfer the listing
         of the Company's Common stock from the Nasdaq National Market
         to the Nasdaq SmallCap Market had been approved effective June
         18, 1998.
<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     9/14/98                          By  /s/ A. Eric Dott
                                          -----------------------------
                                          A. Eric Dott
                                          Chariman of the Board




Date     9/14/98                          /s/ A. Eric Dott
                                          -----------------------------
                                          A. Eric Dott
                                          Chairman of the Board
                                          (Principal Executive Officer)




Date     9/14/98                          /s/ Marshall Chadwell
                                          -----------------------------
                                          Marshall Chadwell
                                          Chief Financial Officer
                                          (Principal Accounting and
                                              Financial Officer)